Dismissing an employee is one of the most significant decisions an employer can make. Whether a dismissal is lawful depends not only on the reason for the dismissal, but also whether the correct process has been followed.
Understanding the circumstances in which an employee can lawfully be dismissed can help employers reduce legal risk and ensure decisions are fair, reasonable and properly documented.
This blog explores the potentially fair reasons for dismissal, the importance of following a fair process and the key risks employers should consider before terminating an employeeโs contract.
Five Fair Reasons for Dismissal
Under UK employment law, a dismissal may be potentially fair if it is based on one of the following five reasons:
- Capability or Qualifications โ where an employee is unable to perform their role to the required standard or does not have the necessary skills or qualifications.
- Conduct โ repeated cases of misconduct such as poor attendance, or a one-off act of gross misconduct such as a serious breach of company policy.
- Redundancy โ where the employerโs requirement for employees to do the work that the employee does has diminished.
- Statutory Restriction โ when an employee is unable to continue working without breach of a statutory restriction, such as losing their legal right to work.
- Some Other Substantial Reason (SOSR) โ a potentially fair reason that does not fall into one of the other four categories, such as a breakdown in working relationship or conflict of interest.
However, having a potentially fair reason does not automatically make a dismissal fair.
The Impact of the Employment Rights Act 2025 (ERA)
The ERA introduces significant changes to unfair dismissal protection. From 1 January 2027, the qualifying period for most ordinary unfair dismissal claims will reduce from two years to six months. This means employers will need to take greater care when managing performance, conduct and capability concerns from an earlier stage of employment, with effective probationary periods, accurate record-keeping and following fair and reasonable processes becoming increasingly important.
When is a Dismissal Automatically Unfair?
Claims relating to dismissals which are alleged to be for an โAutomatically Unfairโ reason under the Employment Rights Act do not require any minimum level of qualifying service.ย These include dismissals which are deemed to be on the grounds of a protected characteristic under the Equality Act (such as race, age, sex) but there is also a long list of other automatically unfair reasons including:
- making a protected disclosure (whistleblowing)
- exercising a statutory right
- raising a Health and Safety issue
- undertaking trade union activities
Carrying out a Fair Dismissal Process
Employers should carry out a fair and reasonable process before dismissing.ย This should involve investigating the situation, informing the employee of the concerns, giving them an opportunity to respond and allowing them to appeal the decision. Before any dismissal, the employer should consider the following:
- What is the genuine reason for the proposed dismissal?
- Is there sufficient evidence to support the decision?
- Has the employee been given a fair opportunity to respond?
- Has a consistent process been followed?
- Could the decision be discriminatory or automatically unfair?
- Has the employee been given the right to appeal?
The appropriate process will depend on the circumstances. For instance, a capability concern will require a different approach to a serious conduct matter or redundancy situation. Failing to follow a fair process can significantly increase the risk of an unfair dismissal claim.
Need Support with a Dismissal?
Dismissing an employee can be complex, particularly where there are allegations of misconduct, poor performance, absence or wider workplace issues. EML provides practical HR and employment law advice to help employers manage difficult situations fairly, confidently and in line with legal obligations. Get in touch us on 01942 727200 or email enquiries@employeemanagement.co.uk for further advice and support on managing a potential dismissal.
