In the UK, dismissal isn’t something an employer can do on a whim. Employment law protects workers from unfair treatment, and unless a dismissal falls within a legally recognised category and follows a fair process, it may be challenged at an employment tribunal.
Under the terms of the Employment Rights Act 1996, there are five potentially fair reasons for dismissal.
The five fair reasons for dismissal are:-
- Conduct
- Capability (including poor performance or ill health)
- Redundancy
- Statutory restriction
- Some other substantial reason (SOSR)
To avoid claims of unfair dismissal, employers must not only rely on one of these five reasons but also follow a fair and transparent process, as outlined in the ACAS Code of Practice on Disciplinary and Grievance Procedures.
Employment Rights Act 1996 – Section 98
Section 98 of the ERA sets out the five fair reasons an employer can legally rely on to dismiss someone, and stresses that they must act reasonably. If your dismissal doesn’t clearly fall into one of these reasons or the process felt unfair, you may be able to challenge it.
The 5 Fair Reasons for Dismissal
A dismissal is fair if it relates to the conduct, capability, redundancy, statutory restriction or some other substantial reason, and the employer acted reasonably.
But what do these 5 fair reasons involve? Here’s a look at how each reason can be defined, and some examples of situations where disciplinary proceedings can start.
1. Conduct
Conduct refers to an employee’s behaviour at work or in relation to their role. This includes breaches of company policies, inappropriate actions, and unprofessional conduct that affects the employer, co-workers, or the business itself.
Misconduct is a legally valid reason for dismissal, but it doesn’t mean an employer can skip procedure. They still need to give you a chance to respond to allegations before making any decisions.
Examples of Misconduct
- Persistent lateness or unauthorised absences
- Bullying, harassment, or discrimination
- Failure to follow reasonable instructions
- Breaches of data protection (e.g., GDPR violations)
- Misuse of social media or bringing the company into disrepute
- Breaching company policies or employment contract terms
Gross Misconduct
Some acts are so serious they may justify summary dismissal (immediate dismissal without notice), including:
- Theft or fraud
- Violence or threats of violence
- Sexual harassment
- Serious breaches of health and safety
Employers must investigate allegations of gross misconduct thoroughly, hold a disciplinary hearing, and offer the employee the chance to respond before reaching a decision. This process must align with ACAS guidelines.
See Also: Examples of Gross Misconduct
2. Capability or Qualifications
Dismissal may be fair where an employee is incapable of performing their role, either due to a lack of skill or qualifications or due to health related issues that prevent them from working effectively.
Let’s break down performance, productivity and ill health to understand what these terms actually mean.
a. Performance & Productivity
Poor performance may warrant dismissal if the employee:-
- Fails to meet performance targets
- Produces frequent errors in work
- Lacks time management or organisational skills
- Is unable to adapt to new technologies
- Refuses to use software or tools critical to their role
A fair process must include performance reviews, clear feedback, targets for improvement, and a support plan (e.g., a Performance Improvement Plan).
b. Ill Health
Long term illness or ongoing health issues may affect an employee’s ability to perform their role. Employers must be cautious here, particularly where a health condition meets the legal definition of a disability under the Equality Act 2010.
Equality Act 2010 & Dismissal
This law protects disabled employees by requiring employers to make reasonable adjustments. That means being dismissed due to illness without any support or changes might be discriminatory.
Under the terms of section 20 of the Equality Act, Employers have a duty to make reasonable adjustments to accommodate disabled employees.
Examples of health related capability issues:-
- Chronic illness requiring frequent time off
- Mental health conditions that affect concentration or communication
- A disability that affects physical ability to perform role duties
Dismissal should only be considered after exploring adjustments such as altered duties, flexible hours, or redeployment to a different role.
See Also: Can Work Sack You For Being Off Sick?
3. Redundancy
Redundancy is a fair reason for dismissal when a role is no longer required either due to a reduction in business needs, restructuring, or business closure.
Section 139 of the Employment Rights Act defines redundancy and protects employees by requiring the job, not the person, to no longer be needed. If your role is still there but you’ve been let go, it might not be genuine redundancy.
Redundancy may apply when the requirements of the business for employees to carry out work of a particular kind have ceased or diminished.
Fair Redundancy Process
A fair process must be followed when redundancies take place. Failure to do so can result in employees taking legal action via an employment tribunal and claiming compensation for unfair dismissal.
To ensure fairness, employers must:-
- Clearly define the redundancy situation
- Use objective, non discriminatory selection criteria
- Consult with affected employees
- Explore suitable alternative roles within the business
- Provide appropriate redundancy pay and notice
Examples of Fair Reasons for Redundancy Include:
- Closure of the business or branch
- Merger or acquisition leading to duplicated roles
- Automation of tasks previously performed by staff
Redundancy cannot be used as a pretext for dismissing underperforming employees or conduct issues.
