Tribunal proceedings in relation to an unfair dismissal claim must be brought within 3 months of the ‘effective date of termination’ of employment.
Unfair Dismissal Cases
The prerequisites for bringing an unfair dismissal tribunal claim are that the employee must actually be an employee (as opposed to an independent self employed contractor) and have had at least 2 year’s continuous service as an actual employee with the employer . The fairness or otherwise of a dismissal is determined via a three stage process which is as follows:-
- Stage 1: An employee must prove that they were unfairly dismissed. If the employee resigned, then there is likely to be a dispute over whether there has been ‘constructive dismissal’ (See section on constructive dismissal).
- Stage 2: The burden is upon the employer to show that the dismissal was for a ‘fair reason’. There are only 6 acceptable fair reasons for dismissal in law which are:-
- Capability or qualifications, such as dismissal on the grounds of incompetence, lack of ability/aptitude, ill-health, etc
- Misconduct such as disobedience, theft, etc
- Redundancy (see section on redundancy)
- Statutory illegality: the employee could not continue to work without contravention of a statute (e.g. a delivery driver who loses their driving licence).
- ‘Some other substantive reason’: One reason classified as a fair reason for dismissal is where a client exerts pressure on an employer to dismiss the employee (e.g. say in circumstances where the employee had stolen from the client). Another which has been classified as fair is where an employee refuses to accept new contractual terms of employment. Whether these are valid fair reasons would turn upon the facts of the given case.
- Retirement: Generally, an employee can retire at a time of their choosing. An employer can only operate a compulsory retirement age if they can objectively justify it. Should the employer have a compulsory retirement age, then their dismissal procedures must be fair and reasonable. Employees should be given reasonable notice by their employer of the proposed retirement date and a meeting should be arrange to discuss the same. Those employees who object to retiring at that proposed date, should then have the option of making a formal request to their employer to work beyond it, and the employer should then follow a set procedure and consider the request. The employee should then have the right to appeal should the request be denied.
- Stage 3: Procedural fairness: fair implementation of the fair reason for dismissal. Employers are expected (but are not legally obliged) to follow the ACAS Code of Practice on Disciplinary Procedures (although the ACAS Code of Practice does not apply to non-renewal of fixed term contracts or redundancy dismissals) when dismissing an employee. Whilst there is no legal obligation to follow the ACAS Code of Practice, the potential penalties for a party in failing to do so can be severe, because where an employment tribunal finds that there has been an unreasonable failure to comply with a part of the Code, then it has the power to increase or reduce any award by up to 25%. Under the ACAS Code of Practice on Disciplinary Procedures, when bringing disciplinary action against an employee (including disciplinary action where dismissal is contemplated), an employer should follow the following procedure:-
- Pre-Disciplinary Investigation: Before undertaking any disciplinary proceedings, the employer should conduct an investigation to ascertain the full facts. This may necessitate a formal investigatory meeting with the employee. The investigation should preferably be carried out by a person different to the individual who would conduct any future disciplinary proceedings. Ideally, the employee should be permitted to be accompanied to any investigatory meeting by either a work colleague or Trade Union representative. Should suspension of the employee be required during the investigation, then the period of suspension should be kept to a minimum and it should be on full pay.
- Written Notification Of Intended Disciplinary Action: The employer should formally write to the employee setting out the circumstances which have led them to consider dismissal or disciplinary action and what the potential ramifications are. The letter should also invite the employee to a disciplinary meeting and the employee should be provided with sufficient time to prepare for it. A full copy of the evidence from the investigation should be provided to the employee (including copies of any witness statements) and the employee has the legal right to be accompanied to the meeting by a work colleague or Trade Union representative.
- Disciplinary Hearing: A hearing should be fair and objective. Hence, the employer should fully explain the case against the employee to them and discuss the evidence. Moreover, the employee should be given all the time they require to set out their defence and should be permitted to call witnesses (so long as they provide appropriate notice of their intention to do so prior to the meeting). The employee should also be formally notified of the outcome of the hearing in writing post meeting and be given the right and opportunity to appeal.
- Appeal Hearing: The employer should appoint a more senior manager to represent them at an appeal hearing and again the employee has the legal right to be accompanied at the appeal hearing by either a work colleague or Trade Union representative. The same principles that apply to a disciplinary hearing as set out above in terms of the manner in which it is conducted, also apply to the appeal hearing
Polkey Deductions In Unfair Dismissal Cases
In accordance with the case of Polkey v A. E. Dayton Services Ltd (1988), where the Tribunal deems the dismissal to have been unfair on procedural grounds, then it has the power to decrease or even eradicate the compensation award altogether, should it determine that a fair dismissal would have occurred anyway had the employer followed a fair procedure.
