Guide
Unfair dismissal: employer guide
How unfair dismissal protection works for employers: the 6-month qualifying period, fire and rehire restrictions, removal of the compensation cap, and extended tribunal time limits. Includes compliance checklist and practical guidance.
Unfair dismissal law gives employees significant protections against being dismissed without a fair reason and fair procedure. This guide explains how the rules work, the qualifying period, compensation, and what employers must do to comply.
Compliance note: Employees gain unfair dismissal protection after 6 months of service, and there is no cap on compensatory awards. Review your dismissal procedures to ensure they are fair and well-documented.
Qualifying period
The unfair dismissal qualifying period is 6 months:
- Qualifying period
- 6 months of continuous employment
- Fire and rehire
- Automatically unfair dismissal
- Tribunal time limit
- 6 months from dismissal to bring a claim
- Compensatory award
- No cap - awards based on actual losses
How the qualifying period works
The key features of unfair dismissal protection:
What this means in practice
- Protection from 6 months: Employees can claim unfair dismissal after 6 months of continuous service
- Day-one for some: Redundancy claims remain a day-one right
- Automatically unfair: No qualifying period for automatically unfair dismissals (unchanged)
- Initial period: A new 'initial period of employment' concept applies during the first 6 months
Impact on probation
Employers should align probation periods with the qualifying period:
- You can operate a 6-month probation period
- Dismissal during probation must still follow fair procedures
- After 6 months, employees have full unfair dismissal protection
- Consider front-loading performance management to assess suitability quickly
Compensation
There is no cap on the compensatory award for unfair dismissal:
- Compensatory award
- No cap - awards based on actual losses
- Already uncapped
- Health and safety dismissals, whistleblowing dismissals
- Basic award
- Remains calculated using the statutory week's pay cap
Increased risk: Without a cap, unfair dismissal claims can be very expensive, especially for high earners. Ensure dismissal procedures are fair and well-documented.
Fire and rehire restrictions
Extended tribunal time limits
Employees have 6 months to bring a claim:
- Time limit
- 6 months from dismissal
- Early conciliation
- Extended to up to 12 weeks
- Total potential timeframe
- Up to 9-10 months from incident to claim
- Record retention
- Maintain dismissal records for at least 12 months
Employer compliance checklist
Dismissal procedures
- Review any planned restructuring or terms changes - fire and rehire is effectively banned
- Familiarise with ACAS Code of Practice on Dismissal and Re-engagement
- Update document retention policies for the 6-month tribunal window
- Review harassment policies for third-party harassment liability
Performance management
- Review dismissal and performance management procedures
- Update probation policies - cannot rely on a 2-year qualifying period
- Train managers on fair dismissal from 6 months
- Consider impact of unlimited compensatory awards
- Review employment contracts and handbooks