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Understand employee dismissal in the UK. Our practical guide covers fair reasons for dismissal, the correct procedure, dismissal letters, employee rights, and what to do if you believe a dismissal is unfair.
Written by:Â Owen John, Employment Law Partner, Darwin Gray | Last updated: 20/04/2026 | Reviewed by: Owen John
Ending someone’s employment is one of the most serious decisions an employer can make, and for employees, being dismissed can feel like the ground has shifted beneath your feet. Whether you’re an employer considering dismissal or an employee who’s just received the news, understanding the rules matters.
UK employment law sets clear expectations about when and how dismissal can happen. Get it wrong as an employer, and you could face an employment tribunal claim, with compensation potentially running into tens of thousands of pounds. As an employee, knowing your rights helps you understand whether you’ve been treated fairly and what options you have.
This guide explains how dismissal works in practice. We’ll cover the fair reasons for dismissal, what a proper procedure looks like, the rights of employees (including those with short service), and what happens when things go wrong. We’ve written it for both employers and employees because, in our experience, both sides benefit from understanding the same rules.
Dismissal occurs when an employer terminates an employee’s contract of employment. This can happen in several ways:
Resignation is not dismissal. If an employee chooses to leave, that’s their decision. But if they feel forced to resign because of something the employer has done, that might be constructive dismissal, which is treated as a dismissal for legal purposes.
Not all dismissals are created equal. Under UK employment law:
The distinction matters because unfair dismissal can lead to tribunal claims, compensation awards, and in some cases, reinstatement.
Under the Employment Rights Act 1996, there are five potentially fair reasons for dismissing an employee. If the reason for dismissal doesn’t fall within one of these categories, the dismissal is likely to be unfair.
This covers behaviour that breaches workplace rules or standards. It might include, for example:
For less serious misconduct, employers typically follow a graduated approach: verbal warning, written warning, final written warning, then dismissal. For gross misconduct – behaviour so serious it fundamentally breaks the employment relationship – dismissal without previous warnings can be fair. But even then, the employer must investigate and follow a proper procedure.
This covers situations where an employee cannot do their job to the required standard. It breaks down into two categories:
Performance-related capability – where the employee isn’t performing their work adequately. Before dismissing, employers should typically:
Health-related capability – where the employee is unable to work due to illness or injury. This is more complex, particularly if the condition might qualify as a disability under the Equality Act 2010. Employers must:
Dismissing someone for ill health without following these steps is likely to be unfair and could amount to disability discrimination.
Redundancy occurs when the employer needs fewer employees to do work of a particular kind, usually because:
A genuine redundancy can be a fair reason for dismissal, but the process must also be fair. This includes proper consultation, fair selection criteria, and consideration of suitable alternative employment.
It’s worth noting: redundancy is about the job, not the person. If an employer dismisses someone claiming redundancy but then hires a replacement, that’s not a genuine redundancy.
This applies when continued employment would break the law. Common examples include:
Even here, employers should consider whether there’s alternative work the employee could do before dismissing.
This is the catch-all category for situations that don’t fit neatly elsewhere but are serious enough to justify dismissal. Examples include:
SOSR is deliberately broad, but tribunals will scrutinise whether the reason genuinely justifies dismissal. It can’t be used as a convenient label for dismissals that don’t meet the criteria for other fair reasons.
Having a fair reason is only half the battle. The employer must also follow a fair procedure. Failing to do so can turn an otherwise fair dismissal into an unfair one.
For conduct and performance dismissals, employers should follow the ACAS Code of Practice on disciplinary and grievance procedures. The key steps are:
Employment tribunals can increase compensation by up to 25% where an employer unreasonably fails to follow the ACAS Code.
While the ACAS Code specifically applies to conduct and capability dismissals, employers should follow a fair procedure whatever the reason:
Redundancy requires consultation (individual and collective where 20+ employees are affected), fair selection criteria, and consideration of alternative employment.
Ill health dismissals require medical evidence, consideration of reasonable adjustments, and exploration of alternatives before dismissal becomes an option.
SOSR dismissals should still involve investigation, discussion with the employee, and an opportunity to respond.