Automatically Unfair Dismissals
The following dismissals are automatically classified as being unfair (i.e. the normal criteria for determining whether a dismissal is unfair do not apply) with certain qualifications:-
- Seeking adoption leave
- Asserting a statutory right
- Areason connected with the transfer of a business
- Performing or proposing to perform any function in a role as an employee representative
- Exercising a right under the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002
- Making an application for flexible working arrangements
- Asserting rights in connection with a health and safety issue
- Taking part in protected industrial action, in connection with pregnancy, childbirth, or maternity leave
- Exercising a right under the National Minimum Wage Act 1998
- Exercising a right to parental leave or additional maternity leave
- Exercising a right under the part-time work regulations
- Exercising a right to paternity leave
- Performing or proposing to perform a function in connection with a role as trustee of a pension scheme
- Improper selection for redundancy
- Failing to disclose a spent conviction
- Shop or betting workers refusing to work on a Sunday where they have not previously agreed to do so (where they have agreed, they can revoke that agreement by giving 3 months notice),
- Claiming for a tax credit
- Exercising a right to have time off to care for dependants
- Exercising a right to have time off in relation to trade union or union learning activities
- Exercising a right under the Working Time Regulations 1998
- Exercising a right to have time off in relation to Works Councils activities
- Being called for and carrying out jury service
- Exercising the right to accompaniment re a disciplinary or grievance hearing (whether they are the person being accompanied or the companion)
- Exercising a right under the Information and Consultation of Employees Regulations 2004
With respect to many of the above, the dismissal will be automatically unfair even if the employee does not yet have 2 year’s continuous employment with the employer. However, it is outside the scope of this website to outline the precise rules on this point with respect to each individual case. For clarification on the point, therefore, please contact us either by telephoning us on the above number or by completing the questionnaire opposite.
Remedies And Compensation In Unfair Dismissal Cases
A tribunal has 3 possible remedies at its disposal in unfair dismissal cases: reinstatement, re-engagement (reinstatement but in a different role), and compensation. Compensation is the most common.
In unfair dismissal cases, there are two elements to any compensation award: the basic award and the compensatory award.
A basic award in unfair dismissal cases compensates employees for the loss of job security following a dismissal, and is calculated according to a formula based upon age, length of service and average gross weekly pay. The figure for average weekly pay is capped at £489.00 per week maximum and only the most recent 20 years will be taken into account in terms of length of service. The basic award is calculated in detail as follows:-
- Years of service below 22 years of age, the weekly pay is multiplied by 0.5
- Years of service between age 22 and 41, the weekly pay is multiplied by 1
- Years of service from age 41 onwards, the weekly pay is multiplied by 1.5
Accordingly, the maximum basic award is 20 years at £489.00 x 1.5 = £14,670.00.
The Basic Award may be reduced by the Tribunal in the following circumstances:-
- Employee unreasonably refused offer of reinstatement.
- Employee partially responsible for own dismissal.
- Misconduct by employee prior to dismissal, whether connected with the dismissal or not
- Redundancy payments paid in dismissals related to redundancy
The Minimum Basic Award That Applies In Certain Situations
Where an employee is dismissed for a reason connected with their role and they were an employee representative, an occupational pension trustee, a trade union member or representative, or a safety representative (or were in the process of becoming a safety representative), then the absolutely minimum basic award is £5,970.00, although this may be reduced for one of the permitted reasons outlined above.
Where the reductions in the basic award exceed its value, then the remaining deductions can be taken from the compensatory award.
The compensatory award in unfair dismissal cases compensates the employee for financial loss sustained as a result of the dismissal at a level which the tribunal determines is ‘just and equitable’. The award is subject to a cap which is revised on the 6th April each year. From the 6th April 2017, the maximum award is £80,541.00. Nevertheless, this figure is subject to an additional cap of a year’s pay, should a year's pay for the individual Claimant be lower than £80,541.00 in their case.
The compensatory award is calculated on a net basis.
The following elements can be claimed as part of the compensatory award:-
- Loss of earnings (net): This runs from the effective date of termination (i.e. the end of the notice period) until the date of the tribunal hearing. Welfare benefits received during this period will be deducted from the final amount. If the employee was dismissed without notice or pay-in-lieu, then these losses will be added to the award for loss of earnings. Furthermore, earnings received from any new job will not be deducted from that element as they are only taken into account from the point at which the notice period expires (i.e. deducted from the final amount less loss of earnings incurred during the notice period).
