If an employee is dismissed in a manner that suggests unfair conduct has occurred, that employee may be entitled to compensation. Such unfair dismissal can involve a worker being released from their contract for unfair and/or discriminatory reasons and the denial of legal requirements, such as a denial of redundancy payment or not issuing full payment of the wage an employee should continue to be paid until their contractual notice period elapses.

How to claim compensation for unfair dismissal

Fighting against unfair dismissal is a right that exists for all workers once they have undertaken one year of continuous employment with an employer. To ensure fair practice is maintained, an employer must abide by two key areas of law:

  • The dismissal must be made on fair grounds in which there is clear evidence of employee wrongdoing;

  • The dismissal must be made in regards to either an issue of redundancy or underperformance at work.

On some occasions the motivation for dismissing an employee can automatically be seen as unfair. The circumstances most common to this instance involves legislation surrounding issues of whistleblowing and maternity leave as they have no minimum employment requirement, meaning that compensation can be unlimited.

Redundancy dismissal

In a scenario involving redundancy there are certain procedures that an employer needs to follow. This includes ensuring the following legal concerns are considered and acted upon:

  • Was the employee given the opportunity of alternative employment?

  • Was the process of choosing an employee for redundancy done fairly and objectively?

  • Was proper warning of and consulting about the redundancy provided to the employee?

In addition to these questions there are other circumstances involving employee wrongdoing that employers should consider when responding to a claim:

  • Was the dismissal a justified response to the employee’s behaviour?

  • Was the issue reasonably assessed before the dismissal decision was made?

  • Where an employee was dismissed for poor performance, did they receive sufficient warning over concerns at their ability?

  • Were they given a chance to improve their performance?

In a situation that involves both misconduct and a bad performance, it may also be necessary to follow the law set out by the the ACAS Code of Practice on Discipline and Grievance Procedures (www.acas.org.uk).

However, it should be noted that the legislation of The ACAS Code of Practice on Discipline and Grievance Procedures holds no bearing over redundancy scenarios.

Compensation for unfair dismissal

Here is a brief overview of what to expect from the compensation that will be issued in response to a successful case of unfair dismissal.

Basic award

A basic award grants an employee the right to receive up to £430 per week (depending on weekly salary) x 0.5, 1 or 1.5 (depending on employee’s age). However, if a statutory redundancy payment has been provided to the employee the offer of a basic award need not be made.

Compensatory award

A compensatory award allows an employee to receive up to £72,300, depending on the financial losses they’ve amassed. This exact sum received will be determined through a consideration of the amount of time an employee has been unemployed, as well as the efforts the employee made to find new employment.

Should an employment tribunal find that a dismissal was rendered unfair on legal grounds to the extent that a fair procedure could not have influenced the outcome, this can result in reduced compensation or none being issued at all.

Wrongful dismissal

In a situation where an employer intends to dismiss an employee, the employer must be able to show that the employee has either completed the notice period detailed in their contract (subject to a statutory minimum of one week for every year worked), or instead issue them with the relevant payment due.

Wrongful dismissal occurs when an employer has not followed the notice procedure required for their dismissal, as stated in the employee’s contract. This agreement can only be altered if it is proven that the employee engaged in behaviour violating responsible conduct rules.

A lieu payment can be issued in a scenario where an employer demands that an employee leave immediately, although the conditions of the employee’s contract must allow for this to happen. The amount paid should also reflect the notice period of the employee’s contract.

If an employee feels they have been unfairly dismissed, they are still expected to make a genuine effort to find another job, even if legal action against their former employer is ongoing.

The final sum rewarded is usually the equivalent of what the employee would have received (net pay and benefits) had they not been unfairly dismissed. The earnings provided during what should have been the appropriate notice period given to the employee will be deducted from the total amount issued.

Tax will not get applied to cases involving wrongful dismissal as long as the compensation amount does not exceed £30,000. Any money the employee might make between the time of their dismissal and the tribunal ruling will be taken into account when determining the final sum of compensation.

Redundancy

Statutory redundancy pay is available to employees who have been employed continuously for a period of two years or more. This works out at £430 a week for each year of employment up to a total of 20 years, multiplied by 0.5, 1 or 1.5 and adjusted to the employee’s age.

There is also the possibility that redundancy provisions will need to be assessed in accordance with the rules of the employee’s contract. This will most often provide for payments that exceed the statutory amount.

To ensure fair dismissal, the redundancy must be the result of an employer discontinuing their business, or at least being no longer able to allow the business to function on the same premises that the employee is accustomed to.

In order for redundancy to be considered eligible, the need for the type of work the employee performs must be reduced or longer required. If an employee is offered alternative employment in a position that maintains the existing criteria of their former role, such as a job with similar salary, benefits, position and responsibility, the employee’s right to redundancy pay could be prevented should they refuse this offer of new role.

Should alternative employment be accepted, a four week trial of this new position is available to the employee, during which time they can deliberate whether they continue the new employment or change their mind and accept the redundancy offer.

Time limits

The time limits required of issuing unfair dismissal cases are often complex and dependent on individual circumstance. However, there are several time limits that are generally accepted as existing in response to a case of unfair dismissal. They are as follows:

  • An unfair dismissal or breach of contract that results in a wrongful dismissal claim should be filed three months less one day from when a worker’s employment ends. Should the claim exceed £25,000 it will instead be judged by the County Court or High Court rather than an Employment Tribunal. In a scenario like this the time limit is extended to six years from the date when the contract agreement was broken.

  • Complaints involving claims of discrimination must be issued within three months of the date that the discriminatory act occurred;

  • Statutory redundancy payment claims must be made within six months of when a worker’s employment was terminated.