Unfair Dismissal

When an employee is dismissed improperly they have a right to compensation for unfair or discriminatory dismissal. They may also be owed a redundancy payment or have the right to be paid for an unfulfilled contractual notice period.

Claiming compensation for unfair dismissal

The right not to be unfairly dismissed arises after a year of employment. To be considered fair an employer must ensure:

Some reasons for dismissal will automatically be viewed unfair, such as whistleblowing and maternity issues. No minimum employment requirements are needed in these instances and compensation may be unlimited.

Questions to consider in dismissal situations

Some scenarios present questions that should be immediately considered; Redundancy:

Employee wrongdoing:

In the case of both misconduct and bad performance, it may be necessary for the ACAS Code of Practice on Discipline and Grievance Procedures (www.acas.org.uk) to be followed. A successful claim can be reduced by 25% if it is later found to have been ignored when required.

Compensation for unfair dismissal:

Basic award = up to £430 per week (depending on weekly salary) x 0.5, 1 or 1.5 (depending on employee’s age), unless a statutory redundancy payment has been made to the employee.

Compensatory award = up to £72,300, depending on losses suffered. This is based on the amount of time an employee has been unemployed, as far as is just and equitable to do consider this.

If a dismissal is found to be unfair for procedural reasons and a Tribunal feels fair procedure would have made no difference, this can result in reduced or no compensation.

Wrongful dismissal

Wrongful dismissal occurs when an employer has not followed the procedure to provide a notice period according to the employee's contract. To dismiss an employee fairly, the employer must either allow them to work out the notice period detailed in their contract or provide payment of this period instead. The only exception is where gross misconduct has been committed by the employee.

A payment in lieu of notice can be made when an employee is required to leave straight away, as long as their contract allows for this. The payment should reflect the notice period in the contract.

Where an employee believes they have been wrongfully dismissed, there are still required to take reasonable steps to find another job. Any money they earned or should have received before the end of the notice period will need to be taken into account when calculating the loss of the wrongful dismissal. The loss will be the amount the employee would have received had they not been wrongfully dismissed, less the earnings made during what should have been the employee’s notice period.


An employee who has been continuously employed for a minimum of two years is entitled to statutory redundancy pay. This amounts to £430 a week for each year of employment up to 20 years, multiplied by 0.5, 1 or 1.5 depending on the employee’s age. There may also be specific redundancy provisions contained in a contract of employment that will usually provide for payments over the statutory amount.

For fair redundancy the dismissal must relate to the employer ending their business or a reduction or ending to the need for work the employee performs. If suitable alternative employment is offerred to the employee redundancy pay may be lost if the offer is unreasonably turned down. Where alternative employment is offered there must be a four week trial - if during that time an employee decides, with good reason, they don’t want the alternative employment they can choose to accept a redundancy payment instead.

Constructive dismissal arises where an employer has breached the terms of an employment contract and the employee has subsequently resigned.

Discrimination may be an issue where an employee has been dismissed for reasons relating to race, age, sex, religion, sexual orientation or philosophical belief.

Time limits

Unfair dismissal or breach of contract issues that result in wrongful dismissal claim must be made three months less one day from the day employment ends. If the breach of contract claim exceeds £25,000 it is brought before the County Court or High Court not an Employment Tribunal, in which case the time limitation is six years from the date the contract was breached.

Discrimination claim = three months from the date of the discriminatory act;

Statutory redundancy payment claim = six months from date of termination of employment.