Being dismissed from your job is usually a distressing experience, but it may entitle you to compensation including pay through your notice period, compensation if your dismissal was unfair, redundancy payment, or compensation for discrimination.

Unfair dismissal

If you have been employed for two years or more you have a right not to be unfairly dismissed. To dismiss fairly, an employer must:

  1. Have a fair reason for dismissal; and
  2. Follow proper procedures to ensure the dismissal is fair in all the circumstances.

Potentially fair reasons for dismissal include: lack of capability, misconduct, redundancy, breach of statutory provisions, compulsory retirement and “some other substantial reason”.

Even if it is established that the dismissal falls within one of these potentially fair reasons, the process of the dismissal must also be fair. An assessment of the process must be made, typically covering issues such as:

  1. Whether a reasonable investigation was conducted. (Misconduct Dismissals);
  2. Whether you were warned about your performance and given an opportunity to improve. (Poor Performance Dismissals); or
  3. Whether there was an objective and fair selection process, whether you were consulted, and whether alternative employment was considered. (Redundancies).

Compensation for unfair dismissal comprises a basic award and a compensatory award.

The basic award is based on your age, length of service and weekly wage, subject to a statutory cap which changes each year of employment. The compensatory award is based on your losses subject to the statutory cap or your annual income, whichever is lower.

The compensatory award will take account of the time when you were unemployed following dismissal and the efforts you have made to find another job.

A dismissal can be automatically unfair if is linked to discrimination, whistleblowing, trade union membership or asserting a statutory right. In these cases there is no minimum service requirement of 2 years or a limit on the level of compensation.

ACAS code

The ACAS Code of Practice on Discipline and Grievance Procedures (which can be downloaded from the ACAS website) sets the minimum standard with which employers should comply. Failure to comply may be at an employer’s peril. While it is not legally binding, it is the benchmark standard by which Employment Tribunals frequently determine the reasonableness of employers’ conduct.

If your employer unreasonably fails to comply with the ACAS Code, an Employment Tribunal can increase your compensation by up to 25% if you succeed in a claim for unfair dismissal.

It is important to get advice at an early stage if you find yourself subject to a disciplinary procedure, because any award of compensation you ultimately receive from a tribunal if you are dismissed can be reduced if you, as the employee, fail to comply with the ACAS Code.

Wrongful dismissal

Wrongful dismissal is different from unfair dismissal. It arises where you have been dismissed, and your employer has not fulfilled its contractual obligations, usually not paying your notice pay. You may have a claim for wrongful dismissal as well as other claims such as unfair dismissal.

Unless you are guilty of gross misconduct, your employer must either allow you to work out your notice, or make a payment to cover that notice period. Even if you have been wrongfully dismissed (i.e. dismissed in breach of your contractual entitlements), you are under a duty to do your best to find alternative employment (to ‘mitigate’ your loss). Your employer may reserve the right to make a payment in lieu of notice under your contract of employment. If this is the case you receive a payment which reflects the length of your notice period. You are not expected to work your notice period. This payment is taxable in the usual way.

Gross misconduct

“Gross Misconduct” is not a precise term and some employers too readily abuse it. Often Employment Tribunals find that so called “gross misconduct” is nothing of the sort and the term has been used by an employer in an attempt to justify “summary dismissal”. Summary dismissal is instant dismissal of an employee without allowing the employee to work his or her notice period or paying them in lieu of notice.

Genuine gross misconduct is serious misconduct and entitles an employer to dismiss the employee immediately without notice for a first offence rather than going through the process of giving warnings before finally dismissing.

The following are obvious examples of “gross misconduct”:

  • Theft;
  • Sexual harassment;
  • Physical violence;
  • Serious bullying or harassment;
  • Deliberate damage to property;
  • Serious infringement of health and safety rules;
  • Serious negligence which causes or may cause loss; or
  • Falsification of records.

Constructive dismissal

This is an unfair dismissal claim that arises when an employee resigns from his or her job because of a serious breakdown in their relationship with the employer. Sometimes an employer does not want to risk dismissing an employee and decides to put pressure on the employee to leave of his or her own accord. Ideally, you should seek legal advice before leaving your job. The following have been held to amount to constructive dismissal:

  • Imposing a salary reduction;
  • Materially reducing benefits;
  • Reducing an employee’s status;
  • Rudely or unjustly criticising an employee in front of others;
  • Allowing a bullying or hostile environment to persist, or failure to investigate allegations of harassment or discrimination;
  • Allowing non-trivial bullying and harassment of an employee by another employee;
  • A senior executive acting in a high handed and aggressive way towards employees;
  • Accusing an employee without justification of inability to do his job;
  • Suspending an employee (even pursuant to a contractual right) without reasonable and proper cause;
  • Maintaining suspension of an employee even though the employer has already concluded that one of two charges against the employee is unfounded;
  • Giving an unjust and unmerited warning or other disciplinary sanction out of all proportion to the offence;
  • Giving a bad reference without checking that it is fair and reasonable;
  • Requiring an employee to relocate without giving reasonable notice;
  • Imposing a disciplinary suspension without pay, unless the employer has the power to do so under the contract of employment;
  • Laying off employees without pay, in the absence of a contractual provision allowing this;
  • Requiring an employee to work in unsafe conditions;
  • Causing psychiatric damage by the volume and character of work;
  • Failing to pay full wages during an employee’s sickness absence when their employment contract did not permit this
  • Failing adequately to investigate a grievance;
  • Not making reasonable adjustments to a disabled employee’s job which would allow him or her to continue working
    Making public remarks about an employee which are highly damaging to his reputation; or
  • Discriminating against an employee by unreasonably refusing a woman’s request to work flexibly following the birth of her child.

The above are examples from real Employment Tribunal cases of what may constitute constructive dismissal but the facts of each case vary and you should seek legal advice before assuming that your employer is acting unlawfully. Many other situations may also amount to serious breaches of contract entitling an employee to resign and claim constructive dismissal.

Discriminatory dismissal

You may also be able to bring a claim in an Employment Tribunal if your dismissal amounted to less favourable treatment on the grounds of one or more protected characteristics. The same applies if the dismissal was related to a disability, or where the employer had failed to make reasonable adjustments to accommodate your disability.

Limitation periods

A limitation period is the period within which a claim must be brought. If you don’t take action against an employer within the prescribed period it is very unlikely a tribunal will accept a late claim.

You have three months less one day from the date of termination to bring a claim in an Employment Tribunal for unfair dismissal and for breach of contract as a result of a wrongful dismissal. You will also need to follow the Stat Code of Practice on Discipline and Grievance Procedures. If your claim is successful but the tribunal considers that you have failed to comply with the Code, your compensation could be reduced by up to 25%.

The Employment Tribunal only has jurisdiction to consider a breach of contract claim worth up to £25,000. Where a breach of contract claim exceeds that amount, a claim would need to be brought in the County or High Court, for which there is a six year limitation period from the date of the breach of contract. This is also a fail safe if you have not issued a claim for wrongful dismissal within the three month limitation period applicable to Employment Tribunals: you can bring a claim in the courts instead where the six year limitation period applies.

You also have three months from the date of any discriminatory act (which may be the dismissal) to bring a discrimination claim in an Employment Tribunal. You have six months from the date of termination within which to bring any claim for a statutory redundancy payment. Please note that time limits can be complicated and that you should take prompt legal advice if you think you may have a potential claim.

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