What Is a Fair Reason for Dismissal?

Under UK employment law, an employer cannot lawfully dismiss an employee without a fair reason. Even where a valid reason exists, the dismissal must also be handled fairly through a reasonable process.

The framework is set out in the Employment Rights Act 1996, which identifies the specific categories of potentially fair reasons for dismissal. Employment tribunals assess whether the employer's reason falls within these categories and whether dismissal was reasonable in all the circumstances.

This article explains what counts as a fair reason for dismissal, how tribunals evaluate fairness, and how these rules apply in practice across employment disputes in England and Wales.

The Legal Framework for Fair Dismissal

A dismissal will generally be fair if:

• The employer has a valid statutory reason for dismissal, and
• The employer acted reasonably in treating that reason as sufficient to dismiss

Tribunals apply a “range of reasonable responses” test, meaning they assess whether a reasonable employer could have dismissed the employee in the same circumstances.

The five statutory fair reasons are set out in section 98 of the Employment Rights Act 1996.

The Five Potentially Fair Reasons for Dismissal

UK law recognises five categories of potentially fair dismissal reasons:

1. Capability or Qualifications

This applies where an employee is unable to perform their job to the required standard.

It includes:

• Poor performance or lack of competence
• Ill health affecting ability to work
• Lack of required qualifications or skills

Examples

• A worker consistently failing performance targets despite support
• A driver losing their driving licence, making them unable to perform the role
• Long-term sickness absence preventing attendance at work

Employers are expected to consider support measures such as training, reasonable adjustments, or medical assessments before dismissal.

2. Conduct

Conduct dismissals relate to employee behaviour.

This includes:

• Misconduct at work
• Breaches of workplace rules
• Serious misconduct (gross misconduct)

Examples

• Theft or fraud
• Persistent lateness or absence without justification
• Insubordination or refusal to follow reasonable instructions
• Harassment or bullying

Gross misconduct can justify summary dismissal (without notice), but only if a fair disciplinary process is followed.

3. Redundancy

Redundancy occurs where the employer's need for work of a particular kind has diminished or ceased.

Common redundancy situations include:

• Closure of a business or workplace
• Reduced demand for specific roles
• Organisational restructuring
• Automation or outsourcing of work

Employers must follow a fair selection process, consult affected employees, and consider alternative employment within the organisation.

4. Statutory Restriction

This applies where continuing employment would breach a legal requirement.

Examples include:

• A care worker barred from working with vulnerable adults
• A driver disqualified from holding a driving licence
• A professional losing mandatory regulatory accreditation

Dismissal must still be handled fairly, including consideration of alternative roles where possible.

5. Some Other Substantial Reason (SOSR)

This is a broad category used when dismissal does not fit neatly into the other four reasons.

It must still be a substantial and legitimate reason.

Common examples include:

• Business reorganisations not amounting to redundancy
• Refusal to accept contractual changes
• Breakdown in working relationships
• Third-party pressure (e.g., client refusing to work with an employee)
• Protection of business interests

Tribunals scrutinise SOSR dismissals carefully because of their flexible nature.

What Makes a Dismissal Fair or Unfair

Having a fair reason is not enough on its own. Employers must also act reasonably.

Tribunals consider:

• Whether a proper investigation was carried out
• Whether the employee was informed of concerns
• Whether a disciplinary or consultation process was followed
• Whether warnings were issued where appropriate
• Whether the decision to dismiss was proportionate
• Whether the ACAS Code of Practice was followed

Failure in procedure can render a dismissal unfair even if the reason is valid.

Capability Dismissals in Practice

Capability dismissals require particular care.

Employers are generally expected to:

• Identify performance issues clearly
• Provide training or support
• Give reasonable time to improve
• Issue warnings before dismissal (in most cases)
• Consider medical evidence where health is involved

Failure to support improvement can lead to a finding of unfair dismissal.

Conduct Dismissals and Disciplinary Procedures

For conduct-related dismissals, employers are expected to follow a fair disciplinary process, including:

• Investigation of allegations
• Notification of allegations to the employee
• A disciplinary hearing
• Right to be accompanied
• Right of appeal

Gross misconduct may justify immediate dismissal, but only where the process confirms the severity of the behaviour.

Redundancy and Fair Selection

Redundancy must be genuine and not used as a disguised dismissal for performance or personal reasons.

Fair redundancy processes typically include:

• Meaningful consultation
• Objective selection criteria
• Consideration of alternative roles
• Fair redundancy payments where applicable

Failure to follow a fair redundancy process is a common basis for unfair dismissal claims.

Statutory Restriction Dismissals

Where legal restrictions apply, employers must:

• Confirm the restriction is real and ongoing
• Consider redeployment where possible
• Follow a fair process before dismissal

Dismissal is only fair if no suitable alternative employment exists.

SOSR Dismissals and Tribunal Scrutiny

Some Other Substantial Reason dismissals require careful justification.

Tribunals will assess:

• Whether the reason is genuinely substantial
• Whether dismissal was necessary
• Whether alternatives were considered
• Whether a fair procedure was followed

SOSR cannot be used as a vague justification for dismissal without evidence.

Burden of Proof in Fair Dismissal Cases

In tribunal claims:

• The employer must show the reason for dismissal
• The tribunal then assesses whether that reason is fair
• The tribunal applies the “range of reasonable responses” test

This means the tribunal does not decide whether it would have dismissed the employee, but whether a reasonable employer could have done so.

Time Limits for Unfair Dismissal Claims

Key procedural rules include:

• Claims must generally be submitted within 3 months less 1 day of dismissal
• ACAS Early Conciliation is required before issuing a claim

Missing deadlines usually prevents a claim from proceeding.

Remedies for Unfair Dismissal

If a tribunal finds the dismissal unfair, it may order:

• Reinstatement to the same job
• Re-engagement in a similar role
• Compensation, including:
  • Basic award (similar to redundancy calculation)
  • Compensatory award for financial losses

Tribunals may reduce compensation if the employee contributed to their dismissal.

Key Takeaways

A fair reason for dismissal under UK employment law must fall into one of five categories: capability, conduct, redundancy, statutory restriction, or some other substantial reason. However, employers must also follow a fair and reasonable process before dismissal. Employment tribunals assess both the reason and the procedure, applying the “range of reasonable responses” test to determine fairness.