Employers often offer settlement agreements to settle a potential unfair dismissal claim. They offer a sum of money so that they do not have to follow a dismissal procedure. To assist in your understanding about unfair dismissal, we will outline the basics, and the factors that will be relevant to being offered terms of a settlement agreement. This article is a guide to unfair dismissal, setting out the basics for you, the employee who has been dismissed or feels they may be dismissed. If you are interested in learning more about constructive dismissal, which is where you are still placed in your job but feel that you’re being forced to leave, see our article on that here.
Two years’ service needed
You need to be employed for at least two years to bring a claim for unfair dismissal. Before an employee has two years’ service there is no requirement for your employer to follow an official procedure. Put simply, providing they give appropriate notice an employer can dismiss the employee. They don’t have to mention your performance, a company restructure or any reason at all, but often they do give something along these lines as reasoning for dismissing you.
What if you get fired after say 23 months, and they do not give you your one month’s notice? Well, unfortunately all you can do is bring a claim for your one months’ notice. It is however often possible to obtain some kind of settlement in these situations with some tough negotiating, regardless of the legalities of the situation.
If you are dismissed after 103 weeks service without notice, in circumstances which should not warrant summary termination for gross misconduct, the Tribunal will add the one week’s statutory notice, which would give the employee the two year’s service required. The last day of employment would then be the date when proper statutory notice would have ended.
Unfair Dismissal Claims not requiring 2 years’ service
In most cases two year’s continuous employment is needed to be able to bring an unfair dismissal claim, however if the dismissal is one of the following “automatically unfair” reasons below there is no qualifying period:
- Dismissal due to discrimination (see below)
- Health and Safety dismissal Pregnancy related dismissal (only if the employer was aware the employee was pregnant)
- Dismissal related to asserting a statutory right
- Dismissal relating to Trade union membership or non-membership
- Dismissal in connection with the national minimum wage
- Dismissal connected with refusing to exceed the 48-hour working week
- Dismissal for whistleblowing
In certain cases, the two year qualifying period does not mean that you do not have a cause of action against your employer. Generally, if the company has a professional HR department they will expect to follow certain processes. Importantly, a claim under the Equality Act does not have a qualifying period. For example if the dismissal is related to discrimination on grounds of sex, race, age, disability, sexual orientation or religious belief, there is no 2 year requirement and no limit on the amount of damages the Tribunal can award for unfair dismissal.
Top 3 TIPS
- You need to be employed for at least two years in order to bring a claim for unfair dismissal.
- When you are unfairly dismissed the time limits are very strict – you only have 3 months to bring a claim in the tribunal. This does not get extended by any grievance process.
- If you win a claim then your compensation will reflect how much money you lost by being out of a job. For example, if you were only out of a job for 2 weeks, you will get very little compensation.
What is the definition of unfair dismissal?
Firstly, you need to look at the reason given for the dismissal. There are five main acceptable reasons:
- Some other substantial reason
If the reason given to you was not one of these reasons, the chances are that you were unfairly dismissed. For example, if you were dismissed because you are friends with the old CEO who has been fired, this is not a fair reason.
If you have been given a potentially fair reason, the next thing to look at is the procedure. If a fair procedure was not followed, then you can still claim for unfair dismissal. Any compensation could be reduced to reflect the chances that you would have been dismissed if the correct procedure has been followed (called a ‘Polkey’ reduction).
Exactly what is a fair procedure varies depending on the size and administrative resources of your employer. The bigger the company, the more hoops they jump through. As a guideline; in a capability dismissal, an employee should be given warnings and chances to improve. They should have a fair hearing, with the chance to bring a colleague. And they should have a right of appeal to a higher level of management (or a different manager if it is a small employer). The ACAS code of practices are used by the Employment Tribunals to measure whether a procedure was fair.
Proving that the reason given was not the real reason for your dismissal
This is always tricky: you may have been given a fair reason, and the procedure was fair, then you may still be able to claim for unfair dismissal if you know that there was an underlying reason and this was a sham exercise. This argument should be used with some caution: Tribunals are part of the establishment and are not readily persuaded by conspiracy theorists. If you prove that there was a different reason why you were dismissed then you may be successful in your claim, even though on the face of it the process seemed fair. This is most common where a pregnant woman finds that she has been selected for redundancy just before going on maternity leave.
How much should I get in my unfair dismissal settlement agreement?
Our starting point is considering what an Employment Tribunal would award, as this can help you to work out what a fair settlement agreement value is. The maximum ‘compensatory’ award in tribunal for unfair dismissal is the lower amount between one year’s salary, or £78,962 (as of February 2017).
There are two elements of compensation in an unfair dismissal claim. The first is a ‘basic award’. This is calculated like a statutory redundancy pay – a week’s pay or £479 (as at February 2017), whichever is lower, for every year of service with an adjustment for an age factor if you are over 41. The second is a compensatory award. This is calculated with reference to how much you have lost. All claimants have a duty to mitigate their loss: you must try to find alternative work at the same, or higher, salary. The Tribunal will factor in your salary from your new job and your attempts to mitigate your losses into the compensatory award.
As you can see these awards from the Tribunal do not amount to much, but we are specialists in maximising the compensation achieved for the employee. Our experience tells us that acting quickly, often while an internal process is still ongoing, is the best means to leverage a higher settlement from your employer.
For general queries including regarding our services and fees, you can refer to our FAQs page.
You might want to get a rough idea of the value of your case by filling in the Settlement Agreement Calculator. Also think about getting some representation have a look at the Testimonials to see how we helped others in your situation. If you want to fight your unfair dismissal or if you have any other settlement agreement query, get in touch on 020 7717 5259, 0800 533 5134, or email [email protected], or follow the steps in the form below: