10. Dismissal

According to the Ministry of Justice, there were 47,900 claims for unfair dismissal in the year ending March 2011, down from 57,400 for the year before. Most of these claims were settled or abandoned, but 10,300 were heard by an employment tribunal and of these, 4,200 were successful. The median (midpoint) compensation award for unfair dismissal was only £4,591 and reinstatement was awarded in just eight cases.

The reality reflected in these figures has not stopped the current government making unfair dismissal law the main focus of its attack on individual employment rights, in particular by announcing, in the Enterprise and Regulatory Reform Bill, a plan to radically reduce the maximum compensatory award for unfair dismissal.

The right to claim unfair dismissal is only available to "employees" (see Chapter 2).

Some dismissals are "automatically unfair" (see Automatically unfair dismissals). There is a long statutory list of reasons for which it is automatically unfair to dismiss. The list is designed to protect particular statutory rights (such as rights in relation to pregnancy, or the right to take dependency leave) and to promote particular types of workplace behaviour that an employer might otherwise discourage (such as acting as a safety rep, or belonging to a trade union). If a dismissal is for an automatically unfair reason, the dismissal is unfair, and the employer is not allowed to argue that the decision to dismiss for that reason was "reasonable". Nearly all "automatically unfair" dismissals do not have a service requirement.

The majority of dismissals will not be for an automatically unfair reason and will require the employee to have been continuouslyemployed for at least a year at the date of dismissal or two years for all dismissals where the employment started on or after 6 April 2012.

What is a dismissal?

A dismissal occurs where:

• the employment contract is terminated by the employer, with or without notice;

• a fixed-term contract is not renewed (even if the employee knows there was never an intention of renewing, for example, a fixed term contract for a single project);

• the employee resigns in response to a serious breach of the employment contract (known as constructive dismissal);

• an employee is threatened with dismissal unless s/he resigns;

• a contract ends because of a redundancy situation (voluntary or compulsory);

• a woman is not allowed to return to work after maternity leave;

• there is a refusal to re-employ after a business reorganisation, such as a sale, merger or takeover; or

• an employee resigns because of a serious detrimental change to working conditions resulting from a TUPE transfer (see Chapter 12: TUPE).

In other words, for there to be a dismissal, the employment contract must have ended.

There will not be a dismissal where the employee ends the contract by exercising free choice and resigning voluntarily. Employees have the right to end the contract at any time through resignation. This will usually be done by giving the notice required by the contract.

An employee who resigns when faced with a choice between resignation and dismissal will normally have been dismissed (Sandhu v Jan de Rijk Transport Limited [2007] EWCA Civ 430). However, there will not normally be a dismissal where an employee agrees to resign on mutually agreed terms. This is often described as a consensual termination. It is not possible to bring a claim for unfair dismissal following a genuinely consensual termination, so care should be taken when negotiating departure terms. Agreed terminations and voluntary resignations can also make it difficult to claim state benefits, or benefits under any employment-related insurance product, such as mortgage protection insurance.

An employee forced to resign should make a careful record of the details of the exchange with the employer and take advice from his or her rep as soon as possible.

To be effective, a resignation must have been communicated to the employer. However, there is no rule that a resignation must be communicated to a particular individual at the employer (for example, the person named on the resignation letter) in order for it to be effective. It is enough for it to reach the employer's address (Horwood v Lincolnshire County Council UKEAT/0462/11/RN). An employee who has drafted a letter of resignation cannot be said to have resigned until the letter is sent (Edwards v Surrey Police [1999] IRLR 456).

An employee who has handed in his or her notice cannot withdraw it without the employer's consent. There is a rare exception for cases known as "heat of the moment" cases, where an employee acts rashly out of anger, severe stress, or sometimes emotional immaturity, ending the contract on an impulse which s/he immediately regrets. In these circumstances, the law allows a very short window in which to calm down and step back from words spoken in the heat of the moment - to say: "I didn't really mean it" (Martin v Yeoman Aggregate Ltd [1983] IRLR 49).

An employee who resigns in the "heat of the moment" needs to act very quickly indeed (e.g. within hours) to try to put things right if s/he wants to get back to work, taking urgent advice from a rep and making themselves available for work as soon as possible, and apologising if appropriate. A careful note should be kept of everything that is said and done, as this will form the basis of any witness statement if a claim later needs to be brought.

In rare cases, employers can also withdraw words of dismissal issued in the heat of the moment, as long as they do this almost immediately (Willoughby v CF Capital PLC UKEAT/0503/09).

Because of the unequal bargaining power between the parties and the risk of employees being forced to give up their rights, employer and employee are generally not allowed to agree between themselves on ways to exclude the laws that protect employees from unfair dismissal. For example, they are not allowed to agree in advance that particular events, if they happen, will bring the contract to an end automatically:

Termination with/without notice

Under section 86 of the ERA 96, both employee and employer have a statutory right to minimum notice if the contract is terminated.

An employee is entitled to notice of at least:

• one week, if their length of service is between one month and two years; or

• one week for each year, if they have between two and 12 years' service; up to a maximum of

• 12 weeks, if they have at least 12 years' service.

This is the statutory minimum entitlement to notice. The employment contract will often provide for more notice than this. If the contract says nothing about notice, the courts can imply "reasonable" notice, taking account of factors such as the employee's length of service and seniority (Clarke v Fahrenheit 451 (Communications) Limited [EAT 591/99]).

If the employer has not given proper notice, the employee can bring a claim for breach of contract (known as a "wrongful dismissal" claim) in an employment tribunal to recover the unpaid notice pay and the value of any other benefits, such as pension contributions or any car allowance, that would have been earned had the notice been worked (see Wrongful dismissal). No service is needed for this type of claim.

An employer can choose to make a payment in lieu of notice (PILON) instead of requiring the employee to work the whole or any part of the notice period, as long as the employment contract allows this. It is generally up to the employer to decide whether to pay wages in lieu of notice instead of making the employee work through (all or any part of) the notice period. The employee is not entitled to demand this (Cerberus Software v Rowley [2001] IRLR 160).

Notice payments made under a PILON clause are paid net of tax and national insurance, because they are taxable earnings. An employer who ends a contract by exercising the right to make a PILON is not allowed to withhold payment of contractual notice pay, even if it discovers, after ending the contract but before making the payment, that the employee is guilty of gross misconduct (Cavanagh v William Evans Limited [2012] EWCA Civ 697).

The minimum notice an employee must give the employer is one week, although the employment contract can provide for longer notice. If the employee gives insufficient notice, this is a breach of contract. However, the employer is not entitled to withhold outstanding wages unless the contract contains a clear term, agreed to in advance by the employee (for example, by signing the contract) authorising a deduction from the final wage packet (see Chapter 4: Unlawful deduction from wages).

Notice pay during sickness absence

An employee absent on sick leave during any part of the notice period is entitled to be paid his or her full weekly pay, even if all contractual sick pay has been used up (section 88 ERA 96), unless their contractual notice entitlement is at least one week longer than the statutory minimum (section 87(4) ERA 96).

This legislative quirk means that employees with a more generous notice entitlement can find themselves worse off when it comes to being paid notice pay at the end of a period of long-term sickness absence than employees whose contracts entitle them only to minimum statutory notice (Scotts Co (UK) Ltd v Budd [2003] IRLR 145).

Non-renewal of a fixed-term contract

When a temporary (fixed-term) contract comes to an end, this is a dismissal and the employee can claim unfair dismissal, as long as the other qualifying conditions are met. It is unlawful to ask employees on fixed-term contracts to agree to waive their right to this protection. The non-renewal of a fixed term contract can also be a redundancy dismissal (See Chapter 11: Redundancy).

Constructive dismissal

A constructive dismissal takes place where the employee resigns in circumstances where the employer's behaviour amounts to a breach of contract so serious that it leaves him or her with no alternative but to resign. The breach of contract can be of an express or implied contract term (see Chapter 3: Contract changes). The implied term most frequently relied on to justify a claim for constructive dismissal is the duty of mutual trust and confidence which is implied into every employment contract. The resignation must be in response to the breach.

To claim constructive dismissal, three elements must be present:

• the employer must have fundamentally breached the contract;

• the employee must have resigned in response to the breach; and

• the employee must not have "waived" the breach of contract (also known as affirming the contract). "Affirmation" takes place where the employee's behaviour after the breach of contract suggests that s/he is willing for the contract to continue despite the employer's actions.

What is a fundamental breach of the contract?

There will be a fundamental breach of the contract entitling the employee to resign and claim constructive dismissal when the employer has broken a core term that goes to the root of the contract.

Whether there has been a fundamental breach of the contract will be a question of fact for the tribunal to decide, after looking at all the evidence, reading the witness statements and hearing all the witnesses being cross-examined. Every case is different, but some examples from case law include:

• Offering an employee money to leave after she asked to change her working arrangements to accommodate her baby's cerebral palsy (Bates Wells & Braithwaite v MacFarlane EAT/0616/02).

• Using foul and abusive language (Horkulak v Cantor Fitzgerald [2003] EWHC 1918).

• A supermarket employee being publicly reprimanded by her manager and not being given any chance to respond (Morrow v Safeway Stores [2002] IRLR 9).

• Issuing a final warning without a proper investigation (Thakeray v Acequip EAT/0396/03).

• Issuing a final warning for an offence which any reasonable employer would have regarded as minor (Stanley Cole (Wainfleet) Limited v Sheridan EAT/0824/01).

• Cutting pay and increasing duties (Governing Body of St Edmond of Canterbury Catholic High School v Hines EAT/1138/02).

• Transferring an employee to a higher graded post where the result was to deprive the employee of previous pay protection (LB Camden v Collins & Clements EAT/1436/01).

• Unilaterally changing a contractual fixed London allowance (Security and Facilities Division v Hayes [2001] IRLR 81).

• Instructing an employee to change her hours in conflict with her domestic responsibilities (Greenaway Harrison v Wiles [1994] IRLR 380). The employer argued that she had jumped the gun by resigning before the change was implemented, but the EAT ruled that there was a breach of contract.

