Unfair dismissal fact sheet

A plain-English guide for both employers and employees on unfair dismissal. It outlines key rules, common risks and typical steps so you can understand the issues before deciding what to do next.

Unfair dismissal is when an employee with qualifying service is dismissed for a reason that is not one of the five potentially fair reasons, and/or where the employer’s procedure and decision were not reasonable. Most claims must start ACAS early conciliation and be lodged within three months less one day.

Key takeaways

·      You need 2 years’ continuous service to claim ‘ordinary’ unfair dismissal, but some reasons are ‘automatically’ unfair, for example, if they relate to discrimination or whistleblowing and with these claims, employees have day‑one protection.

·      Employers must show a fair reason (conduct, capability, redundancy, statutory restriction, or some other substantial reason) and follow a fair process in line with the ACAS Code where applicable.

·      Most claims have a strict deadline: start ACAS early conciliation first, then submit the ET1 claim, typically within three months less one day from the end of employment.

·      Remedies include reinstatement, re‑engagement and compensation (a basic award plus a compensatory award). As at April 2025, the ‘week’s pay’ cap is £719 and the maximum compensatory award is £118,223 (or 52 weeks’ pay if lower). There is no cap for ‘automatic’ unfair dismissals.

·      Facts matter: outcomes vary with the reason for dismissal, the evidence, procedural fairness and yormitigation of loss.

Overview

Unfair dismissal is a statutory claim under the Employment Rights Act 1996. To succeed, the employment tribunal assesses two broad questions: did the employer have a potentially fair reason to dismiss, and did it act reasonably in the circumstances by following a fair process and reaching a reasonable decision? What is ‘reasonable’ depends on context, reason relied on and evidence.

Rights and obligations

Core statutes and codes

·      Employment Rights Act 1996: the right not to be unfairly dismissed (s.94), fair reasons and reasonableness test (s.98), qualifying service (s.108) and time limits (s.111).

·      Acas Code of Practice on Disciplinary and Grievance Procedures: benchmark for misconduct and some capability cases. An employment tribunal can adjust compensation by up to ±25% for unreasonable non‑compliance.

·      Annual ‘increase of limits’ orders: set the cap on a week’s pay and maximum compensatory award (reviewed each April).

Who is covered and the qualifying period

The claim is available to ‘employees’ (not workers or the self‑employed). Ordinary unfair dismissal normally requires two years’ continuous service (technically one year and 51 weeks). Day‑one protection applies to ‘automatic’ unfair reasons, where Equality Act discrimination claims can run alongside unfair dismissal without a qualifying period.

Fair reasons for dismissal

·      Conduct (including gross misconduct) where disciplinary procedures should be followed.

·      Capability (performance or ill‑health) where poor performance or capability procedures should be followed.

·      Redundancy.

·      Statutory restriction / illegality (continuing employment would break the law).

·      Some other substantial reason (SOSR), for example a breakdown of trust and confidence where dismissal is a reasonable response.

Procedure and reasonableness

Tribunals expect a fair investigation, clear allegations/explanation, time to respond, a hearing with the right to be accompanied, a reasonable decision and an impartial appeal. In misconduct cases, employers should form a genuine belief based on reasonable grounds after a fair investigation, and decide within the band of reasonable responses.

Deadlines and early conciliation

Most claims must begin with ACAS early conciliation. Time limits are tight: the usual limit is three months less one day from the effective date of termination. The ‘clock’ pauses during ACAS early conciliation, but only certain periods count, and the rules are strict, so get advice quickly.

Remedies and compensation (high‑level)

If successful, the employment tribunal can order reinstatement or re‑engagement (uncommon) and/or compensation. Compensation has two parts: a basic award (based on age/service/week’s pay formula, subject to the statutory weekly cap – the same calculation as statutory redundancy pay, and which is not paid if statutory redundancy has already been paid) and a compensatory award for financial loss, subject to the statutory maximum or one year’s gross pay if lower (or with no cap if the dismissal is ‘automatically’ unfair). Uplifts or reductions can apply (for example, a failure to follow the ACAS Code, if you are deemed to have contributed to your dismissal through your conduct, or a ‘Polkey’ reduction).

For employers

Legal duties and risks

You must identify a potentially fair reason, follow a fair process, and keep records. Risks include employment tribunal awards, management time, reputational damage and legal fees.  Failure to follow the ACAS Code in misconduct/capability/grievance cases can increase compensation by up to 25%.

Process you must follow (summary)

1.      Investigate concerns promptly and objectively; gather evidence and statements including from the employee concerned.

