Unfair Dismissal and Constructive

Potentially fair reasons to dismiss

An employer can terminate an employee’s employment contract on grounds of one of five potentially fair reasons for dismissal. Those are:

1. Conduct
2. Capability 
3. Redundancy
4. Breach of a statutory duty or restriction
5. Some other substantial reason

If an employer dismisses an employee in the absence of a fair reason, then that dismissal could be unfair.

In addition to there being a fair reason, an employer must also ensure that an open and fair procedure is followed and that its decision to dismiss was reasonable in all the circumstances.  If it fails to do that, then a claim for unfair dismissal may still arise.  Employers should ensure that a fair procedure is followed in all dismissal situations, including in respect of redundancy.

Constructive dismissal

Constructive dismissal is effectively another limb of unfair dismissal, save that it applies upon a resignation by the employee rather than a dismissal by the employer. 

For a constructive dismissal claim to succeed there has to have been a repudiatory breach by the employer of the terms and conditions of employment or in other words, a breach that goes to the root of the employment contract.  Examples of such breaches can be where an employer has unilaterally changed an employee’s duties, without a contractual right to do so, or where there has been a breach by the employer of the implied duty of trust and confidence, which usually means that the employer/employee relationship has “irretrievably broken down”.

The employee’s resignation must be in response to the employer’s breach.  Whilst it is therefore important to act promptly, there may be repercussions in doing so, so it is recommended that you take legal advice on the particular circumstances of your case so that you can ascertain the appropriate course of action to take.

Qualifying period and limitation

As is the case for the majority of employment claims, an employee must have completed at least 2 years continuous service with his or her employer in order to qualify for the right to bring a claim for ordinary unfair or constructive dismissal.

If you think you have been or are about to be unfairly or constructively dismissed then you should seek legal advice promptly as an unfair or constructive dismissal claim will need to be issued within three months less one day of the date that your employment ended.  Please contact us and one of our employment solicitors will be happy to advise you on your specific circumstances.

If you are an employer and are keen to ensure that an unfair dismissal does not take place, or if you think it may already have taken place then we would also be happy to discuss with you the various options available to you in respect of settling such claims and / or the procedures you could adopt to limit any claims being brought against you.

Automatically unfair dismissal

There are a limited number of circumstances in which a dismissal may be automatically unfair.  If that is the case, then there is no need for the employee to have had 2 years of continuous service with his or her employer.  In addition, in respect of some automatically unfair dismissals, there is no cap on the amount of damages that can be awarded.

Unfair or constructive dismissal awards

People often assume that damages are the only remedy available to an employee who has been unfairly dismissed but that is not the case. A tribunal may also order reinstatement (in which an employee is given his or her old job back) or re-engagement (in which an employee is given a different but comparable job).

If damages are to be awarded then firstly the tribunal will calculate the basic award.  This is based on the employee’s age, length of service and his or her weekly pay (subject to a statutory cap which is reviewed each year).  The calculation is as follows:

• For every year that the employee has been employed by the employer whilst under the age of 22 the employee will receive ½  a weeks pay (subject to the statutory cap).
• For every year that the employee has been employed by the employer between the ages of 22 – 41 the employee will receive 1 week’s pay (subject to the statutory cap).
• For every year that the employee has been employed by the employer over the age of 41, the employee will receive 1 and ½ times his or her weekly pay (subject to the statutory cap).

The above calculation is also used to calculate an employee’s statutory redundancy payment.

In addition to the basic award, an employee may also be entitled to a compensatory award, depending on the circumstances of each case and subject always to the employee’s mitigation.  The compensatory award is used to compensate a person for financial losses flowing from the dismissal, such as lost earnings and benefits whilst looking for a new job or lost statutory rights.

Aside from certain instances of automatically unfair dismissals, the total amount of damages will be subject to a statutory cap which will vary for each employee depending on his or her salary.

Reductions in damages

It is important to bear in mind that when assessing a person’s loss the tribunal will take into account whether there has been any contributory fault on the part of the employee in relation to their dismissal.  If so any compensatory award may be reduced accordingly.  

Additionally, the compensatory award might be reduced by the tribunal applying what is known as “The “Polkey Deduction”.  This is where a reduction in damages is applied on account of the fact that even though a dismissal might have been procedurally unfair, it would still have taken place in any event.

If you would like to speak with an Employment Solicitor please call us on 020 8301 7777 or email info@tgbaynes.com.