Under the Employment Rights Act 1996, there are five potentially fair reasons for dismissal. If you are reading this blog, you may be considering dismissing an employee and want to ensure you are handling the situation correctly. Before making any decision, it is important to understand each reason for dismissal and the process that should be followed.
Failing to follow a fair procedure, or dismissing an employee for a reason that does not fall within the Employment Rights Act 1996, could leave your business exposed to an employment tribunal claim and significant costs.
In this article, we will explain the five fair reasons for dismissal and share practical tips to help employers follow the correct procedure in each situation.
Fair Reasons for Dismissal
Before even considering dismissing an employee, you must ensure you fully understand the process and current legislation.
Misconduct
An employee’s conduct is one of the main reasons for dismissal. This is when the employee has been inappropriate or done something unacceptable. The level of severity can vary from extremely serious to minor. You may have come to this decision due to a series of minor incidents. This can include:
- Showing a cycle of not following instructions from managers
- poor attendance
- Sharing private company information
Capability
Termination of contract due to capability can happen when an employee is unable to do their role or doesn’t have the correct qualifications. If you are dismissing a worker due to capability, you must prove the following:
- Why they are incapable of doing their role according to their job description.
- Why there are no steps the company can take to help them.
Capability dismissals can become more complex where an employee is struggling due to a medical condition. If the condition amounts to a disability, there is a risk of a discrimination claim if the matter is not handled correctly. Employers should consider and implement any reasonable adjustments to support the employee, including for both physical and mental health conditions. Dismissal should only be considered once all reasonable support has been explored and proven unsuccessful.
Redundancy
Redundancy is appropriate when the role is no longer required. The company may need to cut costs or the department may be closing. If you are making an employee redundant, it’s because the role doesn’t exist. Therefore, you can’t hire someone else to fill the role or a job that is clearly similar to position that was made redundant. This can lead to a tribunal claim. When making an employee redundant, you must:
- Establish a business case as to why you have to make redundancies
- Show you have looked at alternatives
- Use a fair selection process that is on-discriminatory
- You must consult with all workers who are at risk. This is regardless of the amount of staff involved
- 20 or more staff at risk within a 90 day period or less will require collective redundancy.
A legal reason
This is another fair reasons for dismissal is when an employee is unable to do their job as usual due to a legal reason such as a driver being banned from driving. Before you go ahead with the dismissal, you must prove that driving is an essential part of the role.
Some other substantial Reason
Some Other Substantial Reason (SOSR) – a category used to cover a range of situations that do not fall under the other four fair reasons for dismissal.
Examples of SOSR dismissals can include:
- the expiry of a fixed-term contract
- pressure from a third party, such as a client refusing to work with an employee
- an employee refusing to accept reasonable changes to their terms and conditions of employment
Employees have the right not to be unfairly dismissed
Part 10 of the Employment Rights Act 1996 provides employees with the right not to be unfairly dismissed. In most cases the employee must have two years’ continuous service with their employer to qualify to bring a claim, but this period will be reduced to 6 months in January 2027.
How The HR Booth Can Help
Managing a dismissal process can be stressful and time-consuming, particularly when there is a risk of legal claims or the situation involves sensitive employee relations issues. At The HR Booth, we support employers through every stage of the dismissal process to help ensure decisions are fair, legally compliant, and handled professionally.
Our HR experts can assist with:
- Advising on whether there is a potentially fair reason for dismissal
- Supporting managers with investigations, disciplinary hearings, capability processes, and redundancy consultations
- Reviewing employment contracts, policies, and procedures
- Helping employers manage long-term sickness absence and reasonable adjustments
- Providing guidance on redundancy selection criteria and consultation requirements
- Supporting difficult conversations with practical, commercially focused advice
- Reducing the risk of unfair dismissal and discrimination claims
We understand that every situation is different. That is why we provide tailored support that protects both your business and your employees while helping you reach the best possible outcome.
Conclusion
Dismissal should never be a rushed decision. Employers must ensure there is a fair reason for dismissal, follow the correct procedure, and act reasonably throughout the process. Failing to do so can expose businesses to costly tribunal claims, reputational damage, and unnecessary disruption.
Whether the issue relates to misconduct, capability, redundancy, legal restrictions, or some other substantial reason, it is important to seek advice early and handle the matter carefully. A fair and well-managed process not only protects your business legally, but also demonstrates professionalism and fairness to your workforce.
If you are unsure about any aspect of dismissal or need support managing a difficult employee situation, we are here to help.
