Compensation for Unfair Dismissal - A Guide

In England and Wales, an employee will typically need two years of continuous service to accrue key employment rights, such as the right to not be unfairly dismissed. However, In certain circumstances, a dismissal may be “automatically unfair.” This means if you are dismissed for any of the following reasons you can still bring claims for unfair dismissal without having 2 years of continuous service. Which means you can claim compensation for unfair dismissal even if you have less than 2 years' service.

Grounds for automatic unfair dismissal are:

• Being Pregnant or on Maternity Leave: If you are dismissed from your job because you're pregnant or on maternity leave.
• Standing Up for Your Legal Rights: If you get dismissed for asking for something you legally deserve, like being paid at least the minimum wage.
• Health and Safety Issues: If you're fired for leaving a dangerous work situation or refusing to work in one.
• Whistleblowing: Losing your job for disclosing any illegal activities, or wrongdoing which is in the public interest or your genuinely believe it is illegal or the wrong doing is in the public interest
• Trade Union Membership and Activities: Dismissing an employee due to their membership in a trade union or participation in trade union activities (within reasonable bounds) is automatically unfair.
• Parental Leave: This includes being dismissed for taking paternity, adoption, or shared parental leave.
• Discrimination: If you're fired for one or more of the protected characteristics as outlined by the Equality Act 2010 such as ,  your age, race, gender, or sexuality, that's automatically unfair.
• Being Part-time or on a Fixed-term Contract: If you're sacked just because you're a part-time or fixed-term worker..
• Jury Service: You can't be fired for doing jury service.
• Forced Retirement: If you're made to retire and it's not for a really good reason, that's considered unfair.

In these cases, you don't need two years of continuous service to claim compensation for unfair dismissal. You can submit a claim to an Employment Tribunal for unfair dismissal subject to ACAS Early Conciliation. It's usually up to your employer to prove they fired you for a fair reason and they followed a fair procedure.

In UK employment law, the compensation for unfair dismissal can be broken down into two main parts:

1. Basic Award: This is a fixed sum calculated based on the employee's age, length of service, and weekly pay (up to a statutory limit). The formula is:

• 0.5 week's pay for each full year of service where the employee was under 22 years of age.
• 1 week's pay for each full year of service where the employee was between 22 and 41 years of age.
• 1.5 week's pay for each full year of service where the employee was 41 or older.
• There's a maximum limit on the weekly pay that can be considered for this calculation, and this limit is subject to change each year.

2. Compensatory Award: This is meant to compensate the employee for the actual financial losses resulting from the unfair dismissal. This could include loss of earnings, future loss of earnings, and the loss of benefits. The exact amount varies from case to case and is determined by the Employment Tribunal.

• The compensatory award is capped at an annual statutory limit or 52 week's pay (whichever is lower), but this cap does not apply if the dismissal was for whistleblowing or certain health and safety reasons.

Additionally, in some cases, an employee may be entitled to:

• Additional Awards: If an employer refuses to comply with an order to reinstate or re-engage the employee, the tribunal may order an additional award.
• Loss of Statutory Rights: Compensation for difficulty in finding new employment due to loss of statutory rights.
• Injury to Feelings Awards: In Discrimination cases.

It's important to note that the tribunal also considers the employee's conduct and whether they have mitigated their losses effectively. The awards are subject to change and can be affected by various factors, including caps set by the government, which are updated annually.

You can also use our unfair dismissal calculator to get a better idea of how much you can get.

In UK law, unfair dismissal is about being fired without a fair reason or a fair process, under employment law. Wrongful dismissal is a breach of contract, often due to not giving the correct statutory or contractual notice. Unfair dismissal can only be brought in the employment tribunal claims; wrongful dismissal can be brought in either the employment tribunals or civil courts.

"Unfair dismissal" and "wrongful dismissal" are two distinct concepts, each with its own legal basis and implications:

Unfair dismissal

Legal Basis: This is based on statutory rights set out in employment legislation.

Definition: Unfair dismissal occurs when an employer terminates an employee's contract without a fair reason or without following the correct procedure. Fair reasons for dismissal might include conduct, capability, redundancy,  statutory illegality (i.e. not having a drivers licence for a drivers job), or "some other substantial reason". However, even if the reason is fair, the dismissal can still be considered unfair if the employer doesn't follow a fair process.

Eligibility: Generally, employees must have been working for their employer for a minimum period (usually two years) to claim unfair dismissal. There are exceptions for certain automatically unfair reasons, like whistleblowing or maternity-related issues, where the length of service is not considered.

Tribunal Involvement: Claims for unfair dismissal are dealt with by an Employment Tribunal.

Compensation: If the tribunal finds the dismissal was unfair, compensation typically includes a basic award based on age, length of service, and pay, and a compensatory award for financial losses.

Wrongful dismissal

Legal Basis: This is based on breach of contract.

Definition: Wrongful dismissal occurs when an employer breaches the terms of the employee's contract in the dismissal process. The most common breach is not giving the correct notice period as stated in the contract or required by law.

Eligibility: There's no minimum length of service required to claim wrongful dismissal. It can be claimed by any employee whose contract has been breached in the dismissal process.

Tribunal or Court Involvement: Claims can be made in an Employment Tribunal or a civil court, depending on the amount of compensation for unfair dismissal claimed.

Compensation: Compensation for unfair dismissal is usually limited to the pay and benefits the employee would have received during the notice period they should have been given.

In UK law, unfair dismissal is when an employer wrongly fires an employee, either without a fair reason or by not following proper procedure. Constructive dismissal occurs when an employee resigns because their employer's actions (like breaching their contract) make it impossible to continue working.

The difference between unfair dismissal and constructive dismissal lies in the circumstances leading to the end of employment:

Unfair Dismissal: This occurs when an employer terminates an employee's contract without a fair reason or without following the correct procedure. It's about how the employer acts to end the employment.

Constructive Dismissal: This happens when an employee resigns due to the employer's conduct. The employee must feel that the employer's behaviour or actions have made continuing to work impossible, like a serious breach of contract. It's about the employee ending the contract because of the employer's actions.