Unfair Dismissal and Constructive Dismissal

For a dismissal to be fair, an employer usually needs both a fair reason and a fair procedure.

The recognised reasons include:

• Conduct: such as misconduct or gross misconduct
• Capability: including performance, qualifications or health
• Redundancy: where the role is no longer needed
• Statutory illegality: where continuing the employment would break the law
• Some other substantial reason (SOSR): such as a serious breakdown in working relationships or a business reorganisation

Unfair dismissal claims often turn on the detail. A redundancy may not have been genuine, a disciplinary process may have been rushed, or a performance issue may not have been handled fairly.

Not every dismissal involves the employer formally ending the employment. In some cases, the employee resigns because the employer’s conduct has become impossible to accept: that is known as constructive dismissal.

These claims can arise where there has been a serious breach of contract, such as non-payment of wages, bullying, harassment, a major demotion, or significant changes to duties without agreement. Constructive dismissal claims can be harder to bring, which is why resigning without advice can carry real risk.

These terms are often used together, but they are not the same:

• Unfair dismissal is a statutory claim about whether the dismissal was fair in law.
• Constructive dismissal arises where the employee resigns because of a serious breach by the employer.
• Wrongful dismissal usually concerns notice pay or another contractual breach, rather than the overall fairness of the dismissal.

In most ordinary unfair dismissal claims, employees usually need two years’ continuous service. There are important exceptions, however, and some dismissals are treated as automatically unfair, including those linked to pregnancy or maternity, whistleblowing, trade union activities, health and safety concerns, or certain statutory rights.

A dismissal may also give rise to a discrimination claim, which does not depend on two years’ service. That is why it is important not to assume you have no claim simply because your employment was short. Much depends on the reason for the dismissal and the way it was handled.

Most unfair dismissal and constructive dismissal claims must usually be started within three months less one day of the end of employment. Internal appeals do not extend that deadline.

Before a tribunal claim can usually be issued, you will need to start ACAS Early Conciliation. If you have been dismissed, it is sensible to gather key documents straight away, including your contract, dismissal letter, appeal correspondence and any relevant emails or messages.

If a tribunal finds that a dismissal was unfair, it can award compensation and, in some cases, order reinstatement or re-engagement, although those outcomes are less common.

Compensation usually includes a basic award and, where appropriate, a compensatory award for financial loss. The amount awarded will depend not only on whether the dismissal was unfair, but also on the financial loss that can be shown.