Unfair dismissal

Key takeaways

• Unfair dismissal happens when an employer ends your employment either without a legally fair reason, or without following a fair procedure, or both.
• To bring an ordinary unfair dismissal claim you currently need two years’ continuous service. From 1 January 2027 this drops to six months for dismissals taking effect on or after that date.
• Some dismissals are “automatically unfair” — for example dismissals connected to pregnancy, whistleblowing or trade union membership. These need no minimum length of service.
• You normally have three months less one day from your dismissal to start a claim, and you must contact Acas for early conciliation first. This time limit extends to six months from 1 October 2026.
• Compensation usually has two parts: a basic award and a compensatory award. As of April 2026 the compensatory award is capped at £123,543 or 52 weeks’ gross pay, whichever is lower. That cap is due to be removed on 1 January 2027.

Unfair dismissal is one of the most common reasons employees seek legal advice, and one of the areas of UK employment law that is changing most quickly.

Table of contents

• What is unfair dismissal?
• Automatic unfair dismissal
• Who qualifies: the two-year rule and the 2027 change
• Unfair dismissal during a probation period
• Unfair dismissal claims
• How to claim for unfair dismissal
• Unfair dismissal compensation for employees
• Other types of dismissal
• Advice for employers
• How can we help?
• FAQ

What is unfair dismissal?

Unfair dismissal is the termination of an employee’s contract either without a fair reason recognised by law, or without a fair procedure, or both. It is a statutory right: even where an employer follows the wording of the contract, the dismissal can still be unfair if it was not reasonable in the circumstances. Common examples of unfair dismissal include being sacked without warning, for a reason that is untrue, or for asserting a legal right such as taking parental leave.

Under the Employment Rights Act 1996, there are only five potentially fair reasons — or grounds — for dismissal. A dismissal that does not rest on one of these is very likely to be unfair:

1. Capability or qualifications — the employee cannot do the job to the required standard, or lacks the skills or qualifications the role needs. This includes long-term ill health that prevents them working.
2. Conduct — misconduct or gross misconduct, such as theft, violence or a serious breach of workplace rules.
3. Redundancy — the employer genuinely no longer needs the role, provided a fair selection process is followed.
4. Statutory restriction — continuing to employ the person would break the law, for example a driver who loses their licence or an employee who loses the right to work in the UK.
5. Some other substantial reason — a genuine and significant reason that does not fall neatly into the categories above.

Having a fair reason is only half of the test. The employer must also act reasonably in treating that reason as sufficient to dismiss, and follow a fair procedure. That usually means a proper investigation, written warnings where appropriate, a hearing at which the employee can respond, and a right of appeal. The Acas Code of Practice on Disciplinary and Grievance Procedures sets the standard tribunals expect, and an unreasonable failure to follow it can increase an award by up to 25%.

Automatic unfair dismissal

Some dismissals are treated as automatically unfair, which means the reason itself makes the dismissal unlawful regardless of how fair the procedure was. Crucially, these claims do not require any minimum length of service — they are day-one rights.

A dismissal is automatically unfair if the principal reason is connected to matters such as:

• pregnancy, maternity, paternity, adoption or shared parental leave, or time off for dependants;
• membership or non-membership of a trade union, or taking part in lawful industrial action;
• whistleblowing — making a protected disclosure about wrongdoing;
• raising a genuine health and safety concern;
• asserting a statutory right, such as the national minimum wage or paid holiday;
• jury service; or
• a business transfer protected under TUPE.

Dismissals linked to a protected characteristic — age, disability, sex, race, religion, sexual orientation and others — may also amount to unlawful discrimination under the Equality Act 2010, which is a separate day-one right with no cap on compensation.

Who qualifies: the two-year rule and the 2027 change

For an ordinary unfair dismissal claim, you currently need at least two years’ continuous employment with the same employer. This is the single biggest hurdle for many employees, and it is about to change.

