What is unfair dismissal?

When you terminate an employee's contract without a fair reason, it's an unfair dismissal. You may also hear it called an unlawful dismissal... 

Unfair redundancy is another term you might come across—but the official employment law terminology is unfair dismissal. 

An employment tribunal (some businesses mistakenly call this an unfair dismissal tribunal) will find a dismissal unfair if you dismissed an employee for one of the following: 

• A reason that was automatically unfair. 

• Without following a fair dismissal procedure. 

However, this employment law topic is much more complex than a brief explanation can summarise. And it’s important for your business to have a good understanding of how to approach unfair dismissal in the workplace. 

If you don’t, you may end up having to face a costly employment tribunal process. 

So, we’re here to take you through the ins and outs of unfair dismissal. Then you’ll know what you should avoid doing as an employer. 

Unfair dismissal law—essential information 

UK law explains that this issue is about dismissing a member of staff without a fair reason. 

But, of course, you must remember there are fair reasons to let employees go. Five of them, in fact—these are: 

1. If there’s an act of misconduct, which can result in instant dismissal. 

2. A lack of capability for the role. 

3. Due to redundancy reasons. 

4. If a statutory duty arises. For example, if you have a delivery driver who receives a permanent ban. 

5. The other fair reason is some other substantial reason (SOSR) 

There are no grounds for unfair dismissal—you must have one of these fair reasons to remove an employee from your business. The above examples are all legitimate. 

Changes within the Employment Rights Act 2025

Currently, according to the Employment Rights Act 1996, employees need two years of service to bring a claim for unfair dismissal.  

However, now that the Employment Rights Bill has received Royal Assent and is officially the Employment Rights Act 2025, the length of service required will be reduced to 6 months in January 2027.

More on this can be found in our free download and stay up to date with with employment law updates, our HR experts regulalry add updates for business owners.

What is automatic unfair dismissal?

The dismissal becomes automatically unfair if you violate one or more of your employee’s statutory employment rights. 

When an unfair dismissal in the UK isn’t automatically unfair, your recruit needs two years’ service with you (minus one week). 

They must also be an employee, rather than a worker or self-employed. 

Firing someone for any of the following are automatically unfair reasons for dismissal. So, these are unfair dismissal examples: 

• Membership with a trade union

• Employee exposed wrongdoing in your workplace (whistleblowing)

• Maternity/paternity leave

• Adoption leave

• Shared parental leave

• They refuse to give up a right under the Working Time Regulations 1998—such as the right to a rest break

• They tried to enforce their right to receive the national minimum wage. 

There are plenty of other reasons, too. These are just the most common. If your recruit has a spent criminal conviction they haven’t declared, you can dismiss them until they reach two years’ service. 

After that, you guessed it—automatically unfair. 

Getting rid of someone because he or she had to do jury service is automatically unfair, too. 

Unfair dismissal compensation for employees 

If an employment tribunal decides that you dismissed someone for a reason that was automatically unfair, you’ll owe your former employee compensation. This is also the case for unfair dismissals. 

Maximum compensation in these cases is usually one-year’s pay, up to a limit of £118,223 (whichever is lower), with a basic award added on. 

If you fired somebody for a health & safety reason, or because they blew the whistle, the compensation could be a lot higher. 

Again—this is one of those reasons where your staff don’t need to have worked for you for two years. 

Unfair dismissal during probation period 

To dismiss someone during a probationary period quickly, have a term in your contract that allows you to do this. This is to avoid a breach of contract claim for which there is no service requirement.  

This is because, from time to time, a new hire won’t work out and you’ll need to dismiss someone while they’re on probation. 

An employee must have worked for you for at least two years, as we mentioned earlier, to make an unfair dismissal claim. Note, this is subject to change in the next few years.  

So, for an employee with you for a certain period, with unfair dismissal under 2 years it’s 103 weeks of service for them to make a claim for unfair dismissal. 

But of course, your staff has entitlements to all contractual rights from day one. 

As we also covered earlier, discriminatory or most automatically unfair dismissals don’t need a qualifying period. 

It’s your job as the employer to make sure you go through your disciplinary and dismissal procedures. For conduct and performance purposes. 

Unfair dismissal rights for your employees 

To protect your business, and to ensure staff receive fair treatment, you should always make sure you: 

• Provide staff with copies of all procedures and policies. 

• Make notes of all actions when an event could lead to an employment tribunal. 

• Keep all evidence relating to an issue would be better 

Do these things and you can prove you made your member of staff aware of all company rules. 

But before you dismiss anyone, you should look to take steps to try and solve the issue. For example—with a disciplinary procedure. The steps for this include: 

• Have an informal talk with the employee in question—after this, you may notice an improvement in their conduct. 

• You should first hold an investigation, which can include an investigation meeting to establish the facts (although that isn’t essential to do so, it is always recommended). If following an investigation you feel the allegation has scope, you can then move to a disciplinary procedure. 

• At this point, you would have a disciplinary hearing and allow them to bring a union representative, or colleague, if they wish. 

• Make a decision based off the investigation. 

• Allow for the employee to appeal the decision. 

The eventual sanction, such as a verbal, written or final warning, should come straight after careful deliberation following the disciplinary hearing.  

If you issue the employee a warning at this stage, and their conduct doesn’t improve, you’ll have to implement a separate disciplinary procedure to establish if a more serious sanction is necessary. 

The final step is you can dismiss the employee after they fail to improve. This protects you against a claim for unfair dismissal. 

However, you should be aware the process doesn’t always follow the same pattern of warnings and then a dismissal. 

If the employee’s conduct is very serious, you can provide a final warning at the first instance—or even dismiss them. 

But it’s important to treat your employees consistently throughout the process. 

Disciplinary appeal hearing for unfair dismissal 

You should make sure your appeals procedure for employees to challenge decisions is clear. 

You might find the appeal process lets you move forward without an employment tribunal. 

If not, your employee has three months, minus one day, to begin the process of an unfair dismissal claim from the rejection of their appeal. 

Losing an employment tribunal hearing can result in paying out compensation—which may be as high as £118,223 or 5 weeks pay, which is lower plus the basic award.  

There’s a basic award added as well. Currently, this is £21,570. 

As such, it’s essential you take steps to provide a genuine reason and follow a reasonable process for letting a member of staff go. 

Maintain records of their behaviour if you have concerns so that you can back up your claims at a later date. 

Other types of dismissal 

Finally, there are other types of dismissal your business must be aware of. 

The first is constructive dismissal, where an employee feels forced to resign because of their employer's actions or inaction.  

An example here is if the business provides a staff member with an impossible workload, so they fail to meet KPIs or leave due to stress. 

Another type is wrongful dismissal—this involves an employer breaching an employee’s contract of employment. 

Need further support?  

At BrightHR we have a team of employment law experts who are available 24/7 to provide HR and legal advice regarding a wide range of topics. If you are unsure about the current or upcoming law changes, do not hesitate to get in touch with us.