Unfair dismissal is probably the most important statutory right contained in the Employment Rights Act 1996. Although contracts of employment can be lawfully terminated quite easily at common law, provided the correct notice is given, the statutory position is a great deal more complicated. Unless an employer dismisses an employee “fairly” in accordance with the provisions set out in the Employment Rights Act 1996, the employee will be entitled to sue the employer for unfair dismissal. The current limit for compensation for a successful unfair dismissal claim is £74,200, with weekly wage limit claims increased to £450 per week. So getting dismissal wrong can be hugely expensive and life-threatening to your business.
The right to claim unfair dismissal only arises where an employee can establish that he or she has been dismissed. Determining this is not always straight-forward however, as under the Employment Rights Act 1996, three different situations are deemed to constitute dismissals for the purposes of bringing an unfair dismissal claim. These are:
- a straightforward dismissal – whenever an employer dismisses an employee
- a failure to renew a fixed term contract – when an employee is working under a fixed term contract which comes to an end and the employer fails to renew the contract. Under the Employment Rights Act 1996, the failure to renew a fixed term contract is deemed to be a “dismissal”
- a constructive dismissal – this occurs if the employer acts in such a way so as to “force” the employee into resigning because the employer has committed a serious breach of the employee’s contract making it intolerable for the employee to continue working
The reason for dismissal
The reason for a dismissal is very important. Under the Employment Rights Act 1996, there are only six fair reasons for dismissing an employee. These are:
- legal requirement
- retirement at the legal pension age or above (providing a particular procedure is followed)
- some other substantial reason of a kind so as to justify the dismissal of an employee holding the position which that employee held
Unless the employer can show that its reason for dismissing an employee falls within one of these categories, the dismissal will be unfair. If, however, the employer can show that the dismissal was for one of the above reasons, the employer must then satisfy the tribunal that the dismissal was fair procedurally and substantively in all the circumstances of the case.
Automatically unfair dismissal
If an employee is dismissed for any of the reasons listed below, the dismissal is deemed to be automatically unfair. This means that once the tribunal has established that the reason for the dismissal is one of these “automatically unfair” reasons, the employee wins the case. The tribunal does not go on to consider whether the dismissal was fair procedurally or substantively fair in all the circumstances as in other cases.
The main “automatic” reasons include:
- a reason relating to pregnancy, child-birth or maternity leave
- a reason relating to the assertion of the right to paternity leave, adoption leave or parental leave
- a reason relating to the assertion of the right to time off for dependents
- certain limited health and safety reasons
- a reason relating to the assertion of rights under the Working Time Regulations 1998
- because the employee is a trustee of an occupational pension scheme
- because the employee is an employee representative or a candidate to be such a representative
- a reason relating to the assertion of a statutory right, including asserting the right to a written statement of terms and conditions of employment, the right to an itemised pay statement, the right not to suffer unauthorised deductions, the right to a guarantee payment, the right to time off for public duties, the right to time off for ante-natal care and certain rights to trade union membership and to participate in trade union activities
- a reason relating to the assertion of rights under the National Minimum Wage Act 1998
- a reason relating to the assertion of rights under the Tax Credits Act 1999
- because the employer has made a protected disclosure under the Public Interest Act (whistle-blowing legislation)
You should note that the above list is not exhaustive.
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