Unfair Dismissal Settlement Agreements

Unfair Dismissal Settlement Agreements

Unfair dismissal settlement agreements are fairly commonplace, and in order to understand whether you deserve a settlement agreement in your case, it is necessary to understand more about unfair dismissal itself. This article is a guide to unfair dismissal, setting out the basics for you, the employee who has actually been dismissed. If you are interested to learn more about constructive dismissal, which is where you are still in your job but feel that you’re being forced to leave, see our article on that here.

Woman looking unhappy

Two years’ service needed

You need to be employed for at least two years in order to bring a claim for unfair dismissal. Prior to acheiving your two years’ service, it is ridiculously easy for your employer to dismiss you. All they have to do is inform you that they are dismissing you, and that’s it. They don’t have to mention your performance or a company restructure or any reason at all, but often they do mention something like this.

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 it all.

If you are dismissed after 103 weeks service without notice, in circumstances which should not warrant summary termination for gross misconduct, the Tribunal can add the one week statutory notice, giving the minimum one year’s service for an unfair dismissal claim. 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

Although generally at least one or two year’s continuous employment is needed to be able to bring an unfair dismissal claim, if the dismissal is for one of the “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

Just because you don’t have one year’s service you are not automatically barred from bringing one of the above claims. 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

  1. You need to be employed for at least two years in order to bring a claim for unfair dismissal.
  2. 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.
  3. 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 4 main acceptable reasons:

  1. Capability
  2. Conduct
  3. Redundancy
  4. Retirement

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 of your employer. The bigger the company, the more hoops they will have to jump through. As a guideline, 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 guidelines 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

If you were given a fair reason, and the procedure was fair, then you may still be able to claim for unfair dismissal. You then need to prove that in fact there was a different reason why you were dismissed and that the employer was just clever by following all the correct procedures. This is very common situation. For example, one of the management becomes jealous over an employee s success.

How much should I get in my unfair dismissal settlement agreement?

It worth looking at 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 one year’s salary, or £75,000, whichever is lower. However you have a duty to mitigate your loss, which means that if you get a new job straight away on the same or more money, you won’t be entitled to any compensatory award at all. The other element of an unfair dismissal claim is a ‘basic award’. This is similar to statutory redundancy pay – its around a week’s pay or £450 (whichever is lower) per year of service. This is unlikely to amount to much. Often its better to try to remain employed rather than quit or be fired, that way you can leverage a higher settlement from your employer because they will effectively pay you to leave.


Next steps

If you want to talk to an experienced employment solicitor about the details of your case, and find out how we could help you improve your settlement package. Get in touch on 020 7717 5259, 0800 533 5134 or apply for a free 15 minute consultation.