Under the Employment Rights Act 2025, the qualifying period for ordinary unfair dismissal falls from two years to six months. This applies to dismissals where the effective date of termination is on or after 1 January 2027. The government originally proposed making unfair dismissal a “day-one” right; the final law instead settled on a six-month threshold, giving employers a shorter window to assess a new employee before full protection applies. Until that date, the two-year rule still governs most claims.

The qualifying period does not apply at all to automatically unfair dismissals or to discrimination claims, which are protected from the first day of employment.

Unfair dismissal during a probation period

Being on probation does not, by itself, remove your right to claim. A probationary period is a matter of contract, not a separate legal status, so the same qualifying rules apply. If you are dismissed for an automatically unfair reason or in a way that amounts to discrimination during probation, you can claim from day one regardless of how long you have worked.

What changes on 1 January 2027 is that employees dismissed after six months’ service will gain ordinary unfair dismissal protection, so probation and early-service dismissals will carry more risk for employers than they do today. If you are unsure whether your dismissal during a probation period was lawful, our team can review the reason and the process.

Unfair dismissal claims

Most unfair dismissal claims are decided by an employment tribunal. To succeed, you generally need to show that you were an employee, that you have the qualifying service (unless the reason is automatically unfair), and that the dismissal was unfair in substance or procedure.

Proving unfair dismissal is largely about evidence of the reason and the process. Useful documents include your contract and any staff handbook, dismissal and appeal letters, notes of disciplinary meetings, warnings, and any emails or messages that reveal the real reason for the decision. Where the paperwork says one thing but the true reason was something else — such as raising a complaint — that gap is often where a claim is won. If you signed, or were offered, a settlement agreement, take advice before agreeing to give up your right to claim.

How to claim for unfair dismissal

There is a clear sequence and a strict deadline. The steps are:

1. Appeal internally where your employer offers an appeal — it can resolve the matter and shows the tribunal you acted reasonably.
2. Notify Acas for early conciliation. This is a mandatory step before any tribunal claim. Acas will offer to help both sides reach a settlement without a hearing.
3. Submit the claim (form ET1) to the employment tribunal if conciliation does not resolve it.
4. Prepare and present the case, exchanging documents and witness statements before a hearing.

The deadline is tight. You normally have three months less one day from the effective date of dismissal to begin early conciliation, not from the date your appeal is rejected. Starting Acas conciliation pauses the clock for a short period. From 1 October 2026, this time limit is extended to six months, but until then the three-month limit applies, so it is safest to act quickly rather than wait. Missing the deadline usually ends a claim before it starts. For more on the 2026 change, see our note on the six-month deadline for tribunal claims.

Unfair dismissal compensation for employees

If a claim succeeds, an employment tribunal can order compensation, reinstatement (getting your job back) or re-engagement (a comparable job with the same employer). In practice, compensation is the most common remedy, and it usually has two parts.

The basic award is calculated like a statutory redundancy payment, based on your age, length of service (capped at 20 years) and a week’s pay (capped at £751 as of 6 April 2026). The compensatory award reflects your actual financial loss — lost earnings, benefits and pension — subject to a statutory cap.

Two important changes affect these figures. First, the limits above were uprated on 6 April 2026 and are higher than the figures published in earlier years. Second, the cap on the compensatory award is due to be removed entirely on 1 January 2027, meaning tribunals will be able to award full financial loss without a statutory ceiling. Compensation for unlawful discrimination is already uncapped. A tribunal can also increase or reduce an award — for example, an uplift of up to 25% where the employer unreasonably ignored the Acas Code, or a reduction where the employee contributed to the dismissal.

Other types of dismissal

Unfair dismissal is often confused with two related claims, and the right label affects your deadline and your compensation.

• Wrongful dismissal is a breach of contract — for example, dismissing you without the notice your contract requires. It is about the contract, not fairness, and there is no qualifying period. It is often brought alongside an unfair dismissal claim.
• Constructive dismissal is where you resign because your employer has committed a serious breach of contract that leaves you no reasonable choice but to leave. If the breach is serious enough, resigning can be treated as a dismissal.

Because the tests and time limits differ, it is worth taking early advice to identify which claim — or combination — fits your situation.

