9 Ways to Avoid an Unfair Dismissal Claim

Posted by

Ella Bond

on 23 Aug 2023

With the UK's high risk of recession, redundancies loom. Each redundancy brings the chance of an unfair dismissal claim. Learn how to avoid these.

9 Ways to Avoid an Unfair Dismissal Claim

A recent survey shows that 3 in 10 employers are likely to make staff redundancies in the next year. A closer look into the Acas-commissioned YouGov survey reveals that 41% of large businesses are likely to make redundancies, with 20% of Small and Medium Enterprises (SMEs) expecting to do so.

There were 108 000 redundancies in the three months leading up to June 2023. In line with this, HR consultancy Ayming UK found that almost half of UK businesses expect to cut costs this year, and 37% will reduce hiring activities.

Avoiding an unfair dismissal claim

  1. Create effective employment documentation
  2. HR & equality training
  3. Fair reasons for dismissal
  4. Reasons for unfair dismissal
  5. Penalties for an unfair dismissal
  6. Follow a fair disciplinary procedure
  7. Take notes & follow up meetings in writing
  8. Treat all employees consistently
  9. Seek employment law advice early on

We have some simple tips to help your company avoid the cost, time and damage to your reputation of ending up in an employment tribunal.

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1. Create effective employment documentation

A well-drafted employment contract, together with a comprehensive set of policies, should detail the standards of performance and conduct expected of an employee.

The policies should also outline the procedure which should be followed when those standards are breached. Ensure that copies of all employees’ employment contracts are kept and that the company policies and procedures have been communicated to and are accessible to your staff.

2. HR & equality training

When it comes to claims of unfair dismissal, SMEs with little or no knowledge of employment law or access to an internal HR function can find themselves in trouble.

Employers need to make sure that dismissal is thoroughly thought through beforehand and isn’t a spur-of-the-moment retaliation to an employee’s actions.

By providing training for all staff members involved in the dismissal process, at least you'll know that the process is being conducted legally. And you could perhaps avoid a tribunal completely by ensuring all staff have equality and discrimination training in the first place!

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3. Fair reasons for dismissal

Under the Employment Rights Act 1996, there are five fair reasons for dismissal:

  • Conduct/misconduct;
  • Performance;
  • Redundancy;
  • Statutory illegality or breach of a statutory restriction;
  • Some other substantial reasons.

4. Reasons for unfair dismissal

Even if you’ve acted reasonably, some reasons for dismissal are automatically classed as unfair if they fall within specific areas:

  • Pregnancy, including all reasons relating to maternity.
  • Family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants.
  • Acting as an employee representative.
  • Acting as a trade union representative.
  • Acting as an occupational pension scheme trustee.
  • Joining or not joining a trade union.
  • Being a part-time or fixed-term employee.
  • Pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage.
  • Whistleblowing.
  • Compulsory retirement on the grounds of age is unlawful, unfair dismissal unless you can objectively justify it - but you could be challenged at a tribunal.

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5. Penalties for an unfair dismissal

If a tribunal finds that an employee has been unfairly dismissed, you might be ordered to:

  • Reinstate them (give them their job back)
  • Re-engage them (re-employ them in a different job)


You might also have to pay compensation, which depends on an employee's:

  • Age
  • Gross weekly pay
  • Length of service
  • And extra compensation if you do not follow a tribunal’s order to reinstate someone.

There’s a limit on the amount a tribunal can award for unfair dismissal, apart from in cases relating to:

6. Follow a fair disciplinary procedure

A fair disciplinary procedure should include:

  • Listening carefully to the employee.
  • Carrying out a thorough investigation (including consideration of relevant documentation and speaking with witnesses, where appropriate).
  • Being alert to any mitigating circumstances.
  • Maintaining confidentiality wherever possible and offering the right to appeal against the decision given.

The procedure used should be compliant with statutory requirements as well as those detailed in company policy documents.

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7. Take notes & follow up meetings in writing

All notes should be accurate and made contemporaneously. They will help to demonstrate the fairness of the procedure used and the reasoning behind any decisions made. The follow-up letter to the employee should also communicate this to them and ensure that they are aware of the outcome and any next steps.

8. Treat all employees consistently

It can be very difficult to justify any discrepancy in the treatment of individual members of staff when compared to situations involving largely the same allegations unless there are or were any mitigating circumstances present.

9. Seek employment law advice early on

Claims for unfair dismissal can be financially costly, cause reputational damage and are a drain on time and resources.

Seek advice from a professional employment law advisor as soon as possible to know where you stand and ensure your case is as robust as possible. This will ultimately save you money in the long run.

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