Dismissal is one of the most serious decisions an employer can make, carrying significant consequences for both the employee and the organisation. With evolving employment law, changing workplace expectations, and upcoming legislative reforms, understanding what constitutes fair dismissal has never been more critical.
This comprehensive guide outlines the five legally recognised reasons for fair dismissal under UK law and explores how recent and upcoming changes will impact employers' approaches to terminating employment.
In today's employment landscape, fairness extends far beyond legal compliance, it's fundamental to maintaining trust, reputation, and workplace culture. Employees are better informed of their rights, employment tribunals are increasingly rigorous in their assessments, and the reputational risks of unfair dismissal have grown substantially.
The consequences of getting it wrong can be severe:
For any dismissal to be considered "fair" under UK employment law, two essential criteria must be satisfied:
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These are the five reasons for dismissal that are deemed legally 'fair':
In this case, an employee is being dismissed due to a reason related to their conduct. It should be clearly stated what constitutes misconduct within policy documentation and company guidelines; common examples of misconduct including bullying, harassment, poor attendance, insubordination, and unexplained absence. Gross misconduct is more serious in nature and includes acts that are very serious or have very serious effects on the business, such as fraud, violence, gross negligence, or serious insubordination.
A single act of gross misconduct can result in a fair dismissal without previous warning and without giving the employee any notice/payment in lieu. However, a dismissal for misconduct (rather than gross misconduct) will normally require a series of warnings before dismissal and the employee will be entitled to receive full notice/payment in lieu.
It is also worth noting that it may be potentially fair to dismiss an employee for conduct outside of the workplace, if there is evidence that the misconduct has impacted the employee’s work or the employer’s business in some way (for example, damaging the employer's reputation). The rise in the use of social media has significantly contributed to an increase in these types of dismissals.
Learn more: Social media screening: should you screen candidates and monitor staff?
An employee can be fairly dismissed for a reason related to their capability or performance. Capability is classed as anything related to an employee's skill, aptitude, health, or any other physical/mental quality. Of course, there are more positive ways to address issues of poor work performance or capability before taking a formal capability route.
Dismissals for these reasons are potentially fair, as they relate to the employee's capability to do the job that they were employed to do. However, employers should be aware that in cases of dismissal for ill-health, if the illness amounts to a disability, the dismissal may amount to unlawful disability discrimination, even if it is legally ‘fair’.
If an employer is seeking to dismiss on capability (performance) grounds they will be expected to follow a fair procedure first, which is likely to include putting the employee on a formal performance improvement plan, setting them some achievable objectives, reviewing their progress regularly, providing extra training if required, and giving them a series of warnings to improve before taking any decision to dismiss.
In ill-health cases, an employer would be expected to refer the employee to occupational health, consult with the employee and their GP about their health, and consider workplace adjustments or alternative roles before contemplating dismissal.
Learn more: The Bradford Factor and disability: absence procedure flexibility
Redundancy can be another fair reason why employers may need to dismiss an employee, for example due to a business closure, a workplace closure, or less requirement for employees to carry out a particular kind of work. The selection process for redundancy needs to be fair and clearly signposted from the beginning (including a consultation process, and consideration of any alternative work), otherwise an employee can still file for unfair dismissal.
In some circumstances, a dismissal on the grounds of a genuine redundancy will be automatically unfair, for instance if the employee was selected because they are pregnant, so it's important to be careful.
If it becomes illegal or a statutory breach for an employee to continue working within their role, this is a fair reason for dismissal. If this is the case, a formal dismissal procedure must still be followed. Examples of dismissals that could fall within this category include the following:
In reality, there are more fair reasons for a dismissal, depending on context of the situation. In this case, some other substantial reason (SOSR) that justifies the dismissal may come into play. According to an article from Bevan Brittan, an SOSR often involves a breakdown of trust or confidence between employers and the employee. An example of a SOSR dismissal might be that a client of the employer is insisting that the employee is dismissed, otherwise they will take their business elsewhere.
The Employment Rights Bill and other reforms will bring new requirements, such as day-one unfair dismissal protection, fire and rehire restrictions, NDA limitations, and enhanced harassment protections. Employers should review policies and contracts to ensure compliance.
As well as having a fair reason for dismissal, the dismissal process must also be conducted fairly and reasonably for all employees. It’s good practice to try to solve any issues informally before engaging in a formal disciplinary process. If dismissal is the ultimate outcome, then there are ways to ensure a fair process. According to the Acas code of practice on disciplinary and grievance procedures, employers should do the following during the disciplinary process to ensure it is fair:
It’s advisable to follow this code of practice, as an employment tribunal are likely to take this code into account when looking at whether or not the employer acted reasonably when dismissing the employee.
Are you working out whether dismissal is the correct choice? We recommend following official Acas guidelines, company policies, and expert advice when it comes to disciplinary actions and dismissal, as it is very important to ensure compliance for the success of the business.
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