• Deciding to pay the national rate only, and ignoring the previous collectively agreed local rate which was incorporated into the employee's contract (Gibbons v Associated British Ports [1985] IRLR 376).

• Replacing full time work with part time work (Hogg v Dover College [1990] ICR 39).

• Transferring employees to new work where there was nothing in the contract to allow for this (Hughes v Southwark [1988] IRLR 55).

If an employer fundamentally breaches the contract, the employee is no longer bound by the terms of that contract (except as to confidentiality) unless there is an express term that says otherwise. However, it must be a fundamental breach that goes right to the root of the contract (CRS Computers v McKenzie EAT/1259/01).

The effect of delay

Even though there has been a fundamental breach of the contract, an employee can lose the right to claim constructive dismissal by "affirming" the contract. Affirmation takes place where an employee indicates, through words or actions (or inaction) that he or she is willing for the contract to continue. Delay is one of the most common forms of affirmation, so there must be no significant delay between the breach and the resignation.

The tribunal will examine all the reasons for any delay. There is no fixed length of delay that is "too long". Simply protesting at the time of the unacceptable behaviour, without doing anything else, is unlikely to be enough to support a later constructive dismissal claim, if the employee subsequently continues performing the employment contract. "Reserving" the right to resign is a common tactic, but will not necessarily be effective. Sickness may help justify any delay (see for example, El Hoshi v Pizza Express Restaurants (EAT/0857/03)). As always, everything will depend on the circumstances of each individual case:

Resigning and claiming constructive dismissal is a high risk strategy and should always be regarded as a last resort. Anyone considering resigning and bringing a claim for constructive dismissal should take careful advice first from a union rep. Acas also runs a national advice line on 08457 474747.

An employee in this situation should keep a careful log of the incidents that are making life impossible at work and of all efforts to have their concerns dealt with properly. Keep a copy of any relevant emails, including any sent to a line manager or to HR. Anyone being bullied using social media should print off any offensive messages, or take a screen print.

An employee who decides, having taken advice, that there is no alternative but to resign should act promptly and be clear and explicit in their letter of resignation, spelling out the connection between the decision to resign and the events that have placed him or her into this position. If ill health has been suffered as a result of work, see your GP and keep a copy of all referral letters, prescriptions and hospital appointments.

The breach of contract that leads an employee to resign can be either one act by the employer if it is sufficiently serious, or a series of actions which together amount to a breach. These are often referred to as "last straw" cases, and are common in situations of bullying and harassment, or where there has been a breach of trust and confidence in other ways. It does not matter if none of the incidents in themselves would amount to a serious breach, as long as cumulatively they destroy the contractual relationship.

However, employer behaviour that is "reasonable" or "justifiable" is unlikely to be regarded as a "last straw" justifying resignation, whatever came before (LB Waltham Forest v Omilaju [2004] EWCA Civ 1493 ([2005] IRLR 35)), so any employee contemplating resignation should try to ensure any eventual resignation is in response to an incident that is clearly and unarguably unreasonable.

A serious failure by the employer properly to investigate a grievance can be a breach of the duty of mutual trust and confidence capable of justifying a constructive resignation (dismissal). Every employee has the right to have a grievance dealt with. This is a fundamental right implied in every contract (W A Goold (Pearmak) v McConnell [1995] IRLR 516). It is not unusual for an employee to resign and bring a constructive dismissal claim midway through the grievance process where the investigation is seriously flawed, unreasonably delayed or drawn out, or where an employee is, for example, unreasonably forced to confront his or her harasser.

Even where a grievance has been adequately dealt with, the employee may well still be entitled to accept the breach and resign:

Grievances and the Acas Code of Practice

In 2009, Acas issued a revised Code of Practice on discipline and grievances. Acas also issued accompanying Guidance on dealing with discipline and grievances at work. Both can be downloaded from the Acas website at: www.acas.org.uk

Where the Code has been broken by either employer or employee, tribunals have the power to increase (or cut) compensation by up to 25%.

An employee considering a claim for constructive dismissal should comply with the Acas Code by setting out the grievance first in writing. Employers must arrange a meeting to discuss the grievance and employees should make "every effort" to attend the meeting with their chosen companion, who can be a union rep or a work colleague. Both sides must avoid "unreasonable delay".

Employers must act consistently and carry out all necessary investigations, to establish the facts. Employees unhappy with the outcome of a grievance meeting have the right to appeal.

Employees have a right to a copy of the meeting record and any minutes. The minutes are "personal data" for the purposes of the Data Protection Act. This means the employer owes the employee a duty of accuracy and confidentiality, and must make sure what is recorded is relevant and not excessive. The employee should be given the opportunity to check the minutes in draft to ensure accuracy.

Any claim for constructive unfair dismissal, must be issued within three months of the resignation date, regardless of the stage reached in any grievance procedure, and irrespective, for example, of whether the outcome of any appeal is still outstanding.

The tribunal has a discretion to extend time where it was not "reasonably practicable" to issue the claim in time, but this discretion is rarely exercised. Each case will depend on its particular facts (see Extending time to bring a dismissal claim).

Unfair dismissal

Unless a dismissal is for an automatically unfair reason (see below), it must meet the statutory test set out in section 98 of the ERA 96. According to this test, an employer cannot fairly dismiss an employee unless it can show:

• a potentially fair reason for dismissal; and

• the employer acted reasonably in all the circumstances in dismissing for that reason.

Section 98 contains a list of "fair" reasons. Unless a dismissal falls within one of the categories in the list, it cannot be fair. The potentially fair reasons are:

• capability or qualifications;

• conduct;

• redundancy;

• to comply with a legal duty or restriction; or

• "some other substantial reason".

Compulsory "retirement" was a potential "fair reason" for dismissal until the law changed to abolish the default retirement age (see Chapter 6: Age discrimination). Any retirement notified to the employee after 6 April 2011 no longer provides a fair reason for dismissal.

Establishing a "fair reason" is only the first step to a fair dismissal. The next step is for the tribunal to be satisfied that the dismissal was reasonable in all the circumstances. The tribunal must consider all the relevant facts and circumstances and decide whether the employer acted fairly or unfairly in dismissing the employee for that reason, taking into account, in particular, the employer's "size and administrative resources".

In practice, the effectiveness of unfair dismissal law as a tool for the protection of employees is severely limited by the way in which tribunals interpret this test of "reasonableness". A tribunal is not allowed to "substitute" its own view for that of the employer as to whether a dismissal decision was "reasonable". Instead, the tribunal must take a much more restrictive approach, asking whether the decision to dismiss fell within the "band of reasonable responses" available to an employer. A very harsh decision can be fair, as long as it falls inside this band of reasonable responses. The leading case confirming this test is HSBC Bank v Madden [2000] IRLR 827.

Before carrying out any dismissal, the employer must use a fair dismissal procedure. However, in Whitbread PLC v Hall [2001] IRLR 275, the Court of Appeal confirmed that the "band of reasonable responses" test applies not only to the final decision to dismiss, but also to the dismissal procedure used. In other words the use of a flawed procedure will only make a dismissal unfair if no reasonable employer would have used it.

Before carrying out a dismissal for any reason, the employer must conduct a reasonable investigation into the facts. But in Sainsburys Supermarkets Limited v Hitt [2003] IRLR 23 CA, it was decided that the "band of reasonable responses" test also applies to pre-dismissal investigations.

When deciding whether a dismissal was fair or unfair, a tribunal will only take into account facts known to the employer at the time of the dismissal (or any new facts which emerged during an appeal).

When deciding whether an employer acted reasonably in deciding to dismiss, only the state of mind or knowledge of the person appointed as decision-maker is relevant. He or she will not be assumed to have relevant knowledge known to others within the organisation, unless that knowledge should have been uncovered through a reasonable investigation (Orr v Milton Keynes Council [2011] EWCA Civ 62). This underlines the importance of good preparation and of making sure that all relevant facts are before the decision maker at the hearing, and of always attending the hearing unless there are exceptionally good reasons not to.

In deciding whether "no reasonable employer" would have made the decision to dismiss, tribunals will take into account all the facts, including, for example, an employee's disciplinary record and length of service (Strouthos v London Underground [2004] IRLR 636) and other mitigating factors such as any apology. These issues are looked at in more detail below (see Disciplinary procedures).

Right to written reasons for dismissal

Under section 92 of the ERA 96, employees with at least one year's continuous service have the right to a written statement of reasons for dismissal, which their employer must provide within 14 days of request. If an employer refuses to give a statement, the employee can complain to an employment tribunal. Employees starting work on or after 6 April 2012 will need two years service before they have this right.

An employee dismissed while pregnant or on maternity or adoption leave is entitled to a written statement without having to request it, and does not need any service.

If an employer dismisses without giving reasons, that dismissal is likely to be unfair (Adams v Derby City Council [1986] IRLR 163).

Changing the basis of the dismissal part way through the dismissal procedure is likely to be unfair. For example:

Fair reasons for dismissal

Capability

A "capability" dismissal relates to "skill, aptitude, health or any other physical or mental quality". An employee can be fairly dismissed because of a poor sickness record, but the employer will usually have to show that before deciding to dismiss, it tried to establish the employee's medical condition and prognosis for a return to work and examined alternatives to dismissal. The law governing dismissals while off sick is outlined in Chapter 7.

If a worker is disabled within the meaning of the disability discrimination provisions of the Equality Act 2010, there is additional protection (see Chapter 6: Disability discrimination).

If a dismissal is on the grounds of skill or aptitude, the employer will be expected to have given warnings and to have explained the standards of work required and the consequences of failing to meet them. Training should be offered and the employer should be able to show that alternatives, such as a transfer to another job, were considered. Failure to follow any internal capability procedure is likely to make the dismissal unfair.

Conduct

A conduct dismissal is based on something the employee has done or failed to do. It is more accurately described as "misconduct" dismissal.

