An employee who has completed two years’ service has the right not to be unfairly dismissed. There are however some exceptions to this general rule, where an employee will not require 2 years’ service to bring an unfair dismissal claim.
The dismissal of an employee will be unfair unless:
- The employer can show the reason (or principal reason) for dismissing the employee was one of the five potentially fair reasons: Conduct, Capability, Redundancy, breach of a statutory obligation and ‘some other substantial reason’; and
- The employer has acted reasonably in all circumstances (taking in to account your business’s size and administrative resources) in treating that reason as a sufficient reason to dismiss the employee.
If you believe that you have been dismissed unfairly, you should always lodge an appeal against the decision to dismiss you if your employer has given you the right to do so, even if you feel this is futile.
Providing you have the qualifying service (usually 2 years continuous service), you can bring a claim for unfair dismissal in an employment tribunal.
If your claim is successful, an Employment Tribunal has the power to order your employer to pay compensation to you, comprising of a basic award and compensatory award.
The basic award for unfair dismissal is calculated according to a formula based on your age, length of service and gross weekly wage. In certain circumstances, there is a minimum basic award that your employer may be required to pay. If you have received a statutory redundancy payment, you will not be entitled to a basic award.
Financial compensation is the principal remedy awarded in the Employment Tribunal. The compensatory award is calculated on the basis of your net loss of earnings together with any other sums/benefits you reasonably expected to receive had you remained in employment, e.g. bonus, commission, pension contributions. An Employment Tribunal will normally assess the value of the benefit with reference to what it would cost you to obtain an equivalent benefit elsewhere.
The compensatory award is subject to a statutory cap. The maximum compensatory award is now the lower of the current statutory cap or 52 weeks’ gross pay.
Contrary to popular belief, the compensatory award is not dependent on the unfairness of the dismissal. The overriding intention is to put you back in the position you would have been financially, had you not been unfairly dismissed. Accordingly, a higher paid employee who is out of work for longer is likely to be awarded a higher compensatory award than a lower paid employee who quickly finds another job, but who is dismissed in identical circumstances.
ACAS Code of practice
The ACAS code of practice on disciplinary and grievance procedures applies to disciplinary matters (including dismissals) concerned with misconduct or capability only. When deciding whether an employee has been unfairly dismissed for conduct or capability, an Employment Tribunal will consider whether the employer has followed a fair procedure. The compensation awarded to an employee can be increased by up to 25% if you unreasonably fail to follow the Code. Similarly, if you have failed to adhere to the procedure, for example, by appealing your employer’s decision to dismiss you, any compensation awarded to you may be reduced by up to 25%.
In certain cases, the compensatory award can be reduced to reflect the likelihood that, despite your employer’s failure to take certain procedural steps as part of a fair dismissal process, it would not have made a difference to the decision to dismiss you. The reduction may be expressed as a percentage reduction (up to 100% in some cases) or as a cap on loss.
Contributory fault (or contributory conduct)
A reduction in compensation for your contributory conduct can affect the basic award and/or the compensatory award. The reduction can be anything up to 100%.
You are required to mitigate your losses and explain and demonstrate to the tribunal what actions you have taken by way of mitigation. This includes your attempts to look for another job and applying for available state benefits. Your employer will not be ordered to pay compensation for your full losses if you have not taken steps to mitigate your loss.
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