• Employment
  • July 20, 2021

How SMEs Can Avoid Unfair Dismissal Claims

By Lawbite Team

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One of the things that almost all our clients agree on is that there are few cases more difficult and stressful than having to dismiss an employee, telling someone they no longer have a position in your organisation. What makes a challenging process easier on everyone involved is knowing, as an employer, to ensure the process is done correctly and there are no grounds for an unfair dismissal claim.

What are the costs of an unfair dismissal claim? 


From 1 April 2019 to 31 March 2020, the highest Employment Tribunal award for an unfair dismissal claim was £118,842. The average unfair dismissal award was £6,646. These figures do not include the legal costs and reputational damage associated with a claim. To help you understand the employment law around unfair dismissal and ensure that when you let someone go, the risk of an Employment Tribunal claim is mitigated, this article provides a comprehensive overview of what unfair dismissal is and how you can avoid a claim being brought against your business.

What is unfair dismissal?


An employee who has completed the qualifying period (currently two years of employment) has the right not to be unfairly dismissed. The Employment Tribunal is likely to judge that a dismissal was unfair unless:

  • The employer can show that the employee was dismissed for one of the five potentially fair reasons. These are capability or qualifications, conduct, redundancy, breach of statutory duty or restriction, or ‘some other substantial reason" (SOSR). Common examples of SOSR include personality clashes, a breakdown in trust and confidence, and business reorganisation; and
  • The Tribunal concludes that the employer acted reasonably in dismissing the employee for a potentially fair reason.

In some cases, dismissal is deemed automatically unfair. If an employee is dismissed for health and safety activities, in connection with their pregnancy or maternity leave, or for whistleblowing, the dismissal may be automatically unfair. In most cases where a dismissal is deemed automatically unfair, the qualifying period of two years will not apply.

Is unfair dismissal the same as constructive or wrongful dismissal?


Constructive and wrongful dismissal are separate matters from unfair dismissal. Wrongful dismissal applies when an employer dismisses an employee in a manner that is in breach of the terms in the former’s employment contract. The most common example of wrongful dismissal is dismissing an employee without notice. They must be given the correct notice as per their contract. This does not mean they cannot go on ‘gardening leave’ - in such circumstances, the employee is still being paid up until the official leaving date.

Constructive dismissal occurs when an employee feels forced to resign following a gross breach of the employment contract by their employer.  Examples include not being paid, serious discrimination and/or sexual harassment/misconduct, or unreasonable changes to the conditions or location of work.

Unfair dismissal is an employment law conferred by legislation and does not relate to the employee’s contract, rather it is concerned with the reason or process of dismissal.  

How can I dismiss someone fairly under UK employment law?


If you need to dismiss an employee, the safest thing you can do to protect yourself against an unfair dismissal claim is to follow best practices.  In employment law, the ACAS guidelines carry a great deal of weight. ACAS states dismissing an employee should be only done as a last resort.  Before taking such a step, an employer, working with an experienced Employment Law Solicitor, should:

  • Use informal resolution methods such as negotiation or mediation where possible - especially for matters concerning conduct or performance.
  • Be transparent, ensuring that the grievance or disciplinary rules and procedures to be followed are provided and that the employee fully understands them.

In situations where there is a concern about an employee’s behaviour or in cases where a grievance has been raised, the ACAS guide on handling discipline and grievance issues provide a great starting point. It highlights the significance of consistency, candidness, transparency, keeping written records, fairness, and how meetings with employees should be run.

If all alternatives fail and dismissal is unavoidable, it will be considered fair if:

  • the employee’s conduct was unacceptable
  • the employee was not capable or did not have the qualifications to do the job they were employed for
  • the position is made redundant
  • the dismissal related to a statutory duty or restriction which barred the continuation of the employee’s position 
  • the employer acted reasonably during the dismissal process


You must truthfully and openly explain to your employee the reasons for their dismissal and check they understand.  Furthermore, ensure that every stage of the dismissal procedure and communication relating to it is written down.

Final words


Dismissing an employee is a high-risk process. The best strategy for avoiding a potential unfair dismissal claim is to work with an Employment Law Solicitor who understands your business and industry.  They will advise you through every step of the process so both you and your employee can part ways as amicably as possible.

Questions?


LawBite is here to help you navigate employment law. We believe that great legal advice is a fundamental business right. We are committed to providing your business with expert legal advice that is easier to access, clearer to understand and more affordable. Book a free 15-minute phone consultation with one of our expert employment lawyers to discuss your legal issues.


Additional useful information

In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.



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