When will your dismissal be unfair?

Only employees can bring a claim of unfair dismissal. If you are self-employed, a temporary or casual worker the employment tribunal will not be able to hear your claim.

An employee is an individual who works under a contract of employment. On occasions, however, it can be difficult to work out if a person is working under an express or implied contract of employment.

A contract of employment does not need to be in writing; it can be just a verbal agreement. There is (unhelpfully) no single test or rule that can be applied when trying to resolve this issue. The label used by the parties and the tax treatment of any ‘pay’ are not conclusive factors. A key consideration will be whether there was a ‘mutual obligation’ on the employer to offer work and for the employee to carry it out working under the control of the employer.

If you are an agency worker you may be employed under a contract of employment with the agency or the end user; if so you may well be able to bring a claim.

If you are unsure if you are an employee it is important to obtain expert employment law advice to make sure all relevant factors are taken into account.

If your employment status is disputed the tribunal may hold a preliminary hearing to decide the issue.

Employees must show they have been continuously employed for the relevant minimum time period to bring a claim of ordinary unfair dismissal. Certain breaks in service will not break continuity, for example if there has been temporary cessation of work.

The minimum length of employment depends on the date your employment started:

• If your employment commenced before 6 April 2012 you must have at least one year’s service to bring a claim for ordinary unfair dismissal.
• If your employment commenced on or after 6 April 2012 your minimum service is two years.

There is no minimum qualifying period of service, however, if your claim is for an automatically unfair reason; examples include if your dismissal was because of your pregnancy or linked to taking maternity leave or if you raised a health and safety concern. For more about automatically unfair dismissals see below.

You must also have been dismissed to bring a claim of unfair dismissal. Therefore, if your employment is continuing you will not be able to start your claim. The one exception to this rule is if you are working out your notice period.

You will have been dismissed if:

• your employer terminates your employment with or without notice;
• your fixed-term contract ended and was not renewed; or
• you resigned with or without giving notice in circumstances where your employer fundamentally breached an important term of your contract of employment. This is called a ‘constructive dismissal’. For more about constructive and unfair dismissals click here.

Certain events do not amount to a dismissal. For example, termination of the contract of employment by ‘mutual consent’ or where the employee just resigns without grounds for claiming constructive dismissal.

Once the employment tribunal has established you can bring a claim it must go on to decide if your dismissal was fair or unfair. It will decide this using a two stage test.

• Stage 1

It is for the EMPLOYER to show what was the reason (or, if there was more than one, the principal reason) for the dismissal and that it was one of five potentially ‘fair reasons’ set out in Section 98 (2) of the Employment Rights Act 1996 (‘ERA 1996’).

• Stage 2

Next, the employment tribunal must then decide whether in all the circumstances the employer acted reasonably in treating the given reason (or reasons) as sufficient to justify the dismissal.

Stage 1 | The reason for the dismissal

Your employer can rely on one or more five potentially fair reasons for your dismissal. These are:

1. Your conduct,
2. Your capability by reference to your skill, aptitude, health or any other physical or mental quality,
3. Your redundancy,
4. Your breach of a statutory restriction, ie where your continued employment would contravene a duty or restriction imposed by law;
5. ‘some other substantial reason’ of a kind such as to justify your dismissal (this is catch all category).

Stage 1 | Legal issues

The employment tribunal will look to your employer to show the reason for your dismissal and that the reason falls within one (or more) of the potentially fair reasons. In other words your employer has the ‘burden of proof’. The following principals apply to this stage 1 test:

• Your employer can rely on one or more of the potentially fair reasons for your dismissal.
• It is normally difficult for your employer to argue successfully that the reason for your dismissal was different to the reason given to you at the time of your dismissal.
• Your employer can only rely upon facts it knew at the time of your dismissal to establish the reason for your dismissal.
• The employment tribunal will investigate the real reason(s) for your dismissal relied upon by your employer.
• If your employer can’t establish the reason(s) relied upon for your dismissal was for a potentially fair reason your dismissal will be automatically unfair and there will be no need to deal with the Stage 2 test.

Stage 2 | Fairness in the circumstances

It is not enough for your employer to simply show the reason for your dismissal was a potentially fair reason. The employment tribunal must decide if, in the circumstances, the decision to dismiss you was fair taking into account the reason for your dismissal.

The employment tribunal has to apply the statutory test of fairness as set out Section 98 (4) of the Employment Rights Act 1996. This provides:

“the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) –

(a) depends on whether in the circumstances (including the size and administration resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and

(b) that question shall be determined in accordance with equity and the substantial merits of the case.”

Stage 2 | Legal issues

• This time nobody has the burden of proof. It is neutral.
• The tribunal must consider whether your employer acted reasonably or unreasonably in treating the reason for your dismissal as a sufficient reason to dismiss you.
• If the reason or part of the reason was not sufficient your dismissal will be unfair.
• The size and administrative resources of your employer’s business or organisation will be taken into account by the employment tribunal when deciding whether the decision to dismiss was fair or unfair.
• The law recognises that different employers may reasonably react in different ways to the same situation (including not dismissing!). The employment tribunal will ask whether your employer’s decision to dismiss fell within a ‘band of reasonable responses’ which a reasonable employer could adopt. If it considers other employers in the same situation would have dismissed your dismissal will be fair.
• The employment tribunal must not ask whether your employer did the right thing.
• An employment tribunal must not substitute its own decision for your employers.
• If your employer’s decision to dismiss you was inconsistent compared with how other employees were treated in the same or similar circumstances your dismissal may well be unfair (this is an example of a dismissal not being equitable).

In certain circumstances, a dismissal can be ‘automatically unfair’ regardless of the procedure followed by your employer. These include dismissals, for example, connected to the employee’s:

• pregnancy or childbirth;
• health and safety activities;
• whistle blowing (making a protected disclosure),
• exercising various time off rights,
• asserting a statutory right under the Employment Rights Act 1996; or
• redundancy where the employee was selected for redundancy because of one of the above reasons

If your claim for unfair dismissal is successful, the employment tribunal is most likely to award you financial compensation. This is made up of a ‘basic’ and a ‘compensatory’ award.

The basic award is straightforward. It is calculated in the same way as a statutory redundancy payment and is based on your age, length of service and pay.

The compensatory award compensates you for your net loss of pay from the date of your dismissal to the date of the tribunal hearing and potentially beyond if you are continuing to suffer financial loss.

In some cases the employment tribunal can order that you get your old or a similar job with your ex-employer (known as reinstatement and re-engagement). These orders are rare; in the vast majority of cases financial compensation is the only remedy.

If you have incurred Tribunal Fees, you are now entitled to have these repaid by the Tribunal Service, following the Supreme Court’s decision in July 2017 which held these to be unlawful and denied access to justice.