When Does Dismissing Someone Become an Unfair Dismissal?
Aug 10, 2026
The decision felt straightforward. Someone wasnât performing. The MD had given it time, had conversations, had hoped things would improve. They didnât. So the employment ended. Three months later, a claim notification arrived from ACAS.
This is not an unusual sequence. The decision to dismiss is often the clearest part. What follows depends entirely on what happened before and during it and whether the employer can demonstrate that the process was fair.
Unfair dismissal and wrongful dismissal are distinct legal risks that arise from the same act. Understanding the difference, knowing who can claim, and recognising where process breaks down is not optional knowledge for a UK employer. It is the baseline.
Wrongful dismissal and unfair dismissal are not the same problem
Wrongful dismissal is a breach of contract claim. It arises when an employer terminates employment without providing the notice the employee was entitled to either under their contract or the statutory minimum under the Employment Rights Act 1996, whichever is longer. The remedy is the value of the notice period owed. Anyone can bring this claim from day one of employment, and it can be heard in an employment tribunal or the civil courts.
Unfair dismissal is a statutory right. It protects employees from being dismissed without both a fair reason and a fair procedure. The compensation available is substantially higher. Most employees need two yearsâ continuous service to bring a claim, though significant exceptions apply.
The two claims are not mutually exclusive. An employer who dismisses without notice and without a fair process may face both simultaneously. Treating them as the same risk, or assuming one covers the other, is a common and expensive mistake.
Who can claim unfair dismissal? The two-year rule, and its exceptions
The qualifying period for unfair dismissal is two yearsâ continuous employment. For most straightforward dismissals, an employee who has been with the business for less than two years cannot bring a standard unfair dismissal claim.
That does not mean the dismissal is risk-free.
Automatically unfair dismissal carries no qualifying period at all. An employee dismissed on day one can bring a claim if the reason for dismissal falls into a protected category.
 These include:
- Pregnancy, maternity leave, or any reason connected to having a child
- Whistleblowing â making a protected disclosure under the Employment Rights Act 1996
- Asserting a statutory right, such as the national minimum wage or holiday entitlement
- Raising a health and safety concern
- Participating in trade union activities
- Exercising rights under the Working Time Regulations or the Employment Rights Act 2025
Discrimination claims also carry no qualifying period. An employee dismissed in their first month can bring a claim under the Equality Act 2010 if the dismissal is connected to a protected characteristic: age, disability, race, sex, sexual orientation, religion or belief, gender reassignment, marriage or civil partnership, or pregnancy and maternity. Compensation for discrimination claims is uncapped.
The two-year threshold is a floor, not a guarantee. Employers who treat sub-two-year dismissals as consequence-free are carrying risk they have not accounted for.
What counts as fair grounds for dismissal?
For employees with two or more yearsâ service, a fair dismissal requires two things: a potentially fair reason and a fair procedure. Both must be present. One without the other is not enough.
The Employment Rights Act 1996 sets out five potentially fair reasons for dismissal:
- Capability, the employee cannot do the job, whether through performance or ill health
- Conduct, misconduct or gross misconduct
- Redundancy, genuine reduction in the need for work of that kind
- Statutory illegality â continuing the employment would break the law (for example, a driver who loses their licence)
- Some other substantial reason (SOSR) â a statutory catch-all covering legitimate business reasons that do not fit the other categories
Having one of these reasons is necessary. It is not sufficient. Employers who dismiss for a valid reason but run a flawed process, skipping investigation steps, failing to put allegations in writing, conducting a meeting where the outcome was already decided, not offering a right of appeal, can still lose at tribunal.
The ACAS Code of Practice on Disciplinary and Grievance Procedures sets out the standard a fair process is measured against. Employment tribunals can increase compensation by up to 25% where an employer unreasonably fails to follow it. They exercise that discretion.
Unfair dismissal in a redundancy: the procedural traps that catch employers out
Redundancy is a potentially fair reason for dismissal. It is not a defence against an unfair dismissal claim if the procedure was unfair.
The redundancy situations that end up at tribunal are almost never about whether the business needed to reduce headcount. They are about whether the employer followed the right steps. The traps are consistent.
Failing to consult meaningfully. Even a single redundancy requires individual consultation, not a brief meeting after the decision has been made, but a genuine process in which the employee has the opportunity to put forward alternatives. Collective consultation obligations apply where 20 or more redundancies are proposed within 90 days: a minimum of 30 days for 20 to 99 redundancies, and 45 days for 100 or more. Failing to follow these obligations creates additional claims under TULRCA 1992, with protective awards of up to 90 daysâ pay per employee.
Applying subjective selection criteria. Where a pool of employees exists from which one or more will be selected for redundancy, the criteria must be objective, documented, scored consistently, and capable of being explained to a tribunal. âWe chose the people we thought would goâ is not a fair selection process.
