What Makes a Dismissal Legally Fair or Unfair?

In UK employment law, a dismissal is not automatically lawful simply because an employer has a reason for ending employment. The law requires both a valid reason and a fair process. Whether a dismissal is legally fair or unfair is determined primarily under the Employment Rights Act 1996 and assessed by employment tribunals.

Tribunals examine two core elements: the reason for dismissal and the fairness of the employer's actions in reaching that decision. This article explains the legal test for fairness, the statutory framework, and how tribunals decide whether a dismissal is lawful in England and Wales.

The Legal Framework for Fair Dismissal

Under section 98 of the Employment Rights Act 1996, a dismissal is potentially fair if the employer can show:

1. A fair reason for dismissal, and
2. That the employer acted reasonably in treating that reason as sufficient to dismiss

Even where a fair reason exists, the dismissal may still be unfair if the procedure or decision-making process is unreasonable.

Tribunals apply an objective standard based on what a reasonable employer would have done in the same circumstances.

The Five Statutory Fair Reasons for Dismissal

A dismissal can only be legally fair if it falls into one of five recognised categories:

1. Capability or qualifications

This relates to an employee's ability to perform their role, including:

• Poor performance
• Lack of required skills or qualifications
• Ill health affecting work capability

Employers are usually expected to provide support, training, or warnings before dismissal.

2. Conduct

Conduct-based dismissals involve employee behaviour, including:

• Misconduct at work
• Serious breaches of company rules
• Gross misconduct such as theft or violence

A fair disciplinary process is essential before dismissal is considered reasonable.

3. Redundancy

Redundancy occurs where the employer's need for employees to carry out work of a particular kind has reduced or ceased.

A fair redundancy dismissal requires:

• A genuine redundancy situation
• Fair selection criteria
• Consultation with employees
• Consideration of alternative roles

4. Statutory restriction

Dismissal is fair if continuing employment would break the law, for example:

• Loss of a required professional licence
• Legal prohibition from performing the role

Employers must still consider alternative employment where possible.

5. Some other substantial reason (SOSR)

This is a broad category used when dismissal does not fit other reasons but is still justified.

Examples include:

• Business reorganisation
• Breakdown in working relationships
• Refusal to agree contractual changes
• Third-party pressure (e.g. client refusing to work with employee)

SOSR dismissals require strong justification and careful procedural fairness.

Procedural Fairness: How Dismissals Become Unfair

Even if an employer has a fair reason, a dismissal may still be legally unfair if the process is flawed.

Key procedural requirements include:

Proper investigation

Employers must investigate allegations or circumstances before making decisions.

Informing the employee

Employees must be told:

• The allegations or reasons for potential dismissal
• The evidence being considered

Disciplinary or consultation meeting

Employees must have an opportunity to respond before a decision is made.

Right to be accompanied

Employees have the right to be accompanied by a colleague or trade union representative at formal hearings.

Right of appeal

A fair dismissal process usually includes an internal appeal stage.

The “Range of Reasonable Responses” Test

Employment tribunals do not decide whether they would have dismissed the employee. Instead, they apply the “range of reasonable responses” test.

A dismissal is fair if:

• A reasonable employer could have dismissed in the same circumstances
• The decision falls within a reasonable range of possible responses

A dismissal is unfair if no reasonable employer would have acted in the same way.

When a Dismissal Is Likely to Be Unfair

A dismissal is commonly found to be unfair where:

• There is no valid reason for dismissal
• No investigation is carried out
• The employee is not informed of allegations
• No opportunity is given to respond
• The decision is predetermined
• Selection in redundancy is biased or subjective
• Warnings are not issued where appropriate
• The appeal process is ignored or inadequate

Procedural failures alone can render a dismissal unfair even if misconduct or redundancy exists.

Automatically Unfair Dismissals

Some dismissals are automatically unfair regardless of procedure or service length, including dismissals for:

• Whistleblowing
• Pregnancy or maternity-related reasons
• Trade union membership or activity
• Health and safety activities
• Asserting statutory employment rights
• Jury service

In these cases, fairness is determined by the reason alone.

Fair vs Unfair Dismissal in Practice

Example of a fair dismissal

An employee repeatedly fails performance targets despite warnings, training, and a formal improvement plan. A structured disciplinary process is followed before dismissal.

Example of an unfair dismissal

An employee is dismissed for alleged misconduct without investigation, without being told the allegations, and without a hearing.

The key difference is not only the reason but the fairness of the process used.

Compensation and Remedies for Unfair Dismissal

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

• Reinstatement (return to job)
• Re-engagement (alternative role)
• Financial compensation

Compensation may include:

• Basic award (based on age, pay, and length of service)
• Compensatory award (loss of earnings and benefits)

Reductions may apply if the employee contributed to dismissal or failed to mitigate losses.

Time Limits for Claims

Unfair dismissal claims must usually be brought within:

• 3 months less 1 day from the effective date of termination

ACAS Early Conciliation must be completed before filing a tribunal claim.

Key Takeaways

A dismissal is legally fair in UK employment law only if the employer has a valid statutory reason and follows a fair and reasonable process. Tribunals assess both substance and procedure using the “range of reasonable responses” test. A dismissal may still be unfair even where misconduct or redundancy exists if the employer fails to investigate, consult, or allow the employee to respond. Certain dismissals are automatically unfair regardless of process. Remedies can include compensation or reinstatement.