How to Dismiss an Employee Fairly in the UK
A practical, employer-side guide to fair dismissal: the five lawful reasons, the process you must follow, the most common mistakes that lead to tribunal claims, and what ERA 2025 means for every dismissal from 2027 onwards.
Employer-Side Advice Only
CIPD Qualified
ERA 2025 Updated
North West BasedTo dismiss an employee fairly in the UK you need two things: a potentially fair reason under the Employment Rights Act 1996 (conduct, capability, redundancy, statutory illegality, or some other substantial reason) and a fair procedure to back it up. Getting the reason right but the process wrong still results in an unfair dismissal finding. From January 2027, the qualifying period for unfair dismissal claims drops from two years to six months, making every dismissal higher risk than it was before.
The Five Potentially Fair Reasons to Dismiss an Employee
Under section 98 of the Employment Rights Act 1996, there are five potentially fair reasons for dismissal. If the reason does not fall within one of these five categories the dismissal is automatically unfair, regardless of how reasonable the employer believed it to be.
1. Conduct
The employee has behaved in a way that justifies dismissal, either a single act of gross misconduct serious enough to warrant immediate dismissal, or a pattern of less serious misconduct that has continued despite formal warnings. Examples include persistent lateness despite warnings, dishonesty, violence, and serious insubordination. For anything short of gross misconduct a proper disciplinary process must be followed before dismissal is considered.
2. Capability
The employee is unable to do the job to the required standard, either because of poor performance or because ill health prevents them from carrying out their duties. For performance-based capability dismissals the employer must have given the employee a genuine opportunity to improve with clear targets, support, and warnings. For ill health capability dismissals the employer must have explored reasonable adjustments and obtained medical evidence before dismissal is considered.
3. Redundancy
The role is genuinely no longer needed, because the business is closing, the workplace is closing, or there is a diminished need for work of a particular kind. Redundancy as a label does not protect an employer if the real reason is performance or conduct. Tribunals look at substance not label. A genuine redundancy still requires a fair selection process, meaningful consultation, and consideration of suitable alternative employment.
4. Statutory Illegality
Continued employment would put the employer in breach of a legal obligation. The most common example is a driver who loses their licence where driving is an essential part of the role. This is a narrow category and applies in relatively few situations.
5. Some Other Substantial Reason
A catch-all category for dismissals that do not fit neatly into the other four but where the employer had a genuinely good reason. Examples include the breakdown of a working relationship that has made continued employment genuinely untenable, or the return of an employee from maternity leave to a temporary replacement’s role. This category must be used carefully. It is not a back door for dismissals that lack a proper basis.
Fair Reason Is Not Enough: You Must Also Follow a Fair Process
Having a potentially fair reason is only the first test. The employer must also show it acted reasonably in treating that reason as sufficient to justify dismissal and that it followed a fair procedure. This is where most employers come unstuck.
The Acas Code of Practice on Disciplinary and Grievance Procedures sets the benchmark. Tribunals take the Code into account when assessing fairness. Unreasonable failure to follow it can increase compensation by up to 25%.
Step 1: Investigate Properly
Before any dismissal decision is made the employer must conduct a reasonable investigation. What happened, when, who was involved, what evidence exists. The investigation must be conducted by someone who will not be the decision-maker at any subsequent hearing. Document everything. Tribunals focus on what the employer knew and when.
Step 2: Invite to a Formal Hearing
The employee must receive written notice of the hearing with enough time to prepare, typically at least 48 hours in advance, though longer is better practice. The letter must clearly state the allegation or concern, confirm that dismissal is a potential outcome, and remind the employee of their right to be accompanied by a colleague or trade union representative.
Step 3: Conduct the Hearing Fairly
The employer presents the evidence. The employee has a full opportunity to respond, ask questions, and present their own evidence or mitigating factors. The decision-maker must approach the hearing with a genuinely open mind. A decision made before the hearing takes place is one of the most common grounds on which dismissals are found to be unfair.
Step 4: Make a Reasonable Decision
The decision to dismiss must fall within the range of reasonable responses, meaning it is a decision a reasonable employer might have made, not necessarily the only decision. Document the reasoning in writing at the time it is made.
Step 5: Confirm in Writing
The outcome must be confirmed in writing without delay, including the reason for dismissal, the notice period, the final date of employment, and the right of appeal.
