Unfair dismissal claims

Under what conditions can an employee bring a claim for unfair dismissal?

Employees have the right not to be unfairly dismissed by their employers under provisions contained in the Employment Rights Act 1996, Part X.

The employee must have been continuously employed for at least one year (except in specified circumstances as set out below) and must bring the claim within three months of dismissal.

The specified circumstances where a minimum of one year’s service is not needed to bring a claim include:

  • dismissal for trade union activities, membership or non-membership
  • dismissal for any of a number of reasons connected with leave for family circumstances, including maternity, paternity and adoption leave and time off for antenatal care
  • when the Employment Relations Act 2004, section 40 comes into force on 6 April 2005, dismissal because an employee has been summoned or had time off work for jury service.

Employees are not usually entitled to bring a claim for unfair dismissal if they have reached the ‘normal retiring age’ for an individual holding the position or, if there is no normal retiring age, 65, although this exclusion does not apply if the reason for the dismissal was any of the circumstances listed above.

What are the likely ramifications if an employee succeeds in a claim for unfair dismissal?

When an employment tribunal makes a finding of unfair dismissal, it may make an order for reinstatement, re-engagement or compensation. Employees rarely ask for reinstatement or re-engagement and, even when they do, tribunals do not often make such an order. According to the Employment Tribunals Service Annual Report and Accounts 2003-4, reinstatement or re-engagement was ordered in only 11 cases in the year ending March 2004. In most cases a successful applicant will be awarded compensation.

What is the unfair dismissal basic award?

Where a tribunal awards compensation for unfair dismissal it will consist of a basic award and a compensatory award. The basic award is calculated according to age, length of service and normal weekly pay in the same way as a statutory redundancy payment. For these purposes, where the effective date of termination is on or after 1 February 2005, the maximum amount of a week’s pay is 280.

A minimum basic award of 3,800 is payable where the employee was dismissed on grounds of trade union membership or activities, for carrying out legitimate health and safety activities as a health and safety representative, for carrying out functions as an occupational pension scheme trustee, or for carrying out functions as an elected employee representative.

Where a dismissal is found to be automatically unfair on the basis that the employer has not followed the relevant statutory dismissal and disciplinary procedure, the employee will normally receive a minimum of four weeks’ pay as compensation.

What is the compensatory award?

The compensatory award is an amount that the tribunal considers just and equitable in all the circumstances, based on the losses sustained by the applicant as a result of the dismissal that can be attributed to action taken by the employer. It can include loss of wages from the date of termination until the date of the hearing, loss of benefits in kind and loss of future earnings.

The maximum compensatory award is 56,800 where the effective date of termination is on or after 1 February 2005. No maximum applies, however, where a person is regarded as unfairly dismissed for one of a number of reasons related to health and safety or for making a protected disclosure – whistleblowing.

What are the amounts of compensation generally awarded?

The Employment Tribunals Service publishes maximum, median and average awards in its annual report and accounts.

In 2003-4 the average compensation awarded was £7,275, while the median award was £3,375. Compensation of £50,000 or more was awarded in 46 cases. The maximum award was £113,117.

Can compensation for unfair dismissal include an element for injury to feelings?

No. The House of Lords clarified, in Dunnachie v Kingston-Upon-Hull City Council [2004] IRLR 727 HL, that the Employment Rights Act 1996, section 123, which deals with the compensatory award in unfair dismissal cases, permits only the financial loss of the employee to be compensated.

This is in contrast to the position in discrimination claims, where the legislation expressly states that damages may include amounts in respect of compensation for injury to feelings.

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