Advice for employers

Employers can dismiss fairly and lawfully, but only where the dismissal rests on one of the five potentially fair reasons and follows a fair procedure. Getting either part wrong is what turns a dismissal into an unfair one, however justified it felt at the time.

To reduce the risk of a claim, an employer should:

• identify which of the five fair reasons genuinely applies and record the evidence supporting it;
• follow the Acas Code of Practice — investigate properly, put concerns in writing, hold a hearing and allow an appeal;
• apply warnings and procedures consistently across staff, so a dismissal cannot be characterised as discriminatory;
• take particular care with dismissals connected to pregnancy, whistleblowing, trade union activity or a protected characteristic, which are automatically unfair or discriminatory from day one;
• consider a settlement agreement where an agreed, clean exit is preferable to litigation; and
• keep clear records throughout, because a tribunal will judge the process largely on the documents.

From 1 January 2027 the qualifying period falls to six months, so dismissals early in employment — including during probation — will carry unfair dismissal risk far sooner than under the current two-year rule. Employers should review their probation and performance-management processes before that date. In a redundancy situation, a fair and objective selection process is essential to defend the decision.

How can we help?

Being dismissed is stressful, and the deadlines are unforgiving. Early, practical advice is the best way to protect your position and your options.

Our employment team can help at every stage. Our work can include:

• assessing whether your dismissal was fair in substance and procedure;
• checking your qualifying service and the correct time limit for your claim;
• advising on automatically unfair and discrimination-based dismissals;
• handling Acas early conciliation and negotiating a settlement;
• preparing and presenting your case at an employment tribunal;
• reviewing and negotiating settlement agreements before you sign;
• calculating the basic and compensatory awards you may be entitled to;
• advising employers on fair procedure and reducing the risk of claims; and
• representing you on wrongful and constructive dismissal claims.

Sterling Law is a London-based firm of solicitors regulated by the Solicitors Regulation Authority, advising both employees and employers across the full range of employment disputes. If you think you have been unfairly dismissed, contact us before your deadline passes — we can review your situation, explain your options clearly, and act quickly.

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Frequently asked questions

What counts as unfair dismissal?

A dismissal is unfair if your employer had no fair legal reason to dismiss you, or failed to follow a fair procedure, or both. The five potentially fair reasons are capability, conduct, redundancy, statutory restriction and some other substantial reason.

Can I claim unfair dismissal with less than two years’ service?

Not usually for an ordinary claim before 1 January 2027, when the qualifying period drops to six months. But automatically unfair dismissals and discrimination claims have no qualifying period and can be brought from day one.

How long do I have to make a claim?

Three months less one day from the effective date of dismissal, and you must start Acas early conciliation first. This extends to six months from 1 October 2026.

How much compensation can I get for unfair dismissal?

Compensation usually combines a basic award (up to £22,530) and a compensatory award (capped at £123,543 or 52 weeks’ pay, whichever is lower, as of 6 April 2026). That cap is due to be removed on 1 January 2027.

What is the difference between unfair and wrongful dismissal?

Unfair dismissal is about whether the reason and process were fair under statute. Wrongful dismissal is a breach of your contract, most often not being given proper notice. The two are frequently claimed together.

Do I have to appeal before going to a tribunal?

You are not legally required to appeal, but you should if an appeal is offered. Failing to appeal can reduce your compensation, and appealing can resolve the dispute without a hearing.

Can I be dismissed unfairly during my probation period?

Yes. Probation is a contractual arrangement, not a legal exemption. You can claim from day one for automatically unfair or discriminatory dismissals, and from 1 January 2027 for ordinary unfair dismissal once you have six months’ service.

What remedies can a tribunal order?

A tribunal can award compensation, order reinstatement to your old job, or order re-engagement in a comparable role. Compensation is the most common outcome.

How can employers reduce the risk of unfair dismissal claims?

By ensuring every dismissal rests on one of the five fair reasons, following the Acas Code of Practice on procedure, applying rules consistently and documenting each step. Taking legal advice before dismissing is the most reliable safeguard, especially ahead of the six-month qualifying period from 1 January 2027.

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