In a case of misconduct, the employer must be able to demonstrate a genuine belief that the employee was guilty of the misconduct in question, and that its belief was based on reasonable grounds after a reasonable investigation (British Home Stores Ltd v Burchell [1978] IRLR 379).

Depending on the size of the organisation, if the same person acts as the investigating, disciplining and dismissing officer, the tribunal is likely to find that the investigation is unreasonable. In practice, using the same person to conduct both functions may be unavoidable in the smallest organisations. Whether dismissal is a reasonable outcome will depend on the employee's individual circumstances, as well as the nature of their work.

Employers must spell out what behaviour they regard as misconduct serious enough to justify dismissal. Failure to do this could make an otherwise fair dismissal unfair. This should be set out in the disciplinary procedure and drawn to employees' attention, for example through induction and training:

Any disciplinary rules must be clear and well known. The Acas Code suggests that special attention should be paid to ensuring that young employees new to the workplace, and those whose first language is not English, understand what is expected.

Rules should be applied consistently, although this does not necessarily mean the outcome will always be the same. Because individual circumstances, such as the employee's record, will nearly always be different, it will often be judged as fair for an employer to impose different penalties for the same offence:

Dismissals for a single act of misconduct are usually regarded as fair only in very serious cases.

Dismissing an employee for refusing to obey a reasonable instruction can be fair (Petrofac Offshore Management Limited v Wilson UKEATS/0013/11).

Gross misconduct

Employers have a right to dismiss without warning for offences amounting to "gross misconduct". A dismissal for gross misconduct is also known as a "summary dismissal". The employment ends immediately on dismissal, with no notice or notice pay. Like any other conduct dismissal, the employer must show a genuine belief in guilt based on reasonable grounds after a reasonable investigation (British Home Stores Limited v Burchell [1978] IRLR 379).

There are no circumstances in which a failure to investigate and follow a fair procedure can be justified, no matter how flagrant or obvious the misconduct. However, even though a misconduct dismissal may be procedurally unfair, a tribunal satisfied that on balance, gross misconduct took place is likely to order up to a 100% reduction in any compensation awarded, on the basis that the employee contributed to his own dismissal (see Contributory fault below).

An employer is not required to reach a criminal standard of proof. All that is needed is genuine belief on reasonable grounds. It is not the job of the tribunal to revisit the facts and decide whether the employee was actually guilty of the charges of misconduct against them, or substitute its view for that of the employer (London Ambulance Service NHS Trust v Small [2009] IRLR 563).

But even where there is a clear rule that prohibits certain conduct, employers do not necessarily have a free hand to dismiss. The decision must be within the band of "reasonable responses":

A dismissal related to drink and/or drugs may be fair, but as always, the employer must have a clear policy and communicate clearly to employees that breach of the policy can result in dismissal. Before any dismissal, the employer should have spelled out the rule barring substance use at work, and should conduct a proper investigation. Large employers would normally be expected to consult the employee on any dependency problem.

Employers may dismiss fairly for conduct outside work, but only if the conduct is in some way related to work, usually by damaging the employer's reputation. For the dismissal to be fair, there must be evidence of a genuine risk of reputational damage. A good example of dismissal for conduct outside work is the spate of recent dismissals for criticising the employer using social media, such as Facebook. (See LRD's booklet Social media, monitoring and surveillance at work (2012)).

The mere fact that an employee has been charged with an offence is not justification for dismissal without an investigation (Securicor Guarding v R [1994] IRLR 633). What matters is the extent to which the offence is likely to impact on the employment. The Acas Guidance on Discipline and Grievance at Work (see below) contains helpful guidance when representing employees accused of a criminal offence.

Disciplinary procedures

Since 2009, disciplinary procedures must meet at least the minimum requirements set out in the revised Acas Code of Practice (the Code). The Code replaces statutory dispute resolution regulations (now abolished) which were in place between 2004 and 2009. Alongside the Code, Acas issued fresh Guidance on dealing with discipline and grievances at work. Both are free to download from the Acas website. Breach of the Code gives tribunals the power (but not the obligation) to increase (or cut) compensation by up to 25%. Breach of the Guidance may well make a dismissal unfair, but it will not trigger the power to make a percentage increase/cut to compensation. The Code is intended to covers both "performance" and "conduct" issues.

The Code does not apply to redundancy dismissals or to the non-renewal of fixed-term contracts. There is a separate Acas Guide to Redundancy Handling.

These are the main features of the Acas Code relating to disciplinary hearings:

• discipline rules should be reduced to writing and be clear and specific;

• size and resources of the employer are important: more is likely to be expected of larger than smaller employers;

• issues should be dealt with promptly and unreasonable delay should be avoided. Investigations, in particular, must be carried out before memories fade. Delay can result in stress and anxiety for all concerned;

• in misconduct cases, different people should conduct the investigation and the disciplinary meeting;

• any suspension should always be with pay and be as brief as possible. (Note also, the recent comments of the Court of Appeal in Crawford v Suffolk Mental Health Partnership ([2012] EWCA Civ 138) that suspension should not be an automatic step in all cases of gross misconduct. Employers should bear in mind, in particular, the distressing impact of suspension on employees);

• employers should act consistently and carry out any necessary investigations to establish the facts;

• employees should be informed of the basis of the problem and given the chance to put their side of the story before any decisions are taken. They should be given enough notice prior to the meeting to have time to prepare their case and discuss the issues with a rep, and be sent copies of any documents, including witness statements, relied on by the employer, normally with the meeting notification;

• employees should be given a reasonable opportunity to ask questions, present evidence and call witnesses, and to raise points about witness evidence. The employer should confirm in advance the names of any witness it intends to call;

• employees have a right to be accompanied to any formal disciplinary meeting (see below); and

• there must be a right of appeal, which must be properly explained to the employee.

The Code sets out minimum procedures that must be followed. Many employers (especially public sector employers) have more comprehensive procedures. Failure to follow an internal procedure is likely to make a dismissal unfair. In particular, where an employer has more stages of appeal in an internal disciplinary procedure, a failure to follow all of those stages may make a dismissal unfair (Stoker v Lancashire CC [1992] IRLR 75).

A finding that a dismissal was procedurally unfair can be a hollow victory where the tribunal goes on to conclude that the dismissal would probably have taken place anyway, if a fair procedure had been followed. The well known case of Polkey v Dayton Services Limited ([1987] IRLR 503) established that where an unfair procedure has been used, a tribunal can reduce the compensation awarded to reflect the likelihood that dismissal would have taken place in any event if a fair procedure had been followed. In these circumstances, compensation is likely to be limited to lost earnings for the amount of time it would have taken to complete a fair procedure - usually a matter of weeks (see Compensation).

There is no absolute right to cross-examine witnesses, but the EAT has held that there may be circumstances in which it would be unreasonable for the employer to refuse a request to cross-examine (Santamera v Express Cargo Forwarding [2003] IRLR 273). For another example, in TDG Chemicals v Benton (UKEAT/0166/10), an employee sacked for allegedly mouthing a racist comment at a workmate during an onsite collision was unfairly dismissed when his rep was denied the right to cross-examine the other worker. The grave implications of a dismissal for making a racist comment meant the standard of investigation had to be particularly high and cross-examination should have been allowed.

If the employer has based its case on allegations by employees who want to remain anonymous, it will be for the tribunal to consider, as part of its assessment of the procedure's fairness, whether these sources should have been revealed. At the very least the substance of the allegations must be put to the employee. The EAT has held, in the case of Pudney v Network Rail Infrastructure Ltd EAT/0707/05, that it is unreasonable to dismiss an employee on the basis of material not disclosed to them or on which they do not have the opportunity to comment.

Where employees insist on anonymity, Acas encourages employers to look for corroborative evidence. Employers should also ask themselves questions about the possible motivation of the various participants.

The Acas guidance reminds employers of the importance of an open mind and of investigators looking for evidence both for and against the likelihood that an employee committed the misconduct. Relevant considerations are likely to include whether the employee made any admissions, and whether the allegations are supported by contemporaneous hard evidence, such as emails or CCTV.

A proper investigation may be held to have been carried out even if not all the evidence has been examined, as long as the tribunal finds that the investigation as a whole was fair and that the employer acted reasonably in dismissing the employee (Abbey National v Morgan EAT/0403/03).

Recent EAT cases show how tribunals expect higher standards of investigation where gross misconduct is alleged. The more serious the potential consequences of a charge for the individual, the higher the standard of investigation required. In Salford Royal NHS Foundation Trust v Roldan [2010] IRLR 721, a Filipino nurse was accused of mistreating a patient, based on the evidence of a colleague. The fact that her dismissal for gross misconduct spelled the end of her nursing career, the loss of her work permit and deportation meant that a particularly high standard of care was needed.

Similarly, in Crawford v Suffolk Mental Health Partnership ([2012] EWCA Civ 138), a nurse was unfairly dismissed following an allegation that she used inappropriate restraint methods on an elderly dementia patient. A key reason why the dismissal was unfair was because the hospital conducted a staged reconstruction of the incident without inviting the claimant and her representative.

Unfair dismissal and the Human Rights Act

Representation at internal disciplinary hearings

The Human Rights Act (HRA) binds all public bodies (including public sector employers), but not private employers or individuals. Where a public body, such as an NHS Trust or a maintained school, dismisses an employee for gross misconduct in circumstances likely to have a serious impact on that person's reputation and long-term ability to find work in their field, it has been argued that Article 6 (the right to a fair trial) is "engaged", triggering an obligation on the employer to ensure that internal disciplinary proceedings meet key requirements of a fair trial, in particular:

• legal representation

• an "independe254nt and impartial tribunal"

Courts accept that an internal disciplinary panel cannot be an "independent and impartial tribunal". Neither, normally, can an appeal panel responsible for reviewing the initial decision, even if it is made up of outsiders unconnected to the employer.

However, a recent Court of Appeal case (see below) may have effectively closed the dooron arguments that Article 6 (the right to a fair trial) can apply to an internal disciplinary hearing.