A dismissal letter formally confirms the termination of employment. It should be sent promptly after the decision is made, and employees with two or more years’ service are entitled to request written reasons for their dismissal.
A compliant dismissal letter should contain:
Employees have significant legal protections against unfair dismissal, though the extent of those protections depends on their length of service.
Currently, employees need two years’ continuous service to bring an ordinary unfair dismissal claim. This changes significantly under the Employment Rights Act 2025:
From 1 January 2027, the qualifying period reduces to six months. This means employers will need to follow fair processes much earlier in the employment relationship.
A dismissal is unfair if:
Tribunals apply the “range of reasonable responses” test: would a reasonable employer have dismissed in these circumstances? It’s not enough that the tribunal would have decided differently – the question is whether dismissal fell within the range of responses open to a reasonable employer.
Some dismissals are automatically unfair regardless of how long the employee has worked there. These include dismissals related to:
In most cases, you don’t need two years’ service to make an automatic unfair dismissal claim.
If the real reason for dismissal relates to a protected characteristic under the Equality Act 2010 (age, disability, gender reassignment, marriage/civil partnership, pregnancy/maternity, race, religion or belief, sex, or sexual orientation), the employee may have a discrimination claim.
Discrimination claims have no qualifying service period and no cap on compensation. They can be brought alongside unfair dismissal claims.
If you’ve been dismissed with less than two years’ service (or six months from January 2027), you might think you have no rights. That’s not quite true.
Even with short service, employees are protected against:
With employees below the qualifying threshold for ordinary unfair dismissal, employers have more flexibility. They don’t need to follow the full ACAS Code process, and the risk of a successful unfair dismissal claim is lower.
But “more flexibility” doesn’t mean “no rules.” Employers should still:
The safest approach is to follow a fair process regardless of length of service. This protects against discrimination claims, establishes good practice, and avoids the need to count service periods carefully.
One of the most common questions we hear: “How long can an employee be off sick before we can dismiss them?”
The honest answer: there’s no fixed timeframe. What matters is whether dismissal is reasonable in all the circumstances.
Dismissal for long-term sickness falls under “capability.” It might be fair where:
Before considering dismissal:
Only after exhausting these steps should dismissal be considered.
If the employee’s condition amounts to a disability under the Equality Act 2010 (a physical or mental impairment with a substantial, long-term adverse effect on day-to-day activities), additional duties apply:
Ill health dismissals are among the most legally complex. Taking legal advice before proceeding is strongly recommended.
If you believe your dismissal was unfair:
Appeal first – Use your employer’s internal appeal process. Tribunals expect you to exhaust internal procedures, and failing to appeal could reduce any compensation.
Contact ACAS – Before making a tribunal claim, you must go through ACAS early conciliation. This is a free service that tries to resolve disputes without a tribunal hearing.
Make a tribunal claim – You have three months minus one day from the date your employment ended to start a claim by going through ACAS early conciliation. From October 2026, this is increasing to six months. This deadline is strict. The early conciliation process can extend it slightly, but don’t leave it to the last minute.
If you win an unfair dismissal claim, the tribunal can order:
Basic award – Calculated like a redundancy payment, based on age, length of service, and weekly pay (capped at £751 per week as of April 2026).
Compensatory award – Currently capped at the lower of 52 weeks’ pay or £123,543. From January 2027, this cap is being removed.
The median unfair dismissal award in 2023/24 was around £6,700. But high earners with uncapped claims from 2027 onwards could receive significantly more.
If facing a tribunal claim:
The Employment Rights Act 2025 introduces the most significant changes to unfair dismissal law in decades.
Qualifying period reduced to six months – Employees will be able to claim ordinary unfair dismissal much earlier.
Compensation cap removed – The current cap of £118,223 (or 52 weeks’ pay) will be abolished. Tribunals will assess compensation based solely on actual financial loss.
Written reasons from six months – Employees will be entitled to request written reasons for dismissal after six months, not two years.
The combination of shorter qualifying periods and uncapped compensation significantly increases the stakes. Employers should:
Greater protection earlier in employment, and potentially higher compensation for successful claims. The changes make it even more important to understand your rights and act quickly if you believe you’ve been treated unfairly.