Step 6: Offer a Right of Appeal
Every dismissal must include a genuine right of appeal to a more senior person not involved in the original decision. The appeal must be heard properly. A dismissal that follows every other step correctly but fails to provide a meaningful appeal remains vulnerable.
The Most Common Mistakes That Lead to Unfair Dismissal Claims
Deciding before the hearing
The most frequent and most damaging mistake. If the decision to dismiss has effectively been made before the employee has responded the dismissal is procedurally unfair regardless of the underlying reason.
Inadequate investigation
Dismissals based on incomplete or one-sided investigations are regularly overturned. The investigation must be fair, documented, and completed before any hearing takes place.
Wrong label on the reason
Calling a dismissal redundancy when the real reason is performance, or capability when the real reason is conduct, creates serious vulnerability. Tribunals examine substance not labels.
Jumping straight to dismissal
For anything short of gross misconduct, dismissal without prior warnings will almost always be unfair. The expected progression in most misconduct and performance cases is first written warning, final written warning, then dismissal.
Inconsistent treatment
If a colleague who did the same thing received a warning rather than dismissal the tribunal will want to know why. Inconsistency is powerful evidence of unfairness.
Not offering a right of appeal
Failing to offer or conduct a genuine appeal makes an otherwise fair dismissal vulnerable.
Dismissal Risk Is Increasing: What ERA 2025 Means for Employers
Unfair dismissal protection after 6 months. The two-year qualifying period for ordinary unfair dismissal is reducing to six months. Employees hired from July 2026 onwards will be able to bring unfair dismissal claims after just six months in post.
The compensation cap is removed. The current cap on compensatory awards, the lower of £118,223 or 52 weeks’ gross pay, is being removed entirely. Senior employee dismissals become significantly higher risk with no upper limit on what a tribunal can award.
Every dismissal should be handled to the same standard regardless of how long the employee has been with you. The habits built now are the ones that protect you after January 2027. DaisyHR advises North West businesses on dismissal risk and process every day.
Read our full ERA 2025 guide for North West employersFrequently Asked Questions
Only in cases of genuine gross misconduct where the evidence is clear and at least a basic investigation has been conducted before the dismissal decision is made. Even in gross misconduct cases a full investigation and hearing should be conducted wherever possible. Summary dismissal without any process at all is a significant legal risk in almost every case.
The statutory minimum is one week per year of service up to a maximum of twelve weeks, subject to a minimum of one week after one month’s service. Contractual notice may be longer. Whichever is higher applies. In gross misconduct cases an employer may dismiss without notice but only where the conduct genuinely justifies it.
Unfair dismissal is a statutory claim based on the fairness of the reason and process. It requires qualifying service, currently two years, reducing to six months from January 2027. Wrongful dismissal is a contractual claim based on whether the employer breached the employment contract, most commonly by dismissing without the required notice. An employee can bring both claims simultaneously.
For conduct and capability dismissals, yes: a staged warning process is expected in all but the most serious cases. Dismissing without prior warnings for anything short of gross misconduct will almost always be found to be procedurally unfair.
Yes, the same rules apply. The employment status of the individual determines their rights not the label on the contract. Zero hours workers who have established employee status have the same unfair dismissal protection as those on permanent contracts once they meet the qualifying period.
Certain dismissal reasons are automatically unfair regardless of service length: dismissal for asserting a statutory right, whistleblowing, health and safety activity, pregnancy and maternity, trade union activity, and taking family leave. There is no qualifying period and no defence of procedural fairness for automatically unfair dismissals.
Currently three months minus one day from the effective date of termination. Under ERA 2025 this window will double to six months from a date to be confirmed. Keep all dismissal-related correspondence and records for at least six months after any termination.
Yes. The cost of getting advice before a dismissal is a fraction of the cost of defending a tribunal claim after one. DaisyHR provides same-day dismissal advice for North West employers. Call us before you make any final decision.
Get Dismissal Advice From a North West HR Consultant
Dismissal is the area where North West SMEs face the most tribunal risk, and where getting advice early makes the biggest difference to the outcome. Book a free 30-minute consultation. We will assess the situation, tell you what the risk looks like and advise on the right course of action before you make any final decision.
Dismissal advice for employers across Bolton, Manchester, Wigan, Warrington, Salford, Stockport, Bury, Rochdale, Preston, Lancaster, Cheshire and the wider North West. · Last reviewed: March 2026