- Future loss of earnings: This is related to an assessment of how long the employee will be unemployed given their age, experience, and demand in the labour market for their skills. Should the employee have already acquired a new position, then there will be no award for future loss of earnings unless the new position pays less, in which case the award will be based upon an assessment of how long the employee is likely to be earning less.
- Loss of fringe benefits: health care, company car, free meals, accommodation, etc.
- The manner of the dismissal: Should the employee have been dismissed in a way that makes it more difficult to obtain alternative employment, then this would also be taken into account (e.g. in front of colleagues where news of the dismissal was disseminated throughout the industry within which the employee works). Nevertheless, the tribunal will make no award for ‘injury to feelings’ or any other type of non-economic loss.
- Loss of statutory employment protection rights: The tribunal will take into account the fact that the employee will have to work for 2 years before they reacquire unfair dismissal protection. The award for this element is usually in the region of £350.00 - £500.00. The tribunal will also award compensation for the loss of their statutory notice rights. This is normally assessed at half of the employee’s statutory entitlement (e.g. 4 weeks for 8 years service).
- Loss of pension rights: The guidelines in the booklet, Employment Tribunals – Compensation for Loss of Pension Rights published by The Stationary Office will usually be followed, although there is no obligation on Tribunals to do so.
- Expenses: The cost of finding new employment, for example.
- Adjustment For Unreasonable Failure to Comply With ACAS Code of Practice: Where the tribunal determines that either party has unreasonably failed to follow the ACAS Code of Practice, then it has the power to raise or reduce the compensation award by up to 25% accordingly.
- Grossing Up Award Where It Exceeds £30,000.00: The employee is liable to pay tax on any tribunal award in excess of £30,000.00. Accordingly, any award in excess of £30,000.00 should be grossed up (e.g. higher rate taxpayer with net losses of £36,000.00 = gross up to £40,000.00 as £4,000.00 will go to the Inland Revenue).
The tribunal can make the following reductions to the compensatory award in the following circumstances:-
- redundancy payments paid
- any payments made to the employee including ex-gratia payments
- welfare benefits paid
- employee partially responsible for own dismissal
- no attempt by employee to find new job or employee unreasonably refused appropriate new job
- dismissal was for a ‘fair reason’, but the procedure followed was unfair
- employee would have lost their job anyway at some future point (e.g. redundancy)
- employee received notice in writing that they could have appealed but did not do so. The award can be reduced by up to 2 weeks pay should this be the case. In contrast, should the employer prevent the employee from appealing, the award can be increased by up to 2 weeks pay.
The basic and compensatory awards when combined produce an overall maximum award of £95,211.00.
The Additional Award
Should the employer fail to comply with a tribunal order to reinstate or re-engage the employee, the tribunal can make an additional award in unfair dismissal cases of 26-52 weeks pay. This is capped at £489.00 per week (hence, the maximum for the additional award is £12,714.00 - £25,428.00), and is awarded on top of the basic and compensatory awards.
The Protective Award
Up to 90 days pay can be awarded to employees, where the employer has failed to consult properly during a redundancy consultation.
Award For Failure To Consult During A TUPE Transfer
Failure by an employer to consult during a TUPE transfer entitles each affected employee to an award of up to 13 weeks pay.
What To Do If You Have An Unfair Dismissal Claim
We are specialist unfair dismissal solicitors. Accordingly, should you require advice on an unfair dismissal case, then please do not hesitate to contact us. We can be contacted either by telephoning us on 0333 3010 700, or by completing the questionnaire on the right hand side of this page.
As a specialist employment law firm, you can rely upon us to provide you with quality advice on your unfair dismissal claim from a leading employment law solicitor within the profession.
Please note that we offer a free initial consultation.
Unfair Dismissal Solicitors: Settlement Agreements
Should you have been offered a Settlement Agreement (which used to be known as Compromise Agreements) which you require independent legal advice upon, then please call one of our employment law solicitors immediately on 0333 3010 700, or complete the questionnaire on the right hand side of this page. We will then arrange an appointment with you to go through the Settlement Agreement.
How To Contact Us
To contact The Employment Law Solicitors about an employment law problem, please either telephone us on 0333 3010 700 or complete the short questionnaire above. Simply click the 'Send Now' button to submit the questionnaire once you have completed it. Upon receipt, it will be assessed by a solicitor who will then contact you to discuss the matter. The solicitor appointed to contact you, will be a specialist in your type of employment law issue. The Employment Law Solicitors handle cases on behalf of clients throughout the country. Headquartered in Wilmslow (Cheshire), we also have offices in Manchester, Liverpool, Warrington (Cheshire), Chester (Cheshire), Birmingham, Leeds, Sheffield, Exeter, London, Nottingham, Bristol, Stoke-on-Trent, and Preston.
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