The time limit for lodging a claim with the Employment Tribunal is three months, less one day, from the effective date of termination of the contract of employment. This time limit will only be extended by a further three months, if the internal appeal is still ongoing after that date.

In the event of a claim, the Employment Tribunal examines the facts and circumstances so as to determine whether the dismissal was fair and reasonable.  It is the employer’s burden to justify the dismissal.  The Tribunal will look at the particular circumstances including the size and resources of the employer, the reasons given, the investigation, fair hearing etc.

Dismissal will generally require justification on one of the potentially fair grounds of dismissal and on the basis of the relevant procedure having been followed in relation to ascertainment of the facts. See our separate note in relation to disputes and disciplinary matters.

Dismissal on the basis of capability and qualification will generally require justification on a factual basis and on the basis of the relevant procedure having been followed.  The procedure must include monitoring, face to face meetings to discuss the problem, details of shortcomings, implementation of fair warnings, reasonable opportunities to improve, review of training procedures by employees and consideration of alternative work.

Before dismissing an employee who is ill, the employer should consider any medical evidence reasonably available.  This may require consent to approach a doctor. Having obtained a report from the doctor, the employer is in a position to make a reasonable decision.   The employer should consider the needs of the business, the prospects of a quick return, availability of lighter duties, past record of health, nature of the illness and the likelihood of recovery.

Unfair dismissal based on conduct should have the following procedures; proper investigation of the facts, fair warnings, fair hearing at each stage, implementation of reasonable disciplinary sanctions, and consistent treatment.

An employee with at least one year’s continuous service who has been dismissed is entitled to a written statement of reasons for the dismissal. The employee may make the request orally or in writing and the employer must comply within 14 days. An employee dismissed during pregnancy, maternity leave is entitled to a written statement irrespective of the length of service.

Remedies for Unfair Dismissal

Where an employee succeeds in showing that his dismissal was unfair, compensation is usually payable. The employee may be entitled to chose between returning to the job or compensation.  Re-instatement provides return to the same job while re-engagement is a return to a comparable job.  Re-instatement is an order that the employee must be treated in all respects as if he had not been dismissed.  The Tribunal will consider the wishes of the employer or whether it is practical to make such an order together with the conduct of the complainant.

Re-engagement is re-employment on comparable terms.  The employer can make representations as to why this may be inappropriate and compensation is appropriate in lieu.  Although the Employment Tribunal will consider changed circumstances for the employer post dismissal, it will not allow an employer to avoid re-instatement or re-engagement simply because someone has been hired to replace the dismissed employee.

Where a Tribunal orders re-instatement or re-engagement but the employer refuses to accept the employee, the Tribunal can make an additional award of not less than 26 and not more than 52 weeks pay, up to a maximum of £230 per week.  This is typically on top of  the basic and compensatory awards.

Compensation Basic Award

Where it is impractical to offer re-instatement or re-engagement, the employee will be entitled to financial compensation.

The employment tribunal’s award of compensation for unfair dismissal comprises a basic award and a compensatory award. The basic award is a fixed sum calculated in accordance with a formula in the legislation. The compensatory award is compensation for loss incurred.

The basic award depends on

  • length of employment
  • age
  • weekly gross pay.

The employee is entitled to a payment per year of service up to a maximum of 20 years at a maximum of £508 per week (2018).The maximum basic award is £15,240 based on the maximum weekly limit of £508.

The relevant factor is half a year’s pay for service under 22 years of age, one year’s pay for service between 22 and 40 and a year and a half pay for service between 41 and 64.   The basic award may be reduced where it is just equitable or where an ex gratia award or redundancy payment has been awarded.

Compensatory Award

The compensatory amount of the award may be anything up to the statutory maximum £80,541 (2018). The maximum award for compensation is the statutory £80,541 or 52 weeks gross salary whichever is lower. This is in addition to the basic award (2018).

In deciding how much an award should be, the Tribunal is to take into account several factors including:-

  • the loss of the complainant including expenses;
  • the loss of employment rights;
  • the loss of wages;
  • future loss of earnings;
  • the loss of use of benefits in kind;
  • the loss of pension rights;
  • the loss of statutory rights;

Firstly the actual monetary loss is assessed. If another job has not been found the tribunal  considers how long the person is likely to be out of work. An element of compensation reflects the loss of statutory rights for the first two years of employment in the new employment. Compensation may be reduced if the applicant is partly responsible for the dismissal or e.g. didn’t attend disciplinary hearings. The compensatory award takes account of past and future losses loss of statutory right.

A compensatory award may be reduced if there is contributory fault on the part of the employee, if the employee did not mitigate his loss or if payments have already been made.  It may be reduced if the unfairness does not make any difference to the fact that a dismissal could be justified.  The Tribunal can consider what would have happened, if a fair procedure had been adopted. The award may be reduced where statutory redundancy has been received

The complainant is obliged to attempt to mitigate his loss by finding another job. An award can be reduced if the employer can prove that the complainant has not made sufficient effort to mitigate his loss.

Any amount paid to the employee will be taken into account.  The amount of State benefits received are deducted from any part of the award that covers lost earnings. Interest is payable at 8% per annum on awards.

The award of compensation may be increased if the employer did not follow the requisite ACAS procedure or an equivalent.


Settlement of unfair dismissal claims is strongly encouraged.  Before proceeding to an Employment Tribunal, an ACAS officer will automatically become involved in an attempt to resolve the dispute by settlement through negotiations.  Where an agreement is reached, details of the settlement are formalised and drafted by the ACAS official and are binding on both parties.

It is also possible for parties to agree themselves through their lawyers to settle the dispute.  The compromise agreement must set out the particulars of the dispute and set out what is agreed.  The employee must have received independent legal advice from a lawyer or competent trade union officer.  The independent advisers must be identified in the agreement.  There must be a declaration that the relevant formalities have been followed.


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