Failing to consider alternatives to redundancy. Employers are expected to look at whether the employee could be redeployed elsewhere in the business before dismissing. Skipping this step creates tribunal exposure even where the underlying business need is genuine.
Treating consultation as a formality. If the outcome of the consultation is predetermined, if the meeting exists to inform rather than to consider, it is not genuine consultation. Employment tribunals can identify this from the documentation and the timeline. They do.
A genuine business need to reduce headcount does not protect an employer from an unfair dismissal finding if the procedure failed. The process and the reason must both hold up.
What does wrongful dismissal or unfair dismissal cost the business?
The costs split by claim type. Wrongful dismissal compensation is limited to the notice pay the employee was owed, straightforward to calculate and relatively contained. Unfair dismissal is where the exposure runs higher.
The basic award is calculated using the same formula as statutory redundancy pay: age, length of service, and weekly pay (capped at ÂŁ751 per week from April 2026). For a 38-year-old with six yearsâ service, the basic award is approximately ÂŁ4,506.
The compensatory award covers the claimantâs actual financial losses: lost earnings, lost benefits, and projected future losses if re-employment takes time. This is capped at the lower of ÂŁ123,543 (from April 2026) or 52 weeksâ pay. For employees on modest salaries with reasonable re-employment prospects, total awards of ÂŁ25,000 are common. Where re-employment is difficult, or where the claimant was on a higher salary, awards run significantly higher.
Then there is the cost of getting to that outcome. Defending an unfair dismissal claim, gathering documentation, preparing witness statements, instructing HR consultants or employment lawyers, attending the hearing, typically costs ÂŁ14,000 âÂŁ24,000 in professional fees and management time, regardless of whether the employer wins.
Most claims never reach a full hearing. ACAS early conciliation is required before a claim can be issued, and many cases settle at that stage or shortly after. Settlement figures are shaped by the quality of the employerâs process: a thorough paper trail and a demonstrably fair procedure are the most effective negotiating tools available.
The Employment Rights Act 2025 has raised the compliance bar. Procedural requirements that were already in place have been reinforced, and the penalty for getting dismissal wrong has not become smaller.
Frequently asked questions
Can I dismiss someone with less than two yearsâ service?
You can end the employment of someone with less than two yearsâ continuous service (Changing to six months service from January 2027) without facing a standard unfair dismissal claim. However, wrongful dismissal claims (unpaid notice) are available from day one. Automatically unfair dismissal and discrimination claims carry no qualifying period. The risk is lower than for a long-serving employee, it is not zero. If the reason for dismissal touches on a protected characteristic or a protected act, the qualifying period is irrelevant.
What is automatically unfair dismissal?
Automatically unfair dismissal applies where the reason for dismissal falls into a category that Parliament has specifically protected: pregnancy, whistleblowing, asserting a statutory right, trade union activity, health and safety concerns, and others. In these cases, no qualifying period applies and the tribunal has no discretion to find the dismissal fair regardless of the reason given. These are the highest-risk situations for employers.
What are the fair grounds for dismissal in the UK?
The Employment Rights Act 1996 sets out five potentially fair reasons: capability, conduct, redundancy, statutory illegality, and some other substantial reason. Having one of these reasons is a necessary condition for a fair dismissal, not a sufficient one. A fair procedure must also be followed. Both elements are required.
How long does an unfair dismissal tribunal claim take?
ACAS early conciliation is required before a claim can be issued and typically takes one to six weeks. If the claim proceeds to an employment tribunal, single-day hearings are currently listed six to twelve months out in most regions. Multi-day cases take longer. The full process is slow, disruptive, and expensive. Most employers who have been through a tribunal claim once invest more seriously in process afterwards.
What is the difference between unfair dismissal and wrongful dismissal?
Wrongful dismissal is a contractual claim for unpaid notice. Unfair dismissal is a statutory claim that the dismissal lacked a fair reason, a fair procedure, or both. The two can apply to the same dismissal simultaneously. Wrongful dismissal compensation is limited to the notice pay owed. Unfair dismissal compensation can run to six figures in serious cases.
Is your dismissal process safe from a tribunal claim?
The Compliance Confidence Kit from The HR Doctor covers exactly this ground: employment contracts, disciplinary and dismissal procedures, and the documentation that protects you when a decision is challenged. Most employers who discover a gap discover it during a claim, not before it. That is a more expensive time to find out.
Not sure where you stand? The free HR Health Check takes under a minute and lets you know which areas need attention first.
Book a free 30-minute discovery call to find out where your exposure lies before it surfaces.
Want to see how this plays out in practice? Download the HR DR App to read our Redundancy case study, a real example of what happens when the process isn't watertight.