Dismissal
Key points
- In addition to termination by the employer, there will be a dismissal where the employee resigns in response to a fundamental breach by the employer (constructive dismissal).
- Dismissing in breach of contract will give rise to a claim for wrongful dismissal. Typically, wrongful dismissal claims concern a dismissal with inadequate notice.
- Employees with more than one month of service are entitled to statutory minimum notice.
- A payment in lieu of notice (PILON) clause allows an employer to dismiss without notice and make a payment in lieu without being in breach of contract.
- Unfair dismissal claims can be brought by employees who have sufficient qualifying service.
- A dismissal will be unfair if is not for a fair reason and/or the employer has acted unreasonably in treating the reason as sufficient.
- The five fair reasons for dismissal are capability, conduct, redundancy, statutory illegality and some other substantial reason.
- No qualifying service is required to bring an unfair dismissal claim where the dismissal is for one of the automatically unfair reasons.
- If an employee is dismissed without following the Acas Code of Conduct: Disciplinary and Grievance Procedures, there is an increased risk of the dismissal being found to be unfair and any compensation awarded can be increased by up to 25 per cent.
- Compensation for unfair dismissal can take the form of a basic award (based on age, pay and years of service) and a compensatory award for losses.
- Tribunals have the power to order reinstatement or re-engagement following a successful claim for unfair dismissal.
Recent developments
New limits, applicable from 6 April 2022, are now in place:
Payments | From 6 April 2020 | From 6 April 2021 | From 6 April 2022 |
Limit on guarantee payments | £30 | £30 | £31 |
Limit on a week's pay for calculating redundancy and unfair dismissal basic award | £538 | £544 | £571 |
Maximum basic award for unfair dismissal and statutory redundancy payment (30 weeks' pay subject to the limit on week's pay) | £16,140 | £16,320 | £17,130 |
Minimum basic award for dismissal on trade union, health and safety, occupational pension scheme trustee, employee representative and on working time grounds only | £6,562 | £6,634 | £6,959 |
Maximum award for unlawful inducement relating to trade union membership or activities, or collective bargaining | £4,294 | £4,341 | £4,554 |
Maximum compensatory award for unfair dismissal | A year's pay subject to max cap of £88,519 | A year's pay subject to max cap of £89,493 | A year's pay subject to max cap of £93,878 |
Minimum compensation for employees excluded/expelled from trade union | £10,022 | £10,132 | £10,628 |
Contract claims (if a claim for breach of contract (eg wrongful dismissal) is brought in an employment tribunal, compensation is capped at £25,000. If the claim is for more than £25,000, it can be made in the county court or high court | £25,000 | £25,000 | £25,000 |
The use of fire-rehire practices has been widely criticised as a means of renegotiating contractual terms and conditions through force.
A new statutory code will be developed by the Department of Business, Energy and Industrial Strategy (BEIS) on dismissal and re-engagement. The Code will include practical steps that employers should follow in these situations.
Consultation will take place later in 2022 on the draft Code later, with a view to implementing this as soon as parliamentary time allows.
Vento bands | Claims presented on or after 6 April 2020 | Claims presented on or after 6 April 2021 | Claims presented on or after 6 April 2022 |
Lower band | £900 to £9,000 | £900 to £9,100 | £990 to £9,900 |
Middle band | £9,000 to £27,000 | £9,100 to £27,400 | £9,900 to £29,600 |
Upper band | £27,000 to £45,000 | £27,400 to £45,600 | £29,600 to £49,300 |
Only in exceptional cases will compensation awards for injury to feelings exceed the upper band.
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