The case decided that the human right to a fair trial is not triggered by internal disciplinary hearings because these proceedings do not decide "civil rights". That step comes later, in either a claim for unfair or wrongful dismissal. It is already the case that employment tribunals and Courts, as public bodies, must consider human rights when making all their decisions, whether the employer is in the public or private sector:

The case made other important findings. For example, the Court dismissed any argument based on a human right to reputation, confirming that under UK law there is no general right to a reputation, and the European Convention on Human Rights (ECHR) cannot create such a right.

In deciding against Dr Mattu, the Court also criticised another well-publicised case: Kulkarni v Milton Keynes Hospital NHS Foundation Hospital Trust [2010 ICR 101]. In Kulkarni, the Court decided that a doctor's dismissal was unlawful because he was not allowed the legal representation to which he was contractually entitled under a contractual disciplinary procedure. However, one of the judges went further, suggesting that the human right to a fair trial can be triggered whenever a doctor faces charges so serious that their practical effect, if proved, would be to bar that doctor from practising his profession. The Court of Appeal in Mattu said that these comments did not reflect the law.

The only narrow basis on which it might still be possible to argue that the right to a fair trial is engaged by internal disciplinary proceedings is where an employer's decision is "likely to have a major influence over the outcome" of a later, separate decision (such as a decision to strike a name off a professional register) that will result in that person being excluded from his or her profession.

In these limited circumstances, it might still be possible to argue that the right to a fair trial applies to the internal disciplinary hearing. However, the case of Re (G) illustrates that such a scenario is likely to be very rare:

Given the limitations of an appeal to human rights in this context, reps defending employees accused of gross misconduct may well be better off turning their attention away from the HRA and drawing, instead, on the message from recent cases such as Roldan and Crawford that the more serious the consequences for the individual employee, the higher the standard of fairness required from the employer, both in the investigation and the hearing.

In any event, all these cases underscore the benefits of a good negotiated contractual dismissal procedure on which reps can rely, instead of having to build arguments based on the HRA.

The Human Rights Act and surveillance

In McGowan v Scottish Water [2005] IRLR 167, the EAT confirmed that the human right to respect for private and family life (Article 8) is engaged by an employer's decision to carry out covert surveillance of staff. However, the tribunal went on to conclude in that case that the use of private investigators to record Mr McGowan coming and going from outside his own home for a week was a proportionate means of addressing the legitimate aim of "preventing crime". The tribunal accepted evidence from Scottish Water that it had genuine suspicions that Mr McGowan had been falsifying time sheets by manufacturing false "call outs", and that the employer had explored other ways of investigating the situation before concluding that using investigators in this way was the only way of addressing the issue, especially as Mr McGowan worked virtually alone at an isolated water treatment plant, living in a nearby tied cottage.

Even though Mr McGowan's claim was unsuccessful, the case remains important for reps because it demonstrates that for covert surveillance not to be a breach of the HRA, the issue requiring investigation must be grave and serious, the employer must have genuine and reasonable grounds for suspicion, the employer must explore all other viable ways of investigating before opting for surveillance, and the level and manner of carrying out the surveillance must be "proportionate". Surveillance should not be a default or "knee-jerk" response of employers.

Employers are expected to warn staff (for example in a policy) that covert surveillance may be carried out. (For further information see Social media, monitoring and surveillance at work, LRD 2012).

Disciplinary warnings

Acas recommend that most issues are best approached informally before using a formal procedure.

Formal disciplinary procedures should specify a series of warnings leading to dismissal. There is no legal requirement for a procedure always to include a verbal warning before moving to a written warning.

Failure to follow an internal procedure is likely to make a dismissal unfair. In practice, most disciplinary procedures will usually allow the employer flexibility to decide what level of Warning to issue, depending on the seriousness of the conduct and past disciplinary offences. The Acas Code contemplates at least a First Written Warning, followed by a Final Written Warning, with the option of moving straight to a Final Written Warning where misconduct is sufficiently serious.

The Acas Guidance states that except in exceptional agreed circumstances, any disciplinary action taken should be disregarded for disciplinary purposes after a specified period of satisfactory performance or conduct. Employees should be told how long a warning will remain live and the disciplinary procedure should state that lapsed warnings will be disregarded.

It is normally unfair to rely on a lapsed warning when deciding to dismiss an employee (Diosynth Limited v Thomson [2006] IRLR 284), but there may be circumstances when the existence of a lapsed warning can be used to justify the reasonableness of a decision to dismiss. For example:

Disciplinary records

Employees are entitled to a copy of the notes of any disciplinary or dismissal meeting, and any supporting documentation relied on to make the decision and should be given the chance to comment while the minutes are still in draft. These documents are "personal data" for the purposes of the Data Protection Act 1998, so they must be kept confidential and be adequate, relevant, accurate and secure.

A number of other procedural matters may make a dismissal unfair. These include:

• a failure to consider a lesser penalty than dismissal (for example, demotion or a final warning);

• holding a disciplinary hearing in the absence of the employee (unless there are exceptional circumstances);

• refusing to consider new evidence presented at the appeal;

• failing to ensure that where possible, witnesses to a disciplinary offence are not involved in hearing the case (Moyes v Hylton Castle Working Men's Club [1986] IRLR 482);

A defective disciplinary hearing, for example, one where the employee has not had the opportunity to prepare a case, can sometimes be put right on appeal, as long as the person hearing the appeal had not been involved in the earlier stage (Byrne v BOC [1992] IRLR 505).

An appeal does not normally have to be a complete re-hearing of the case, but it must be comprehensive (Taylor v OCS Group Ltd [2006] EWCA Civ 702).

Retirement

When an employee's contract is brought to an end through compulsory retirement, this will be a "dismissal". Up until 6 April 2011, an employer was allowed to rely on compulsory retirement as a "fair reason" as long as the statutory retirement procedure was followed. In summary, this involved giving at least six months' notice to employees who were within 12 and six months of their normal retirement age (usually 65) of the intention to retire them. At the same time, the employees had to be told of their statutory right to request working beyond retirement.

The law changed on 6 April 2011, with the abolition of the "default retirement age" (DRA) of 65. From 6 April 2011, it is no longer possible forcibly to retire employees at age 65. The relevant regulations are known as the Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011.

Fixed retirement ages are likely to become increasingly rare, because a compulsory retirement age is age discrimination (section 13(2) Equality Act 2010). This means that it will only be allowed if it can be justified as a "proportionate means of achieving a legitimate aim".

The Supreme Court has examined the circumstances in which a compulsory retirement age can be justified as a "proportionate means of achieving a legitimate aim" in Seldon v Clarkson Wright and Jakes (a partnership) [2012] UKSC 16.

The Court set out a series of "legitimate aims" that could be used to justify a contractual retirement age, based on European case law. These include: sharing employment opportunities fairly between the generations, sharing experience and ideas, efficient workforce planning, safety considerations, including specific job demands for physical strength, rewarding experience, cushioning the blow for long-serving employees who may find it harder to find new work if dismissed and avoiding "humiliating" dismissals on capability grounds.

The aims fall into two distinct categories: (1) inter-generational fairness; and (2) dignity. Aims based on "dignity" are by far the more controversial, because as the Court acknowledged, opponents such as Age UK argue convincingly that suggestions that older workers should be saved the "indignity" of performance management are based on out-dated stereotypical assumptions.

Any compulsory retirement age must be able to reflect one or more of these "social policy" objectives and be both appropriate and necessary to the particular requirements of the employer, taking into account its impact on the disadvantaged group.

In particular, just because an employer may be able to justify operating a compulsory retirement age, it does not follow that retirement at age 65 (as opposed to some later age) can be justified in any particular workplace, especially if a less discriminatory measure might equally achieve the employer's aim (see Chapter 6: Discrimination - Age).

Redundancy

Redundancy can be a fair reason for dismissal, but there are several ways in which a dismissal on grounds of redundancy can be unfair. These include unfair selection, failure to consult properly and failure to offer suitable alternative employment. The law relating to redundancy is set out in Chapter 11. See also LRD's publication: Redundancy law - a practical guide (2011).

Complying with a legal duty or restriction

It is a fair reason to dismiss an employee if continuing to employ him or her would contravene a legal duty or restriction: in other words, where continued employment would break the law. Typical examples include drivers who lose their licence, where there is no suitable alternative employment, or employees who lose the right to work in the UK.

Since 2004, employers have been under a statutory obligation to carry out checks before the start of the employment, to ensure that all their workers have the right to work in the UK. Employers can lawfully demand proof of the right to work at any stage during the employment, as long as they treat all workers in the same way, and do not target particular workers or groups of workers because of race or nationality. Inability to produce proof of the right to work is likely to be a fair reason for dismissal. For further information see Chapter 3: References and employer checks.

Some other substantial reason

Section 98(1) of the ERA 96 also contains a "catch-all" provision, which states that it is fair to dismiss an employee for "some other substantial reason" (SOSR). There is no statutory list of reasons that might fall into this category, but they must be "of a kind such as to justify the dismissal of an employee holding the position which the employee held". This provision has been used to justify dismissal in a variety of contexts.

Examples include business reorganisations that do not result in redundancy, and dismissals for refusing to agree to new (usually worse) contract terms, such as cuts in pay. As always, for a dismissal for these reasons to be fair, the tribunal must be satisfied that the employer acted reasonably in all the circumstances.