4. Statutory Restriction
If employing someone would break the law, their dismissal may be fair. This is known as dismissal for statutory restriction.
ERA 1996, s.98(2)(d) Applies where an employee could not continue to work in the position without contravention of a duty or restriction imposed by or under an enactment.
This means if your job requires something legal, like a valid licence or visa, and you lose it: dismissal can be fair. But your employer should still consider other options first.
Examples of statutory restrictions:-
- A driver loses their driving licence
- A teacher is barred from working with children
- A worker’s visa or right to work in the UK expires
Employers must first explore alternatives, such as redeployment or temporary adjustment to duties, before considering dismissal.
5. Some Other Substantial Reason (SOSR)
This is a flexible category that allows dismissal for other serious, justifiable reasons not covered above.
ERA 1996, s.98(1)(b) outlines that a dismissal may be fair where it is for some other substantial reason of a kind such as to justify the dismissal.
This is a catch all reason. If your dismissal doesn’t fit neatly into conduct or redundancy, it might still be fair but your employer must prove there was a serious and justifiable reason.
Examples of valid “other substantial reasons” for dismissal:-
- Irreconcilable breakdown in the working relationship
- Refusal to accept changes to employment terms (e.g. location, hours)
- Conflict of interest (e.g. close personal relationship in a small team)
- Third-party pressure (e.g. a client demands removal from a contract)
As with all dismissals, employers must act reasonably, offer the chance to respond, and follow a fair process.
Employees With Less Than Two Years’ Service
Employees must usually have at least two years’ continuous service to bring a claim for unfair dismissal.
ERA 1996, s.108(1) confirms that the right not to be unfairly dismissed applies after two years of continuous employment.
However, there are important exceptions—like discrimination or whistleblowing—which apply from day one. Further exceptions apply where a dismissal is deemed automatically unfair, or discriminatory under the Equality Act 2010.
Automatically Unfair Reasons for Dismissal Include:-
- Pregnancy and maternity related dismissal
- Asserting a statutory right (e.g. asking for holiday pay)
- Whistleblowing
- Health and safety reporting
- Trade union involvement
In such cases, an employee does not need to meet the two year threshold to bring a claim.
Tribunal Examples: Why Following Procedure Matters
Even when an employer believes they have a fair reason to dismiss someone, whether for misconduct, poor performance, or redundancy – it’s not enough to be right in principle. UK employment law requires that the dismissal is not only for a legally valid reason, but that it is also handled in a procedurally fair way.
The Employment Rights Act 1996 and ACAS Code of Practice stress that employers must:
- Investigate thoroughly
- Hold proper hearings
- Give employees the chance to respond
- Consider alternatives to dismissal
- Document each stage of the process
Failure to do so can result in a claim for unfair dismissal, even if the reason itself seems valid. Below are two real tribunal outcomes—one where the employer lost due to procedural mistakes, and one where the employer succeeded because they followed due process.
Case Where the Employer Lost: Dismissal for Misconduct Without Proper Investigation
Case: Ms M Jones v Vale Curtains and Blinds
Outcome: Unfair dismissal upheld. Employee awarded £5,484.74.
Summary: Ms Jones, a part-time admin worker, accidentally sent a rude message about a customer directly to that customer. She immediately apologised and offered to compensate the business. Despite this, the employer dismissed her for gross misconduct without a proper investigation and without giving her the chance to formally explain her actions. The tribunal found the dismissal was rushed and influenced more by the customer’s complaint than any objective process.
Key takeaway: Employers must investigate allegations fully and allow employees to respond—even when the mistake seems serious. Skipping the process made the dismissal unfair.
Read the official case summary
Case Where the Employer Won: Dismissal for Underperformance with Full Process
Case: Fallahi v TWI Ltd
Outcome: Dismissal for poor performance ruled fair.
Summary: Mr Fallahi was repeatedly failing to meet performance targets. The employer had issued a final warning and set clear expectations via a performance improvement plan. Although the review period was shortened, the tribunal concluded the employer had taken reasonable steps: offering support, documenting performance concerns, and allowing time to improve. The dismissal was ruled fair.
Key takeaway: When employers clearly explain expectations, support the employee, and follow fair internal processes, tribunals are more likely to side with them.
Read the full tribunal appeal case
These examples show that how a dismissal is handled matters just as much as why it’s done. Employees have the right to a fair and reasonable process regardless of the situation. If you’re unsure whether your dismissal was fair, it may be worth seeking advice from a legal adviser, union representative, or ACAS.
