Unfair dismissal is a claim brought under section 94 of the Employment Rights Act 1996, where an employee argues that their employer dismissed them without a fair reason, without a fair process, or both. It is one of the most common claims made in the Employment Tribunal, and one of the most common legal risks facing any business that gets a dismissal wrong.
This guide is written for both sides of that relationship, because that is genuinely how we work. Unusually for a firm of our size, Gurve Legal advises both employees and employers on unfair dismissal, as part of our wider employment law services. If you are an employee wondering whether your dismissal was unfair, the sections below explain what the law requires and what to do next. If you are an employer facing a claim, or trying to avoid one, later sections set out what a fair process looks like and how claims are usually defended. Where a section is written primarily for one side, we have said so.
What Counts as Unfair Dismissal
Under the Employment Rights Act 1996, a dismissal is only fair if two things are true. First, the employer must show that the real reason for dismissal falls into one of five statutory categories: conduct, capability, redundancy, a legal restriction that makes continued employment illegal, or “some other substantial reason” capable of justifying dismissal. Second, the employer must have acted reasonably in treating that reason as sufficient to dismiss, which in practice means following a fair and proportionate process.
Tribunals judge that process against the ACAS Code of Practice on Disciplinary and Grievance Procedures. A dismissal can still be found unfair even where the underlying reason was genuine, if the employer skipped a proper investigation, failed to hold a fair hearing, or did not give the employee a genuine opportunity to respond before deciding. Many of the claims we see, on both sides, turn on process rather than on whether the reason itself was justified. Our disciplinary and grievance solicitors advise on exactly this stage, before a dismissal decision is made.
Who Can Bring a Claim: The Qualifying Period
Ordinary unfair dismissal claims currently require at least two years’ continuous service with the employer, calculated up to the effective date of termination. This is changing. Under the Employment Rights Act 2025, the government intends to reduce the qualifying period for ordinary unfair dismissal to six months, with commencement due on 1 January 2027 and applying to dismissals taking effect from that date onwards. The same date is expected to bring the removal of the statutory cap on compensatory awards, covered in more detail below.
Regardless of length of service, some dismissals are treated as automatically unfair and carry no qualifying period at all. These include dismissal connected to pregnancy or maternity, dismissal for whistleblowing (making a protected disclosure), dismissal for asserting a statutory right, dismissal related to trade union membership or activities, and dismissal for health and safety reasons. Where a dismissal involves a protected characteristic under the Equality Act 2010, such as age, sex, disability, or race, a claim can also be brought regardless of service length, though this falls under discrimination law rather than unfair dismissal itself. Our employment discrimination solicitors advise on this overlap, which comes up more often than people expect.
Qualifying Period and Compensation Cap: Current Position vs From 1 January 2027
| Current position | From 1 January 2027 | |
|---|---|---|
| Qualifying period for ordinary unfair dismissal | Two years’ continuous service | Six months’ continuous service |
| Cap on compensatory award | £123,543, or 52 weeks’ gross pay if lower (from 6 April 2026) | Cap removed for dismissals taking effect on or after this date |
| Maximum basic award | £22,530 (unaffected by these reforms) | £22,530 (unaffected by these reforms) |
| Time limit to bring a claim | 3 months less one day from the effective date of termination | Unchanged |
For Employees: Have You Been Unfairly Dismissed?
If you believe your dismissal was unfair, a few early steps make a significant difference to how strong your position is.
- Check your length of service and whether one of the exceptions to the qualifying period applies to your situation
- Note the exact date of dismissal, the effective date of termination, since every time limit runs from this date
- Gather the relevant documents: your contract, any dismissal or disciplinary letters, performance reviews, and correspondence with your employer
- Contact ACAS for Early Conciliation. In almost all cases, this is a mandatory step before a claim can be lodged with the Employment Tribunal, and it is worth understanding how non-court dispute resolution routes work before you start
- Be aware of the time limit: a claim must be lodged within three months less one day of the effective date of termination. ACAS Early Conciliation extends this deadline in specific circumstances, but do not rely on it as a buffer
Reinstatement or re-engagement, in other words getting your job back, is rarely ordered by tribunals in practice. Most successful claims result in a financial award instead, made up of a basic award and a compensatory award, which we explain below. Many disputes are resolved before a tribunal hearing through a negotiated exit, and our settlement agreement solicitors can advise on whether an offer properly reflects the value of your claim.