Some of the key factors which are likely to influence a tribunal's decision as to whether the employer acted reasonably in all the circumstances can include whether:

• meaningful and genuine consultation took place over the proposed changes;

• there was a "sound business reason" for the changes at the time of the dismissal: it is not necessary for the employer to show that downgrading terms and conditions (for example, cutting pay) is essential or "the only way" to save the business. However, the severity of the impact of the change on employees is not irrelevant, because the worse the impact on employees, the harder the employer must work to justify the reasonableness of the dismissal (Slade v TNT (UK) Limited UKEAT/0113/11/DA);

• the employer considered other cost-cutting measures before cutting pay;

• the pay cut is distributed fairly across the workforce;

• the employer considered alternatives to dismissal with the individual who refused to agree to the changes;

• the majority of other employees agreed to the change, and the need for "industrial harmony" (in other words, the impracticality of giving better terms to a small number of workers who refuse to agree a change); and

• the employer used fair (as opposed to misleading) arguments to encourage the other employees to accept the deal:

The current economic downturn has seen a worrying increase in the number of employers adopting the tactic of ending contracts on notice, coupled with immediate offers of re-engagement on reduced terms. Where 20 or more employees are affected, the collective redundancy consultation obligations will be triggered (see Chapter11: Collective consultation). Cases like Garside illustrate the importance of solidarity, organisation and collective action in these circumstances. This case and others are looked at in more detail in LRD's booklet Redundancy law - a practical guide (2011).

A breakdown in trust and confidence caused by the employee can also lead to a fair dismissal for "some other substantial reason", (Huggins v Micrel Semiconductor (UK) EAT/0009/04). So too can third-party pressure where, for example, the third party was the employer's only or main client (Martin v JF X-Press EAT/0010/04).

Refusing to sign a restrictive covenant can be a valid reason for dismissal, where the employer is genuinely attempting to protect the interests of the business, although as always, the tribunal must take into account all the circumstances, for example, whether restrictions are reasonable, and whether other staff have signed it.

The right to be accompanied

Under section 10 of the Employment Relations Act 1999 (ERA 99), as amended by the ERA 2004, a worker required or invited by an employer to attend a disciplinary or grievance hearing has the right to bring a companion. The companion is chosen by the worker and can be a full-time union official (whether or not the union is recognised), a certified lay official (someone the union has trained to accompany individuals to hearings) or a workplace colleague.

The right to be accompanied is regardless of length of service.

To qualify as a "disciplinary hearing", the meeting must be capable of resulting in a warning or some other action, provided that this is held on the employee's file and represents a stage in a disciplinary procedure (LU v Ferenc-Batchelor EAT/1039/01/PRW [2003] IRLR 252). Whether a meeting is a disciplinary hearing (as opposed, for example, to an investigation meeting or a redundancy consultation meeting) depends on what happens at the meeting and not what the employer calls it. If it becomes clear during the course of an "investigation" meeting that some form of disciplinary action is being considered, the worker can ask for the meeting to be adjourned (Skiggs v South West Trains Ltd EAT/0763/03 ([2005] IRLR 459)).

To qualify for the statutory right to be accompanied, a grievance hearing must concern "the performance of a duty by an employer in relation to a worker".

If a worker's chosen companion is not available on the date fixed for the hearing, it has to be postponed, provided the new date is reasonable and within five days of the original hearing.

Because of the limitations to the statutory right to be accompanied, reps should try to negotiate improved rights to represent members beyond the statutory minimum. These should be wide enough to cover, for example, redundancy consultation meetings, redeployment meetings, return to work interviews, disciplinary investigations, progress meetings during a sickness absence procedure and all types of grievance meeting. At the same time, they should try and negotiate improvements to the rules on postponement of meetings, and an agreement that these rules will apply to all meetings at which representation is allowed under the procedure.

At the hearing, the companion has the right to put the worker's case, confer with the worker, sum up the case and respond on the worker's behalf to any view expressed at the hearing, but s/he cannot answer questions on behalf of the worker.

The worker and the companion have protection against any detrimental act or dismissal in connection with exercising these rights, and can take a claim to a tribunal within three months. If working for the same employer, both the companion and the worker have the right to be paid.

It is automatically unfair to dismiss an employee for acting as a rep or companion for another member of staff. There is no qualifying service requirement.

A lay official working for a different employer is protected from detrimental action by that employer, but has no right to be paid for any time taken to deal with the hearing.

An employee can take a claim to a tribunal if the employer refuses to let them bring their chosen companion to the hearing.

Qualifying for unfair dismissal rights

In most cases of unfair dismissal, an individual must meet certain qualifying criteria to be able to bring a claim. They must:

• be an employee (see Chapter 2);

• have been dismissed (see above);

• have been continuously employed by the employer for at least one year (two years if the employment started on or after 6 April 2012) by the "effective date of termination" (see below); and

• present the application to a tribunal within three months of the date of dismissal.

There is no longer an upper age limit on the right to claim unfair dismissal.

There is no service requirement in cases of automatically unfair dismissal (see below), with the exception of dismissals resulting from a business transfer or because of a spent conviction, when the normal service rules apply.

The effective date of termination (EDT) is the date the employment contract comes to an end. Employees must understand clearly when the EDT is if they are to bring a claim within the time limit.

In a case of summary dismissal (dismissal without notice), the EDT is the date the dismissal takes effect. This is usually the date the employee is told they are dismissed.

No dismissal takes effect until it has been communicated to the employee.

For a dismissal with notice, the EDT is usually the date when the notice period expires, even if the employee is told that s/he does not have to come to work during their notice period. However, a payment in lieu of the whole or any part of the notice can bring forward the EDT, and employees and reps should be aware of this if the employer indicates that it intends the employment to finish straight away.

The EDT is not necessarily the date on the P45, although this can be used as evidence of the date. Neither is a P45 proof of dismissal, and an employee does not have to wait to receive one before bringing a claim. If fact, if they do wait they may be beyond the three-month time limit and lose the right to pursue a claim (LB Newham v Ward [1985] IRLR 509).

In Wedgewood v Minstergate Hull Limited ([2010] UKEAT0137), the EAT confirmed that before the contract has come to an end, a termination date can be varied by a clear and unambiguous agreement between the parties:

The employer and employee cannot retrospectively agree on a termination date. Instead, the date is worked out by looking at what actually happened:

If an employee is dismissed for a reason other than genuine gross misconduct (summary dismissal) and has not been given the statutory minimum notice, the EDT is extended to the date when that notice would have expired (section 97(2), ERA 96). This means that an employee dismissed within a week of reaching the qualifying service for an unfair dismissal claim will still be entitled to bring that claim. However, this extension of the EDT does not apply to contractual notice exceeding the statutory minimum entitlement (Harper v Virgin Net Ltd [2004] IRLR 390).

If there is an appeal hearing and the dismissal is confirmed, the EDT remains the date of the original dismissal. If the dismissal is overturned and the employee is reinstated, the dismissal "vanishes" (Roberts v West Coast Trains [2004] IRLR 788) and continuity of employment is preserved.

Extending time to bring an unfair dismissal claim

A claim for unfair dismissal must be brought within three months of the EDT (see Qualifying for unfair dismissal rights). The tribunal has a discretion to extend the time limit for submitting a claim if it was "not reasonably practicable" to present the claim in time (section 111(2) ERA 96). However, this test is strictly applied and in practice, the discretion is rarely exercised in the employee's favour.

Failure of machinery, such as printers or faxes, will not be enough to justify an extension. In one EAT ruling, the claim arrived just 11 minutes late because of problems with the claimant's printer, but the EAT held that this was a relatively common occurrence and did not mean it was not reasonably practicable to comply with the time limit (Fishley v Working Men's College EAT/0485/04). In Horwood v Lincolnshire County Council UKEAT/0462/11/RN, the claim would have been in time if Ms Horwood's adviser had opted to use email or fax instead of the post. The EAT said this made it impossible to argue that it was not "reasonably practicable" to submit the claim in time.

A claimant who has not received an acknowledgement of their claim or who submits it very close to the deadline should check with the tribunal office that it has been received. Make a careful note of the time and date of your call and the person you spoke to.

In general, ignorance of the time limit is not a valid reason for extending it. If a claim is submitted late because the claimant has received the wrong legal advice, or has not been advised of the time limit by their solicitor, this will not normally be treated as a sufficient reason to extend time (Dedman v British Building and Engineering Appliances [1973] IRLR 379). For a recent example, see the following case:

The fact that the advice was given to Mr Singleton in a one-off free telephone consultation was irrelevant. The advice was negligent and Singleton's remedy was against the solicitors (who have insurance).

In Opare-Addo v Wandsworth (BC EAT/0740/01), the fact that the claimant was represented by her union was one reason why the tribunal thought it "reasonably practicable" for her to have lodged her claim in time.

The Court of Appeal did allow an extension of time where the claimant sought advice from a Citizens Advice Bureau who failed to tell her about the time limit (Marks & Spencer v Williams-Ryan ([2005] IRLR 562)). But in Remploy Limited v Brain UKEAT/0465/10 (see below), the judge commented that since there is now "widespread public knowledge of unfair dismissal rights", it will be increasingly difficult for employees to argue successfully that their ignorance of the time limit is reasonable.

In Remploy Limited v Brain, the EAT decided that informal advice from a solicitor who was not an employment lawyer and was a "friend of a friend", delivered over a cup of coffee, did not prevent Ms Brain arguing it was not "reasonably practicable" for her to meet the time limit. She was allowed to bring her claim even though she missed the time limit because the solicitor wrongly advised her to exhaust the internal appeal process first.

The EAT emphasised that a claimant is not allowed to argue that just because an internal appeal is still on-going, it is not reasonably practicable to bring an unfair dismissal claim. Even if the appeal process has not been exhausted, the claim must still be brought within the three month deadline.

Once an individual becomes aware of the correct time period, s/he must act with "reasonable skill and diligence" to bring her claim.

These cases illustrate the unpredictability of applications to extend time to bring claims for unfair dismissal. In practice, the three-month deadline should be approached by reps as if it is "set in stone". Only very rarely will it be extended. Given the unpredictable outcome of applications to extend time, it is vital that claims are submitted well inside the correct timeframe, i.e.three months from the date of dismissal. Even if a claimant succeeds in persuading the tribunal to extend time, s/he will have wasted costs and time and suffered considerable anxiety.

What is continuous employment?

Workers with broken or irregular service with the same or an "associated" employer may still be able to show that they have the necessary continuity of employment to claim unfair dismissal (and other statutory rights).

Continuous employment is calculated under sections 210 to 219 of the ERA 96.

