Dismissal is fair only if it is for one of five legally recognised reasons and the employer followed a fair procedure. The five fair reasons are: conduct, capability, redundancy, statutory illegality, and some other substantial reason (SOSR). Even a fair reason for dismissal can result in an unfair dismissal finding if the process was flawed. Employees need 2 years of continuous service to bring an ordinary unfair dismissal claim — but there is no qualifying period for automatic unfair dismissal.
What is unfair dismissal?
Unfair dismissal occurs when an employer dismisses an employee without a fair reason or without following a fair procedure — or both. It is one of the most common employment tribunal claims in the UK.
The average tribunal award for unfair dismissal in 2024/25 was approximately £10,000 — but cases involving long service, high earners, or discrimination elements can run significantly higher. The maximum compensatory award is £115,115 (2025/26).
The 5 fair reasons to dismiss
To defend an unfair dismissal claim, the employer must show the dismissal was for one of these five reasons:
| Reason | What it covers | |---|---| | Conduct | Misconduct or gross misconduct — from repeated lateness to theft | | Capability | Inability to do the job due to performance or ill health | | Redundancy | The role has disappeared or the business has closed | | Statutory illegality | Continuing the employment would break the law (e.g. a driver who loses their licence) | | Some other substantial reason (SOSR) | A catch-all for other legitimate business reasons |
Having a fair reason is necessary but not sufficient. You must also follow a fair process.
What makes a dismissal unfair?
Even with a fair reason, a dismissal can be found unfair if:
- No investigation was carried out (for conduct or capability)
- The employee was not invited to a formal hearing
- The employee was not told they could bring a companion
- The decision to dismiss was made before the hearing
- No right of appeal was offered
- The sanction was disproportionate (e.g. dismissal for a first minor offence)
- The employer did not follow their own procedure
Tribunals apply the "band of reasonable responses" test: would a reasonable employer in the same circumstances have dismissed? If the answer is yes, the dismissal is likely fair — even if the tribunal would have made a different decision.
Qualifying period and exceptions
Employees need 2 years of continuous service to bring an ordinary unfair dismissal claim.
However, there is no qualifying period for automatic unfair dismissal — dismissal that is automatically unfair regardless of process or reason. These include dismissal for:
- Pregnancy or maternity leave
- Whistleblowing (protected disclosures)
- Trade union membership or activity
- Asserting a statutory right (e.g. requesting flexible working)
- Health and safety reasons
- Taking part in jury service
Always follow a fair process regardless of the employee's length of service. Automatic unfair dismissal claims carry no qualifying period and can be brought from day one.
Dismissal for conduct — the ACAS standard
For conduct dismissals, the tribunal will assess whether:
- You held a genuine belief that the employee was guilty
- You had reasonable grounds for that belief after a reasonable investigation
- Dismissal was within the range of reasonable responses
A minor first offence will rarely justify dismissal. Gross misconduct can justify dismissal without prior warnings — but you must still investigate and hold a hearing.
Dismissal for capability — performance and ill health
Performance: before dismissing for poor performance, you should:
- Make the required standard clear
- Give the employee support, training, and time to improve
- Hold formal review meetings with documented targets
- Issue written warnings before dismissal
Ill health: before dismissing for long-term sickness:
- Obtain an occupational health or GP report on prognosis
- Consider whether the condition is a disability requiring reasonable adjustments
- Explore alternatives (phased return, changed duties, redeployment)
- Give the employee warning that the position may not be held indefinitely
Redundancy — a fair reason with strict rules
Redundancy is a fair reason for dismissal — but a flawed redundancy process creates unfair dismissal risk. For redundancy to be fair:
- The redundancy situation must be genuine
- Selection must be fair and based on objective criteria
- Consultation must be meaningful (not just a formality)
- Alternative employment must be considered
Compensation if dismissal is found unfair
If a tribunal finds dismissal unfair, it can award:
- Basic award: calculated like statutory redundancy pay (age, service, weekly pay)
- Compensatory award: loss of earnings, loss of benefits, future loss — up to £115,115
- Additional award: if the employer fails to reinstate or re-engage following a tribunal order
Tribunals can also reduce awards if the employee contributed to their own dismissal or failed to mitigate their loss.
Frequently asked questions
Can an employee bring an unfair dismissal claim if they resigned? Yes — if they resigned in response to a fundamental breach of contract by the employer, this is constructive dismissal and is treated as unfair dismissal. Common examples include unilateral pay cuts, sustained bullying, or failing to address a grievance.
Do I need to offer reinstatement if a tribunal finds unfair dismissal? The tribunal can order reinstatement or re-engagement, but it rarely does. Most unfair dismissal cases result in a compensation award. You can object to reinstatement on practical grounds.
Is a settlement agreement a way to avoid tribunal? Yes. A settlement agreement (formerly a compromise agreement) is a legally binding agreement where the employee waives their tribunal rights in exchange for a payment. It must be signed with independent legal advice for the employee. ACAS early conciliation is another route to settlement before a claim is lodged.
Can I dismiss an employee who is on sick leave? Yes — but only following a fair capability process that includes obtaining medical evidence, consulting the employee, considering alternatives, and giving appropriate warning. Dismissing an employee simply because they are on sick leave, without process, is very likely unfair.
What is the time limit for an unfair dismissal claim? 3 months minus one day from the effective date of termination (the last day of employment). ACAS early conciliation must be attempted before lodging the claim, and the clock stops during the ACAS process.