2.      Set out allegations and evidence in writing; give the employee reasonable time to respond.

3.      Hold a hearing chaired by someone impartial; allow the employee the right to be accompanied.

4.      Decide on a proportionate outcome within the band of reasonable responses; confirm the outcome in writing.

5.      Offer an appeal handled by someone not previously involved and ideally more senior to the decision maker.

Common pitfalls for employers

·      Skipping investigation or not sharing key evidence with the employee.

·      Pre‑judging outcomes or using inconsistent sanctions.

·      Letting time limits drift, causing procedural unfairness.

·      Dismissals within two years without checking for day‑one/automatic unfair dismissal risks (discrimination/whistleblowing).

·      Not considering alternatives (warnings, adjustments, redeployment) where appropriate.

For employees

Do I qualify?

Check your employment status, length of service, the stated reason for dismissal, and whether any day‑one protections apply (for example, health and safety activities, whistleblowing, discriminations (pregnancy/maternity/disability)). Note the effective date of termination for time‑limit purposes.

What to do next

1.      Request your dismissal letter, the evidence, meeting notes and appeal decision; keep payslips and benefits details. Ask for written reasons for the dismissal.

2.      Appeal internally and keep records. An appeal can fix procedural defects and may affect remedies.

3.      Start ACAS early conciliation before the deadline; diary the limitation date.

4.      Seek legal advice on prospects, remedy, and whether a settlement agreement is sensible or possible.

5.      Mitigate loss by job‑hunting and documenting all applications and efforts.

How long it takes

ACAS early conciliation typically takes up to six weeks. Once complete you have limited time to issue your claim in the employment tribunal. Employment tribunal timetables vary by region and complexity, but can take up to two years to conclude. Deadlines are strict, so act quickly. Many cases settle, especially after disclosure or witness statements.

Typical outcomes

·      No claim (for example, fair dismissals with good process).

·      Settlement (confidential, tax treatment of the payments vary).

·      Tribunal win with basic and compensatory awards, subject to statutory caps for ordinary unfair dismissal; or a reduction, for example, for your contributory conduct or ‘Polkey’ reasons.

Examples

Performance: An employer dismisses for poor performance after only one informal meeting and no targets or review period. Even if capability was the reason, lack of warnings, support and time to improve may make the dismissal unfair.

Misconduct: An employee is dismissed for alleged theft without being shown key CCTV footage, and witnesses are not interviewed. The investigation is inadequate, so even a potentially fair reason could be unfairly handled resulting in a finding of unfair dismissal.

FAQs

What is the difference between unfair dismissal and wrongful dismissal?

Wrongful dismissal is a breach of contract claim for notice pay . Unfair dismissal is a statutory claim about the fairness of the reason and process of dismissal.

Can I claim with less than two years’ service?

Yes in some limited cases, for example, if the reason is ‘automatically unfair’ (such as whistleblowing, for certain health and safety reasons or if the dismissal is discriminatory under the Equality Act 2010). Get advice urgently because deadlines are short.

What is the effective date of termination (EDT)?

The EDT is usually when your employment actually ends. For summary dismissal it is immediate; if dismissed with notice, it is when the notice period expires. The EDT drives the time limit for bringing a claim of unfair dismissal.

Can I claim constructive unfair dismissal if I resigned?

Possibly. You must show a fundamental breach by the employer that caused you to resign without undue delay. This is fact‑sensitive and risky; take advice first.

What awards can a tribunal make?

Reinstatement or re‑engagement (rare) or a monetary award made up of a basic award and a compensatory award; subject to statutory caps for ordinary unfair dismissal. Adjustments can apply (for example, failure to follow the ACAS Code can see an uplift of up to 25%, or reductions for contributory fault or ‘Polkey’).

Do I have to pay fees to bring a tribunal claim?

There are no tribunal issue fees at present, but each side generally bears their own legal costs (although costs can be awarded, it is rare). Check any insurance for cover of your legal fees.

When to get advice and next steps

1.      Note the EDT and diarise the limitation date (three months less one day in most cases).

2.      Start ACAS early conciliation as soon as possible.

3.      Gather key documents and evidence; keep a timeline.

4.      Speak to a specialist employment Solicitor to assess prospects and settlement options.

Speak to our team about unfair dismissal.

0800 915 7777 or hello@kilgannonlaw.co.uk

This page provides general information only, based on UK employment law as at the date of publication. It is not legal advice and must not be relied on as such. Outcomes depend on your circumstances. Reading this page or contacting us does not create a solicitor‑client relationship. Please do not include confidential information in your first message.