For Employers: Defending a Claim, or Avoiding One
The best defence to an unfair dismissal claim is a dismissal process that was fair from the outset. If a claim has already been brought, early and clear-eyed advice changes the outcome.
- Follow the ACAS Code of Practice at every stage: investigate properly, hold a genuine hearing, and give the employee a right of appeal
- Document your reasoning at the time, not after the event. Tribunals give far more weight to contemporaneous notes than to explanations written up later
- Treat ACAS Early Conciliation as a genuine opportunity to resolve the matter, not a formality to get through
- If a claim is lodged, respond to the ET1 with a properly prepared ET3 within the tribunal’s deadline
- Consider, at any stage, whether a settlement resolves the matter more efficiently than continued litigation
Getting this right at the point of dismissal is far cheaper than defending a claim after the event. We regularly advise employers before a dismissal takes place, precisely to reduce this risk, and where a dispute has already escalated, our guide to resolving business disputes sets out the broader options available to you.
Constructive and Wrongful Dismissal: Related but Different Claims
Unfair dismissal is not the only claim that can arise from the end of employment, and the distinctions matter for both sides.
Constructive dismissal occurs where an employee resigns in response to a fundamental breach of contract by the employer, such as a unilateral cut to pay, a significant change in role, or a sustained breach of the implied duty of trust and confidence. The employee is treated as having been dismissed, and the same unfair dismissal principles, including the qualifying period, then apply.
Wrongful dismissal is a different, contractual claim. It arises where an employer ends employment without giving proper notice, or pay in lieu of notice, as required by the contract. It carries no qualifying period at all, since it depends on breach of contract rather than the statutory unfair dismissal regime.
What Compensation Can Look Like
Where a tribunal finds a dismissal unfair, compensation is usually made up of two separate elements.
The basic award is calculated by a fixed formula, using the employee’s complete years of service (up to a maximum of 20), a multiplier based on their age during each of those years, and a capped week’s pay figure. From 6 April 2026, the week’s pay cap is £751, giving a maximum possible basic award of £22,530. This figure is unaffected by the 2027 reforms.
The compensatory award is intended to cover the employee’s actual financial loss flowing from the dismissal, including lost earnings and benefits. It is currently capped at the lower of 52 weeks’ gross pay or the statutory maximum, which is £123,543 from 6 April 2026 under section 124(1ZA)(a) of the Employment Rights Act 1996. From 1 January 2027, the Employment Rights Act 2025 removes this cap entirely for dismissals taking effect on or after that date, which exposes employers to potentially uncapped compensatory awards for the first time.
Both figures increase most years, but the removal of the compensatory award cap is the single biggest financial change in this area of law for some time. Employers should treat it as a genuine factor in dismissal risk from January 2027 onwards, not a technicality to note in passing.
Why We Advise Both Employees and Employers
Most firms specialise in one side of the employment relationship only, acting exclusively for employees or exclusively for employers. Gurve Legal does not. Unusually for a firm of our size, we advise both, and we think that matters. Our employment dispute resolution team puts it plainly: we act for both sides, which gives us a genuine understanding of how disputes look from each perspective.
When we advise an employer, we know exactly the arguments an employee’s solicitor is likely to raise. When we advise an employee, we understand how an employer’s legal team will assess the claim internally. That dual perspective, built through acting for both sides in practice rather than in theory, makes our advice sharper and our settlements more realistic, whichever side of the table you are on.
Unfair Dismissal: A Quick Reference for Each Side
| For employees | For employers | |
|---|---|---|
| Main risk | Missing the three-months-less-a-day time limit | An unfair process, even where the underlying reason was genuine |
| What usually resolves it | ACAS conciliation or a negotiated settlement | Early legal advice and a properly documented process |
| What changes from 1 January 2027 | Protection from six months’ service instead of two years | Compensatory awards become potentially uncapped |
Speak to Our Unfair Dismissal Solicitors
Whether you are an employee weighing up whether to bring a claim, or an employer trying to manage a dismissal properly or defend one that has already been brought, early advice narrows down your options and reduces cost. If this affects you or your business, get in touch with our unfair dismissal solicitors or call us on +44 207 566 1188. You can also email us at info@gurvelegal.com.