For conduct or capability issues, follow the ACAS Code: investigate, notify the employee in writing, hold a hearing where they can respond, make a decision, and offer the right to appeal. For redundancy, follow a consultation and selection process. For all dismissals, act fairly, document your reasons, and give proper notice.
For gross misconduct, yes – you can be dismissed without previous warnings. But there must still be an investigation and a hearing where you can respond. For less serious misconduct or performance issues, employers should typically follow a graduated warnings process.
There’s no fixed period. What matters is whether dismissal is reasonable given the circumstances, including the nature of the illness, the prognosis, the impact on the business, and whether the employer has properly explored adjustments and alternatives.
Currently, after two years’ continuous service (reducing to six months from January 2027). But some dismissals are automatically unfair regardless of service length, including those related to pregnancy, whistleblowing, or asserting statutory rights.
The reason for dismissal, the effective date of termination, notice period details, final pay arrangements, instructions for returning company property, the right to appeal, and any ongoing post-employment obligations.
The employee’s statutory notice period is sometimes different to their contractual notice, so it’s important to take legal advice if unsure. Usually, employees are entitled to at least a week’s notice for each completed year of employment (up to a maximum of twelve weeks).
It is also a legal requirement to give the employee a written statement of the reasons for dismissal, even if the decision to dismiss is communicated to them verbally.
Statutory Notice Period Calculator
Wrongful dismissal is a breach of contract claim, usually about notice. If your employer dismissed you without giving proper notice (or pay in lieu), you may have a wrongful dismissal claim regardless of your length of service.
Potentially, if the misconduct affects your work or brings your employer into disrepute. But the employer must investigate properly and show the effect on the business.
Redundancy is a specific type of dismissal that occurs when the employer needs fewer employees. Other dismissals might be for conduct, capability, or other reasons. The distinction matters because redundancy comes with specific consultation requirements and (for employees with two or more years’ service) statutory redundancy pay.
Your contract will set out the notice period. The employer may let you leave earlier (with pay in lieu) or place you on garden leave. If you simply stop attending, you could be in breach of contract.
If you have the qualifying service, you may be able to claim unfair dismissal even if there was a fair reason, because the procedure was flawed. Tribunals can also increase compensation by up to 25% for failure to follow the ACAS Code.
| Term | Definition |
|---|---|
| ACAS Code of Practice | The guidance setting minimum standards for disciplinary and grievance procedures. Tribunals must consider whether it’s been followed. |
| Automatically unfair dismissal | Dismissal for certain protected reasons (such as pregnancy or whistleblowing) that is unfair regardless of length of service or procedure. |
| Basic award | Part of unfair dismissal compensation, calculated like statutory redundancy pay based on age, service, and weekly pay. |
| Compensatory award | Part of unfair dismissal compensation designed to compensate for financial loss. Currently capped but becoming uncapped from January 2027. |
| Constructive dismissal | When an employee resigns in response to a fundamental breach of contract by the employer, treated as a dismissal in law. |
| Gross misconduct | Behaviour so serious it fundamentally breaches the employment relationship, potentially justifying immediate dismissal. |
| Notice period | The time between giving notice and employment ending. Statutory minimums depend on length of service; contracts often specify longer periods. |
| Payment in lieu of notice (PILON) | A payment instead of requiring the employee to work their notice period. |
| Qualifying period | The length of service required before an employee can claim ordinary unfair dismissal (currently two years, reducing to six months from January 2027). |
| Summary dismissal | Immediate dismissal without notice, typically for gross misconduct. |
| Wrongful dismissal | A breach of contract claim, usually relating to failure to give proper notice. |
Whether you’re an employer navigating a difficult dismissal or an employee who’s been let go and isn’t sure if it was fair, we can help.
We’re direct, responsive, and focused on practical solutions. You’ll work with the solicitor handling your case from the start. And as Wales’ leading Welsh language law firm, we can provide all our services in Welsh or English.
Need advice about a dismissal? Contact us for a free, no-obligation chat about how we can help.
To speak to one of our experts today, please contact us on 02920 829 100 or by using our Contact Us form for a free initial chat to see how we can help.
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