Dismiss an employee fairly

An employee who is dismissed can claim unfair dismissal in an employment tribunal. You defend the claim by showing the reason, or principal reason, for the dismissal and that it falls within a reason the law treats as potentially fair. The tribunal then decides whether you acted reasonably in treating that reason as sufficient, taking into account your size and administrative resources and the substantial merits of the case.

Have a fair reason

A reason is potentially fair if it relates to the employee's capability or qualifications, their conduct, redundancy, or a legal restriction on continuing to employ them (for example a driver who loses their licence). You can also rely on some other substantial reason that justifies dismissing an employee in that position.

Follow a fair procedure

A fair reason is not enough on its own. Follow the Acas Code of Practice on disciplinary and grievance procedures for conduct and performance cases, and make sure you:

• investigate before you decide anything, and gather the evidence
• tell the employee in writing what the problem is and what could happen, and invite them to a meeting
• let them be accompanied at the hearing by a colleague or trade union representative, which is a statutory right if they reasonably ask
• consider alternatives to dismissal, such as training, support or a warning, before you decide
• confirm the decision and reasons in writing, and offer a right of appeal that you hear fairly

Where the reason is long-term illness, treat dismissal as a last resort: support the employee, help them back to work and consider reasonable adjustments. Redundancy dismissals follow their own process.

If you fail unreasonably to follow the Code, a tribunal can increase any award by up to 25%. It can also reduce an award by up to 25% if the employee unreasonably failed to follow it.

Check the employee's service

Employment is continuous if no week breaks it. A week still counts if the employee was off sick for up to 26 weeks, if work temporarily ceased, or if by arrangement or custom they were regarded as continuing in your employment. If the employee's job transferred to you under TUPE, their service with the previous employer counts.

Short service does not make a dismissal safe. An employee who is dismissed for discriminatory reasons does not need any service to claim discrimination, and the reasons below need no service either.

Avoid the automatically unfair reasons

Some reasons make a dismissal unfair whatever your procedure and however long the employee has worked for you. Check this list before you dismiss anyone, especially someone inside the qualifying period, for whom it may be the only route to a claim.

Dismissal for refusing certain contract changes, or because you want to re-engage or replace the employee on them, is also due to become automatically unfair. The Government expects to bring this into force in March 2027.

Know what a claim could cost

If the tribunal finds the dismissal unfair, it can order reinstatement or re-engagement if the employee wants that and it is practicable. Otherwise it orders compensation, made up of a basic award and a compensatory award.

The compensatory award is what the tribunal considers just and equitable for the employee's loss as a result of the dismissal, including expenses and lost benefits. Where the effective date of termination is before 1 January 2027, it is capped at the lower of a set sum and 52 weeks' pay, except in health and safety, whistleblowing and some other cases where there is no cap. Section 25 of the Employment Rights Act 2025 removes the cap altogether for dismissals with an effective date on or after 1 January 2027.

How the basic award is worked out

For example, an employee aged 30 with 6 complete years' service on £500 a week (below the cap) receives 6 x 1 x £500 = £3,000. The age bands apply year by year, counting back from the dismissal.

The tribunal must reduce the basic award for the employee's conduct before the dismissal where it is just and equitable, if they unreasonably refused an offer to reinstate them, and by any redundancy payment already made. It reduces the compensatory award by the proportion the employee's own actions caused or contributed to the dismissal, and expects them to have taken reasonable steps to find new work.

Unfair dismissal claims must reach the tribunal within 6 months of the effective date of termination where that date is on or after 1 October 2026, or within 3 months before then. Before claiming, the employee must notify Acas, which offers early conciliation, and the time limit is paused while that runs.