With the rise of the compensatory limit from £12,000 to £50,000 for
dismissals on or after 25 October 1999, potential liability for unfair
dismissal has become a serious business issue for many employers. So it is
vital that all employers are familiar with the concept of what constitutes a
fair dismissal, and how to go about it.

To defend a claim of unfair dismissal, an employer will need to show two
things – that it had a fair reason for the dismissal, and that it adopted a
fair procedure and acted reasonably in treating the fair reason as a sufficient
reason for dismissing the employee.

There is, of course, a huge amount of case law on what these statutory
provisions mean in particular circumstances. However, it is worthwhile bearing
in mind the above two-stage defence is effectively required to resist each
unfair dismissal claim and it is for the employer to demonstrate on the balance
of probabilities that it has met these requirements.

Fair reasons

The fair reasons adopted in the statute are conduct, capability, redundancy,
contravening a statutory duty and "some other substantial reason of a kind
such as to justify the dismissal of an employee holding the position which the
employee held". This fifth, residual category – SOSR – will increasingly
become a battleground for more unfair dismissal cases as unfair dismissal litigation
increases due to the size of the potential awards.


All kinds of reasons have been used to justify a dismissal for SOSR. The
most typical scenarios include business restructurings not involving
redundancies, third party pressure to dismiss an employee and unacceptable
behaviour reflecting upon the employer. In each case, there is a duty on the
employer to show that dismissal was effectively the last resort, having
consulted thoroughly with all the relevant individuals, and having conducted a
reasonable investigation into the situation and all alternative solutions.

One obvious alternative solution will usually be redeployment within the
organisation – if it is possible, the dismissal may not be fair. Perhaps more
than any other four fair reasons, the SOSR category blurs the distinction
between the two stages of the defence above. Some tribunals have distinctly
signalled that if sufficient thought has not been given to alternative
solutions for the difficulty and/or an insufficient investigation and consultation
process has been undertaken, this might impact on the very substance of the
reason upon which the employer wishes to rely.


Always be aware that if you are faced with a situation requiring a dismissal
for practical or commercial reasons, it might be possible (sometimes as a last
resort!) to carry out the dismissal fairly using the SOSR process. At the very
least adopting this stance in the absence of any other can assist the employer
in negotiations over settlement, giving the employer at least some respectable
argument that the dismissal was not actually unfair, and at best it can avoid
liability altogether for the employer provided that all the elements for
relying on SOSR are made out.

By Russell Brimelow, Head of the employment group Boodle Hadfield

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