A gap of less than a week does not break continuity even if, within that week, the employee goes to work for another employer and then returns.

Under section 210, employment is presumed to be continuous unless the contrary is shown, for example, where it was clearly intended that a series of temporary contracts would not be regarded as continuous (Booth v USA [1999] IRLR 16).

Under section 212, the following circumstances do not break continuity of service:

• incapacity through sickness or injury of 26 weeks or less;

• a "temporary cessation of work"; or

• absence that "by arrangement or custom" is regarded as continuing the employment.

A recent case looked at "temporary cessation of work" in the context of a temporary teacher whose work was broken by the long summer holiday. The case also has wider significance because it examines the meaning of "temporary cessation of work":

An employer and employee cannot agree between themselves that weeks will not count toward continuous service if they meet the statutory criteria under the ERA 96:

An employee agreed to resign, breaking continuity, to take advantage of an early retirement package. He immediately returned to a new job with the same employer. The EAT said that his continuity was not broken because he could not sign away his statutory rights (Carrington v Harwich Dock Co [1998] IRLR 567).

Continuity of service can be preserved where there is an "arrangement or custom" under section 212 ERA 96:

Reps should note that there is nothing in the Curr case to stop them negotiating a career break policy that provides expressly that all service will count for the purposes of contractual redundancy compensation, profit-related pay, and any other service related benefit. There is also nothing to stop a career break scheme being negotiated on terms that do amount to an arrangement to preserve continuity for the purposes of section 212.

For example, in Unwin v Barclays Bank (EAT/0273/02), the EAT held that the career break terms agreed between Mrs Unwin and Barclays did amount to an "arrangement" intended to continue the employment contract for the purposes of section 212. As a result, Mrs Unwin's service preceding her career break was included when she resigned less than a year after returning to work and brought a claim for constructive dismissal.

Below are some further examples of the rules operating to preserve continuity:

• employment on a series of fixed-term contracts (Pfaffinger v City of Liverpool Community College [1996] IRLR 508): Note that, under the Fixed-Term Employee Regulations, an employee who has worked on a series of fixed-term contracts for four years or more will be deemed to be a permanent employee unless the employer can justify keeping them on a fixed-term contract (see Chapter 2: Temporary employees);

• dismissing and then reinstating an employee (Ingram v Foxon [1985] IRLR 5), even if there is a TUPE transfer between dismissal and reinstatement (G4S Justice Services (UK) Ltd v Anstey EAT/0898/5);

• gaps between employment which are relatively short in comparison to the period of employment (Sillars v Charringtons Fuels [1989] IRLR 152);

• a period of work abroad followed by one in the UK with the same employer (Weston v Viga Space Systems [1989] IRLR 429);

• a break for sickness of fewer than 26 weeks, even if the employee worked elsewhere in that period (Donnelly v Kelvin International Services [1992] IRLR 496);

• a two-week gap during which the employee continued to work for the old employer before being transferred to the new employer under the TUPE regulations (Tuck A & G v Bartlett [1994] IRLR 162); and

• a week during which the employee received unemployment benefit in the period between his employment shutting down and reopening (Justfern v D'Ingerthorpe [1994] IRLR 164).

• Continuity is also preserved following a business transfer under the TUPE regulations (see Chapter 12).

If an employee is on strike for any part of a week, continuity is not broken. However, that week does not count in calculating continuous length of service. Women on maternity leave preserve their continuity of employment, and the period of the leave itself is counted.

Dismissal while on strike

Employees are automatically unfairly dismissed if the reason or main reason for dismissal is that they took part in official industrial action, and the dismissal took place during the first 12 weeks of the action (the "protected period") (see Chapter 9: How the law aids employers). No minimum service period is required.

Protection will extend beyond twelve weeks where the employer has failed to take reasonable procedural steps to resolve the dispute (for example, by engaging in collective conciliation through Acas).

The 12-week "protected period" is also extended to include any time when employees are locked out.

After 12 weeks, an employer wanting to dismiss some strikers must dismiss all of them. It cannot pick and choose. None of the dismissed employees can be offered their jobs back for three months after the date of dismissal unless all the strikers are offered their jobs back. Once three months have passed following the date of dismissal, employers can take back who they want without the risk of unfair dismissal claims.

Employees on strike during unofficial industrial action can be dismissed and will have no right to claim unfair dismissal (Section 237(1) Trade Union and Labour Relations Consolidation) Act 1992). If the action is unofficial, the employer can choose to dismiss some but not all of the strikers, without consequence.

Whether an individual is taking part in a strike is decided objectively. The test is what the employee did, not why.

In one case, an employee only took part in a strike to enable him to report back to the company on what the strikers were up to. When everyone else was dismissed, he was not, and the company tried to argue that he had not really been taking part in the strike. The EAT disagreed, saying his motive for taking part was irrelevant.

Workers must actually be taking industrial action when dismissed. If they have already returned to work and are then dismissed, they are not barred from making unfair dismissal claims. Whether or not they were taking industrial action is a question for the tribunal, not the employer, to decide (Jenkins v P & O Ferries [1991] ICR 652).

The International Labour Organisation (ILO), the body responsible for regulating employment law worldwide, has repeatedly condemned UK law for allowing the dismissal of strikers, saying it breaches international standards.

Although employees have statutory protection against dismissal for official industrial action, they have no statutory protection against action short of dismissal.

Automatically unfair dismissals

Dismissals for certain reasons are automatically unfair. In these circumstances, there is no need to go on to consider whether dismissal was reasonable. It is for the employee to prove the reason for dismissal fell within one of the automatically unfair categories.

The list of automatically unfair dismissals continues to grow as employees gain statutory employment rights. The different types of automatically unfair dismissals are described below. Except for dismissals relating to business transfers or dismissal because of a spent conviction, there is no service qualification for the right to claim unfair dismissal on one of the automatically unfair grounds (see Qualifying for unfair dismissal rights).

Pregnancy and parental rights

Dismissing a woman because she is pregnant or on maternity leave, or for any reason connected with her pregnancy, is contrary to both the Equality Act 2010 and section 99, ERA 96. The dismissal of an employee due to a pregnancy-related illness is also unlawful (Brown v Rentokil [1998] IRLR 445). However, a woman undergoing IVF treatment whose ova have been fertilised but not yet implanted, is not entitled to the protections afforded to pregnant women (Mayr v Bäckerei und Konditorei Gerhard Flöckner, C-506/06, Sahota v The Home Office and Pipkin (UKEAT/0342/09)).

It does not matter that there might have been other reasons for the decision to dismiss her. Provided that at least part of the reason for dismissing her was to do with her pregnancy, a woman will be regarded as dismissed for an automatically unfair reason.

Dismissal of employees for exercising parental, paternity or adoption leave rights is also automatically unfair. For the law on pregnancy, maternity and redundancy, see Chapter 11.

Business transfers

A dismissal connected with the transfer of business is automatically unfair under the Transfer of Undertakings Regulations 2006 (TUPE) (see Chapter 12).

Trade union membership

Section 152 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) protects individuals dismissed because they are, or propose to become, a member of an independent trade union or take part in its activities at an "appropriate time", i.e. outside working hours or inside those hours with the employer's consent.

A management-grade employee who was also a rep and was dismissed for advising new employees that their only safeguard lay with the union, was held to have been unfairly dismissed under this section.

Employees are protected by section 152 if they are dismissed for asking for union assistance in relation to their employment (Speciality Care v Pachela [1996] IRLR 248). However, this does not include organising or taking part in industrial action (see Dismissal while on strike).

Anyone dismissed for trade union reasons should immediately use the interim relief procedures in section 161 of TULRCA (see Chapter 5: Victimisation).

This must be done within seven days of the dismissal. The application must include a certificate signed by a union official stating that the dismissal is on account of union membership. The tribunal will, if it believes that the full hearing is likely to conclude that the dismissal was union-related, make a continuation order. This will mean that the employer must continue paying the employee pending the full tribunal hearing. A recent example of a union successfully securing such an order was the RMT sponsored case of Eamonn Lynch v London Underground (2011, unreported).

Blacklisting

It is automatically unfair to dismiss an employee where the main reason for dismissal relates to the use of information from a blacklist (i.e. a list containing details of individuals who are or have been trade union members, or who have taken part in trade union activities).

Representation rights

Employees are protected from dismissal for exercising their right to be accompanied or to act as a companion in disciplinary and grievance hearings (see The right to be accompanied).

Protected industrial action

During the period of protected industrial action (see Dismissal while on strike) employers are barred from dismissing employees taking official industrial action.

Enforcing a statutory right

It is automatically unfair to dismiss someone because s/he has attempted to enforce a relevant statutory right, such as a claim for holiday pay (section 104, ERA 96), or a parental right, such as parental leave or emergency time off for dependents.

It does not matter whether the employee actually has the right, or whether it has been infringed, as long as they acted in good faith (Mennell v Newell and Wright [1997] IRLR 519).

In Pearce and Pearce v Dyer EAT/0465/04, the EAT held that the dismissal of employees for alleging their employer had made unlawful deductions from their wages was a dismissal for enforcing a statutory right and therefore automatically unfair. Dismissal for a reason relating to jury service or working tax credits is also automatically unfair, as is dismissal for a spent conviction.

Part-time or fixed-term employees

It is unlawful to dismiss a part-time or fixed-term employee for asserting statutory rights as part-time or fixed-term employees.

Health and safety reasons

Under sections 44 and 100, ERA 96, a person must not suffer a detriment, be dismissed or made redundant wholly or mainly because of:

• carrying out functions as a safety rep;

• raising health and safety concerns with the employer;

• participating in safety consultations with the employer;

• leaving or refusing to return to a place of work in circumstances of "serious or imminent danger" or taking other steps to protect themselves or others in these circumstances; or

• carrying out safety duties designated by the employer.

