With effect from 26 June 2020, the Corporate Insolvency and Governance Act 2020 (CIGA) affects the ability of Contractors to terminate on grounds that the Employer has entered a formal...
The right not to be unfairly dismissed is a purely statutory right arising under the Employment Rights Act 1996 (ERA), section 94.
- Time limits
- Who can claim?
- Qualifying period
- Definition of dismissal
- Effective date of termination
- Reason for dismissal
- Procedural fairness
- Automatically unfair reasons
- Interim relief
Claims for unfair dismissal may only be brought in an employment tribunal and must generally be presented within three months of the effective date of termination of employment.
Who can claim?
The right is generally subject to a number of qualifying conditions and exceptions, including that the claimant must be an employee who has been dismissed.
There are specific provisions setting out which categories of employee and employment situations have the right not to be unfairly dismissed.
The right not to be unfairly dismissed generally only arises when the employee has been continuously employed for a period of at least two years. However, there are many exceptions to this requirement, mostly relating to situations in which the employee is automatically unfairly dismissed for one of several impermissible reasons.
Definition of dismissal
To succeed in a claim of unfair dismissal, the claimant must establish that he was dismissed by the employer. The circumstances in which an employee is treated as having been dismissed for the purposes of an unfair dismissal claim are limited to:
- Termination of the employee’s contract by the employer
- Notice to terminate the contract given by the employer, followed by counter-notice given by the employee that expires before the end of the original notice period
- Termination of a limited-term contract on the happening of the limiting event
- Resignation by the employee, where he is entitled to do so by reason of the employer’s conduct (constructive dismissal)
Dismissal does not include:
- Termination by mutual consent
- Genuine voluntary resignation
- Termination by frustration
Effective date of termination
Where a qualifying period of employment is required to bring an unfair dismissal claim, the claimant’s period of continuous employment is calculated up to an including the “effective date of termination”.
The effective date of termination is the date when:
- Notice expires where the contract is terminated (by employer or employee) on notice
- Termination takes effect where the contract is terminated without notice (i.e. on summary dismissal)
- Termination takes effect on the happening of a limiting event with limited-term contracts
Reason for dismissal
Once an employee has established that he has the right to be unfairly dismissed and that he has been dismissed, a tribunal will generally look to the employer to show that the reason or principal reason for dismissal was one of a list of potentially fair reasons.
Potentially fair reasons for dismissal include:
- Retirement (repealed, subject to transitional provisions, with effect from 6 April 2011)
- Breach of statute
- Some of substantial reason
If the employer does establish a potentially fair reason for dismissal, the tribunal will consider whether the dismissal was fair or unfair having regard to all the circumstances of the case, including the size and administrative resources of the respondent employer. In doing so, the employment tribunal should not substitute its own view for that of the employer. Instead, it should decide whether the employer’s actions fell within the range of reasonable responses of a reasonable employer.
Dismissal will be automatically unfair if the employee is able to show that the reason or principal reason for dismissal was one of a list of special reasons, including pregnancy, reasons relating to health and safety and whistle blowing. Most of those reasons will also render the dismissal unfair where the reason for dismissal is redundancy, but the employee was selected for redundancy one the basis of an impermissible reason.
Even where an employer has established that the reason for dismissal is potentially fair, the dismissal may be found to have been unfair where the employer has failed to follow a fair procedure. Employers must follow the Acas Code of Practice on Disciplinary and Grievance procedures.
Automatically unfair reasons
The Employment Rights Act 1996 and certain other legislation specify various reasons for dismissal that makes it automatically unfair. It is for the employee to allege that his decision was for one of those reasons. Where the employee does allege this, the question of who has the burden of proving the real reason for dismissal will depend upon whether the employee has sufficient length of service to claim ordinary (non-automatic) unfair dismissal.
Where the tribunal does conclude that the reason or principal reason for the dismissal was one of those specified as making a dismissal automatically unfair:
- There will be no need for further consideration of the issue of fairness
- The statutory limit on compensation for unfair dismissal does not apply
Automatically unfair reasons for dismissal are many and varied and include dismissal for one of a number of specified family-related reasons, such as giving birth or taking maternity leave, whistle blowing and trade union membership or activities.
Where an employment tribunal has found that an employee has been unfairly dismissed, it will consider what remedy should be ordered.
The available orders are:
- An order for reinstatement – ordering the employer to give the employee his old job back and to make good any loss of earnings from date of dismissal to date of reinstatement
- An order for re-engagement – ordering the employer to give the employee a job comparable to his old job and to make good any loss of earnings from date of dismissal to date of re-engagement
- An order for compensation
Orders for reinstatement or re-engagement are rarely asked for and are even more rarely made.
An order for compensation usually includes:
- A ‘basic award’: an award to reflect the fact that the employee has been unfairly dismissed. It is calculated in much the same way as a statutory redundancy payment and depends on the gross weekly pay of the employee, his length of continuous employment before dismissal and his age. In some types of cases, the basis award is set at a specified level or at a particular minimum level. The basic award may also be subject to a number of deductions
- A ‘compensatory award’: to compensate the employee for financial losses suffered as a result of the unfair dismissal. It may be subject to a number of deductions and/or increases
In certain circumstances, an interim remedy is available to an employee claiming unfair dismissal before the final hearing of his claim and before any finding of unfair dismissal has been made. Interim relief is only available where an employee has brought a claim for unfair dismissal and alleges that his dismissal was for one of a number of automatically unfair reasons which are specified.
There are strict time limits for any application for interim relief. An application will only succeed if the tribunal is satisfied that the likely outcome of the final hearing will be that the reason for dismissal was as alleged by the employee.
If successful, interim relief may be in the form of an order that the employee be reinstated or re-engaged, or that his contract of employment should continue. In each case, this is granted pending the outcome of his unfair dismissal claim.
It is open to the parties to an unfair dismissal claim, as with any other claim, to settle privately or through the assistance of Acas. The parties may choose to settle their difference before the claim is commenced or even before dismissal takes effect. However, to be effective in compromising a claim or potential claim for unfair dismissal, the settlement must comply with one of a number of statutory provisions. Generally, the settlement must either be achieved through Acas conciliation or be set out in a valid compromise agreement.
Please contact us to discuss how we can help you or your business with any of your employment law needs.