The dismissal is automatically unfair and no period of service is required. Examples include a finding of unfair dismissal for refusing to drive defective vehicles, and, in the case of a young female employee, for refusing to take rubbish alone at night to a deserted dump. Steps to protect members of the public are also covered. For example, in Masiak v City Restaurants (UK) Limited [1999] IRLR 780, a chef dismissed for refusing to cook food he considered unfit for human consumption was protected. "Circumstances of danger" has a relatively wide meaning and includes danger of violence from other employees (Harvest Press Limited v McCaffrey [1999] IRLR 778) but in Balfour Kilpatrick v Acheson ([2003] IRLR 683), staff who walked out over being made to wear damp clothing were not able to show an imminent risk.

A recent case, Oudahar v Esporta Group Limited UKEAT/0566/10, looked at how to interpret the statutory protection given to employees facing "serious and imminent danger". The EAT decided that as long as a tribunal is satisfied that there were in fact "circumstances of danger" which the employee reasonably believed to be "serious and imminent", the dismissal will be unfair if it was solely or mainly due to the employee taking steps to avoid the danger. In other words, it is wholly irrelevant whether the employer agreed at the time with the employee's assessment of the risk, or felt that the steps chosen were necessary or appropriate.

Some unions provide useful advice on when workers can "stop the job". For example, the Community union has produced pocket-sized cards for safety reps setting out the letter of the law, so that reps are clear about their rights if they feel they have to take this step.

For further details and examples see LRD's booklet Safety reps in action (2011).

Whistleblowing

Under the Public Interest Disclosure Act 1998 (PIDA), an employee making a protected disclosure ("whistle-blowing") about an employer's fraudulent or criminal activities has protection against victimisation, detriment and dismissal.

Even if it turns out that the allegation was wrong, provided that the employee had a reasonable belief and was reasonably mistaken, the law will protect him or her from detrimental treatment (Babula v Waltham Forest College ([2007] IRLR 346). However, the employee's reasons for making the disclosure must be motivated entirely by the public interest in disclosure and not by personal antagonism.

The recent case of BP PLC v Elstone (UKEAT/0141/09), demonstrates that a PIDA claim can be brought even where a disclosure is not about a current employer, but instead relates to a previous employer, or even, in some cases, a third party. In this case, Mr Elstone made a disclosure to senior executives at BP about safety concerns at his previous employer. He was then engaged by BP as a consultant, but the appointment was terminated almost immediately when BP discovered he had been sacked by his previous employer for making the disclosure.

The EAT has held that PIDA also protects workers who complain about breaches of any legal obligations their employers have under their individual employment contracts. In Parkins v Sodexho [2002] IRLR 109, an employee used PIDA successfully to complain about lack of adequate supervision, amounting to a breach of health and safety obligations. This case has been relied on by employees to suggest that there is a "protected disclosure" whenever a worker makes a written complaint about breaches of the employment contract.

In Cavendish Munro Professional Risks Management Ltd v Geduld [2010] IRLR 38, the EAT clarified that merely complaining to your employer (even through solicitors) about breaches of the employment contract is not a "protected disclosure" because whistleblowing requires the disclosure of information and not just the statement of a position.

In any event, reps should note that the law on this issue is to be significantly changed by planned new legislation. The government's proposal, which appears in section 14 of the Enterprise and Regulatory Reform Bill 2012, is to limit PIDA protection, so that it is only available to those workers who make disclosures about wrongdoing "in the public interest". This new "public interest" test, if it becomes law, is likely to act as a significant deterrent to workers concerned about speaking up about their conditions of work.

Compensation in whistleblowing cases is uncapped and can include an award for injury to feelings (see Compensation).

Refusal to work on Sundays

Dismissal of a protected shop or betting worker for refusing to work on Sundays is automatically unfair.

Employee representatives and pension fund trustees

It is automatically unfair to dismiss an employee for acting as an employee representative (or candidate), a member of a European Works Council or for activities in connection with information and consultation rights. Similar protection applies to trustees of occupational pension funds under section 102 ERA 96.

Minimum wage and working time

It is automatically unfair to dismiss someone for lawfully pursuing their statutory rights to pay, hours or holidays (see Chapter 4).

Union recognition

It is automatically unfair to dismiss an employee for seeking trade union recognition.

Successful claims

An employee bringing a claim for unfair dismissal is entitled to ask for his or her job back. However, less than one per cent of successful claimants are reinstated or re-engaged. Most are awarded financial compensation only. Victimised reps should always ask for reinstatement or re-engagement, not least as it can increase the amount of compensation awarded or help promote a more favourable settlement.

Reinstatement or re-engagement

When the tribunal system was first devised, reinstatement and re-engagement orders were supposed to be the primary remedy. However, in practice, they are extremely rare. Only eight were made for the whole year leading up to March 2011.

Under sections 113 and 114 ERA 96, tribunals can order an employer either to reinstate (give the employee their old job with compensation for lost earnings) or re-engage (give the employee a suitable alternative job with compensation for lost earnings). Reinstatement restores the original contract and preserves continuity (London Probation Board v Kirkpatrick EAT/0544/04 ([2005] IRLR 443).

Employers cannot avoid their obligations to reinstate or re-engage simply by showing that they have already hired a replacement. When deciding whether to order the re-employment of unfairly dismissed employees, the tribunal must make a provisional assessment of the practicability of the employer complying with the order. A final decision is only made if the employer refuses to comply (Port of London Authority v Payne and Others [1994] IRLR 9). A tribunal refusing a request for reinstatement or re-engagement must always give reasons for refusing (Prior v City Plumbing Supplies Ltd UKEAT/0535/11/CEA).

Reinstatement will hardly ever be ordered where there has been a serious breakdown of trust and confidence (Wood Green Heavy Industrial Turbines Limited v Crossan [1998] IRLR 680). The mere fact that the employee made allegations about the employer while presenting his tribunal claim will not, on its own, be enough to show that the fundamental relationship has been destroyed. However, if a tribunal finds the employee partly responsible for the dismissal (known as a finding of "contributory fault"), it is unlikely to order re-engagement.

A shocking case concerning reinstatement for engaging in lawful trade union activities is currently making its way through the Courts, via an application for judicial review. The claim results from the refusal of an NHS Trust to re-engage a trade union activist unfairly dismissed for engaging in trade union activities:

Compensation

Compensation has two main elements: a basic award and a compensatory award. At an early stage of any tribunal claim, the claimant will be expected to complete a detailed Schedule of Loss for the employer and the tribunal, explaining what sums are claimed and why.

The basic award is calculated using a formula linked to length of employment and age. It looks backwards at prior service: the longer the service, the higher the award. Following the age equality legislation, the formula no longer has an upper age limit or the "tapering" provisions which used to reduce compensation once employees reached 64.

The basic award is calculated as a number of "weeks' pay" according to age and length of service, as follows:

• aged under 22 - half a week's pay for each complete year worked under this age;

• aged 22 to 40 - one week's pay for each complete year worked between these ages; and

• aged 41 and over - one and a half weeks' pay for each complete year worked from this age onwards.

A "week's pay" is capped at the statutory maximum of £430 (2012-13). Weekly earnings over this amount are not included in the calculation of the basic award (although they are used to calculate the compensatory award: see below). Below the amount of the cap, the week's pay is based on gross pay and, where earnings are irregular, is averaged over a 12-week period. Overtime is only included if there is a contractual obligation on the employer to offer it and on the employee to work it (British Coal v Cheesbough [1990] IRLR 148).

The "week's pay" cannot be less than the national minimum wage, even if the employee was not receiving it (Paggetti v Cobb EAT/136/01 ([2002] IRLR 861)).

The maximum number of years of work that can be taken into account is 20. This makes the maximum basic award £12,900 (2012-13).

In cases of dismissal for trade union duties and activities, for carrying out the duties of a health and safety rep, an employee rep, a rep for the purposes of the Working Time Regulations, or of a trustee of a pension scheme, the minimum basic award is £5,300 (2012-13). There may also be an entitlement to an additional award (see below).

If the dismissal is carried out in breach of the Acas Code of Practice on Discipline and Grievance (see Disciplinary procedures), the tribunal has a power to increase or cut its award by up to a maximum of 25%.

The compensatory award (section 123, ERA 96) looks forward into the future and is intended to cover financial losses resulting from the dismissal. The tribunal has discretion to award an amount that it considers "just and equitable". However, this discretion does not allow the tribunal to award damages beyond the losses that actually result from the dismissal (Dunnachie v Kingston upon Hull City Council [2005] ICR 1052).

The compensatory award can include:

• expenses resulting from the dismissal;

• net wages up to the hearing date that the employee would have earned if s/he had not been dismissed. Wages are awarded net of tax and national insurance contributions because they are supposed to equate roughly to what the employee would have earned had s/he not been dismissed;

• lost pension rights;

• loss of statutory protection: this notional sum, typically around £300, is supposed to reflect the loss of the job security that comes from having enough service to bring an unfair dismissal claim;

• costs associated with seeking new work (e.g. travel costs to interviews: keep all evidence, including receipts); and

• future net lost wages: the length of period claimed should reflect how hard this particular claimant is likely to find the search for alternative work, taking account of individual characteristics such as age and any disability, and general features such as poor economic conditions.

If the claimant has not found alternative work quickly, the largest part of the compensation claim is likely to be for actual and projected lost earnings. In exceptionally rare cases, there may be a longer claim for lost earnings on the basis that the employee has been "stigmatised" for bringing a claim (Chagger v Abbey National PLC [2010 IRLR 47).

Loss of pension rights amounts to more than just the money the employer would have paid into the pension fund. It is the amount of pension an individual would have been entitled to had it not been for the unfair dismissal (Clancy v Cannock Chase Technical College [2001] IRLR 331). If the employee was in a final salary scheme, this is likely to be very significant.

A claimant can only recover losses resulting from the employer's actions. A hospital consultant was not entitled to recover earnings from private work he took on externally, because these were not earnings he was entitled to under his contract with the NHS Trust. This is so even if the dismissed employee can show that the extra earnings were dependent on the existence of the lost job (Schlesinger v Swindon & Marlborough NHS Trust EAT/0072/04).

If an employee is too sick to work, and that sickness was not caused by the dismissal, future lost earnings will normally be limited to any sick pay they would have earned had they not been unfairly dismissed (Burlo v Langley [2007] IRLR 145).

However, if a tribunal is satisfied that a claimant is unfit for work as a result of the unfair dismissal (for example, depression as a result of a dismissal decision), it may award the net lost earnings that would have been earned if the claimant had not been unfairly dismissed (Devine v Designer Flowers [1993] IRLR 517). Careful medical evidence is needed in this kind of case, to show that the inability to work is as a result of the dismissal decision itself and did not pre-date the dismissal. Note that the position is different in the case of resignation and constructive dismissal, as the following case illustrates:

These cases show how unfair dismissal law is particularly complex where issues of dismissal due to long term sickness are concerned. It is vital to get early legal and medical advice, to make sure any claim is brought in time and in the right court.

It is never possible to claim for injury to feelings in unfair dismissal cases (Dunnachie v Kingston upon Hull City Council ([2004] IRLR 727)).

Employees have an important duty to "mitigate (lessen) their losses" principally by looking for alternative work.

The key to success in any compensation claim is to be well organised and realistic, and to think ahead about how you will prove your losses:

• Keep a careful document trail and a "job search diary" of all efforts to find work, including evidence of all adverts, application forms, online applications, responses received, interviews attended and all costs incurred, such as travel costs.

• Remember that an employer who loses a case on liability will arrive at the tribunal armed with evidence of all the jobs you could have applied for.

• If you are sacked while on maternity leave, it is particularly important to be ready to resist arguments that your compensation should be cut because you would probably not have come back to work quickly in any event (Ministry of Defence v Cannock [1994] 918). Do this by making (and keeping a record of) regular job applications (including online applications) during your maternity leave, and following them through appropriately.

Where an employer dismisses an employee without notice, the employee need not give credit in unfair dismissal compensation for sums earned from a new job during the notice period (Norton Tool Company Limited v Tewson [1972] ICR 501). This rule of "good industrial practice" was upheld by the Court of Appeal in Burlo v Langley ([2006] EWCA Civ 1778), even though it can result in "double-recovery" of compensation during the notice period. The situation is different with claims for wrongful dismissal and constructive dismissal. In both these situations, the employee must give credit for any sums earned in a new job during the notice period (Stuart Peters Ltd v Bell [2009] EWCA Civ 938).

Earnings from any new job will be taken into account to reduce the compensatory award, although the basic award stays the same. The compensatory award will be reduced by earnings from, for example, new full or part-time work, self-employment, agency or casual work. However, the tribunal will not take into account earnings from a second job that a claimant already had before dismissal. Neither will it normally take account of income from any insurance product a claimant bought before dismissal, for example, mortgage or income protection insurance that pays a percentage of pre-dismissal earnings for a fixed period.

An employee who finds a new higher-paid job will have no on-going claim for loss of earnings. In some circumstances, an employee who secures a new job but then loses it before the date of the tribunal hearing may still be able to bring a claim for future lost earnings, but the employer will argue strongly that the new job "broke the chain of causation", so that it should no longer be held responsible for on-going lost earnings.

An employee may be able to use other ways of mitigating losses apart from finding a new job, for example, setting up a new business, or attending a training course if s/he can show that it would be unreasonable to find a new job in his or her particular circumstances. For example, in Orthet v Vince-Cain ([2004] IRLR 857), the EAT ruled that a dismissed employee had mitigated her loss by attending a university course, since it was unlikely that she would get a comparable new job to the one she had lost without further qualifications.

The burden of proof that the employee has failed to mitigate his or her loss rests with the employer (Fyfe v Scientific Furnishings [1989] IRLR 331).

An unreasonable refusal of an offer of re-employment can amount to a failure to mitigate. The tribunal will consider whether the employee acted unreasonably in refusing the offer, taking into account all the circumstances (Wilding v BT [2002] IRLR 524)). For example, see the following case:

As always, each case depends on its own facts. An employee is more likely to be judged to be behaving unreasonably in turning down an employer's offer of fresh employment where it is a large employer able to offer a fresh start at a new location.

The maximum compensatory award that can be made in most cases is £72,300 (2012-13). There is no maximum in cases of dismissal for health and safety reasons or for whistleblowing. If the dismissal is discriminatory, compensation for lost earnings can be claimed under the Equality Act 2010, with no limit on the amount of compensation that can be awarded (see Chapter 6). In reality, the vast majority of claimants achieve awards far below these maximum sums. As indicated at the start of this chapter, the median award for unfair dismissal in the year to March 2011 was £4,591.

Employers cannot avoid paying proper compensation by arguing that they do not have enough money and that the size of the award would endanger their business:

Contributory fault

If the tribunal thinks the employee's conduct contributed to the unfair dismissal, it can reduce the compensatory award to reflect this (section 123(6) ERA 96). However, to justify a cut in compensation, the conduct must be "foolish, perverse or unreasonable" (Nelson v BBC (No.2) [1980] ICR 110).

Note that where a dismissal is automatically unfair because it relates to trade union duties or activities, section 155 TULRCA 92 requires a tribunal, when assessing contributory fault, to disregard any conduct or action by the employee relating to the employer's demand that the employee cease to be a member of a union, participate in union activities or access union services.

The tribunal can reduce the amount of the basic award because of any conduct of the employee before dismissal (section 22(2), ERA 96). The tribunal also has a general power to reduce the compensatory award if it thinks this is "just and equitable", for example, if the employee is guilty of misconduct which was only discovered after the dismissal (so that it cannot be said to have "contributed" to the dismissal decision). This can result in a percentage reduction of as much as 100% (Devis v Atkins [1977] ICR 662).

Any money already paid to the employee by the employer as a result of the dismissal (for example, any settlement payment) will be deducted from the compensation. Job Seekers Allowance and Employment and Support Allowance can also be taken into account (Morgans v Alpha Plus Security EAT/0438/04), but incapacity benefit is not automatically deducted (Sheffield Forgemasters International Ltd v Fox UKEAT/0143/08/MAA).

Compensation can also be reduced where the tribunal finds a chance that, even if a fair procedure had been followed, the employee would have been dismissed. This is known as a Polkey reduction. Compensation can also be increased or decreased because of the employer's (or employee's) failure to follow the Acas Code of Practice. The amount awarded can be increased or decreased by up to 25%: Section 207A, ERA 96.

Redundancy payments are offset against the basic award (which is equivalent to a statutory redundancy payment in terms of its amount) (Digital Equipment v Clements [1998] IRLR 134), but only if the tribunal finds that there was a genuine redundancy (Boorman v Allmakes ([1995] IRLR 553).

An additional award applies in trade union membership (or non-membership) cases and in cases of unlawful discrimination and dismissal for health and safety reasons where the employee asked for reinstatement or re-engagement but the employer refused to comply with the tribunal order. It gives between 26 weeks' and 52 weeks' pay. Section 160 of TULRCA 92 gives the tribunal power to order that the compensation award be paid by the union instead of the employer in cases where the tribunal decides that the union induced the employer to dismiss.

The statutory cap

The statutory cap (currently £72,300) is to the compensatory award. Applying the statutory cap is the last step in the calculation, after assessing the amount of the loss and taking into account any payments made by the employer and any percentage adjustments required for, for example, contributory fault or failure to comply with the Acas Code. The basic award is in addition to the compensatory award and any additional award (see above).

If the sum awarded remains unpaid 42 days after the tribunal decision, interest is payable on amounts outstanding. If the employer is insolvent, the Secretary of State for Department for Business, Innovation and Skills (BIS) assumes responsibility via the National Insurance Fund, but only for some of the money due.

The right to payment from the Secretary of State covers the basic award for unfair dismissal, arrears of pay (to a maximum of eight weeks) and holiday pay (six weeks maximum). But in these cases a "week's pay" is calculated as for the basic award for unfair dismissal with a maximum of £430 (2012-13). The employee receives a net sum after tax and other deductions (Titchener v Secretary of State for Trade and Industry [2002] IRLR 195).

Contractual lay-off pay is not payable by the Secretary of State as it does not come under the definition of pay (Benson v Secretary of State ([2003] IRLR 748)). A payment made by the Secretary of State breaks continuity, meaning that even if employees later transfer to a new employer, they will have lost their right to count previous service. If the Secretary of State fails to make any payment, a claim should be submitted to a tribunal within three months. If any other money is due from the employer, it becomes either as a priority debt or an unsecured debt in the insolvency. (See Chapter 12: TUPE).

A payment received as compensation for unfair dismissal under a compromise agreement is tax free up to £30,000, even if the employee is reinstated, as long as it is genuinely compensation for loss of the job rather than earnings or a payment for services (HM Inspector of Taxes v Clayton [2005] IRLR 108).

Wrongful dismissal

Employees who are not able to claim unfair dismissal may be able to claim wrongful dismissal or in rare cases, seek an injunction to prevent the dismissal until a fair procedure has been followed. Wrongful dismissal is a claim for breach of contract. The breach of contract is the wrongful failure to give proper notice. So the normal measure of damages is the amount the employee would have been paid if the contract had been ended lawfully by giving proper notice, minus anything earned elsewhere during what would have been the notice period. The employee has a duty to mitigate his loss (Cerberus Software v Rowley [2001] IRLR 160).

Usually the contract will specify the notice needed to end the contract. Employees who are wrongfully dismissed without proper notice can claim any rights they would have had during the period of the notice (Silvey v Pendragon [2001] IRLR 685).

Where employees have the benefit of a contractual entitlement to a disciplinary or appraisal procedure which the employer has not followed, they will be entitled to be paid for the amount of time it would have taken to operate the procedure properly. They may also be entitled to an injunction preventing the employer (for example, an NHS Trust) carrying out a dismissal without following the procedure.

As a contract claim, a wrongful dismissal claim can be brought in either the civil courts or the employment tribunal. However, although there is no cap on claims in the civil courts, in the tribunal such claims are limited to £25,000.