United Kingdom — Termination & Severance

The Employment Rights Act 1996 (ERA 1996) establishes the statutory right not to be unfairly dismissed and is the principal framework governing dismissal protection in the United Kingdom. Part X of the Act sets out the core protections, procedural requirements, and remedies available to employees who are dismissed.

The right and qualifying period

Section 94 of the ERA 1996 provides that "an employee has the right not to be unfairly dismissed by his employer." However, this right is subject to a qualifying period of continuous employment. Under Section 108(1), as amended in 2012, an employee must have been "continuously employed for a period of not less than two years ending with the effective date of termination" to bring an ordinary unfair dismissal claim. The two-year threshold was introduced by The Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012 (S.I. 2012/989), which took effect on 6 April 2012; prior to that date, the qualifying period was one year.

Automatically unfair dismissals: no qualifying period

Section 108(3) carves out significant exceptions to the two-year rule. Employees may bring unfair dismissal claims from day one of employment if the dismissal is for certain protected reasons, including:

• Pregnancy, maternity, and family leave — dismissal connected with pregnancy, childbirth, or the exercise of maternity, paternity, adoption, or parental leave rights (Section 99);
• Health and safety — dismissal for carrying out health and safety activities or raising health and safety concerns (Section 100);
• Asserting statutory rights — dismissal for asserting a statutory employment right, such as the right to the national minimum wage, working time protections, or written particulars of employment (Section 104);
• Whistleblowing (protected disclosures) — dismissal for making a protected disclosure under the Public Interest Disclosure Act 1998 framework (Section 103A);
• Trade union membership or activities — dismissal related to trade union membership, activities, or the exercise of collective bargaining rights, as specified in Sections 152 and 153 of the Trade Union and Labour Relations (Consolidation) Act 1992, which are cross-referenced in Section 98(6) of the ERA 1996.

These automatically unfair categories do not require any minimum service period.

Fair reasons for dismissal

Where the two-year qualifying period is met (and no automatically unfair ground applies), the employer bears the burden of showing both a potentially fair reason for dismissal and that it acted reasonably. Section 98(1) requires the employer to establish that the reason for dismissal falls within one of the following categories set out in Section 98(2):

• (a) Capability or qualifications — relating to the employee's skill, aptitude, health, or any other physical or mental quality for performing the work (Section 98(3) defines "capability" and "qualifications");
• (b) Conduct — misconduct, gross misconduct, or other behavioral grounds;
• (c) Redundancy — the employer's need for employees to do work of a particular kind has ceased or diminished;
• (d) Statutory restriction — continued employment would contravene a duty or restriction imposed by law (for example, loss of a required license or work authorization); or
• (e) Some other substantial reason (SOSR) — a catch-all category for reasons not falling within the four enumerated grounds but still justifying dismissal, such as business reorganizations or third-party pressure.

The reasonableness test

Even where a fair reason exists, Section 98(4) imposes a second hurdle: the employer must have acted reasonably in treating that reason as sufficient to justify dismissal. The tribunal assesses "whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably," and the determination "shall be determined in accordance with equity and the substantial merits of the case."

This reasonableness inquiry is fact-specific and evaluates both substantive fairness (whether dismissal was an appropriate response) and procedural fairness (whether the employer conducted an adequate investigation, gave the employee notice of the allegations and an opportunity to respond, and allowed the employee to be accompanied at a disciplinary hearing). Case law interpreting Section 98(4) has established the "band of reasonable responses" test, under which a tribunal asks whether the employer's decision to dismiss fell within the range of responses that a reasonable employer might have adopted, rather than substituting the tribunal's own view for that of the employer.

Enforcement

Section 111 provides that an employee may present a complaint of unfair dismissal to an employment tribunal. The complaint must ordinarily be presented within three months of the effective date of termination, though the tribunal has discretion to extend time if it was not reasonably practicable to present the claim in time.

Source: Employment Rights Act 1996, Section 94 Source: Employment Rights Act 1996, Section 98 Source: Employment Rights Act 1996, Section 108 Source: The Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012 (S.I. 2012/989)

Section 86 of the Employment Rights Act 1996 (ERA 1996) establishes the statutory minimum notice periods that employers and employees must give to terminate a contract of employment. These minimums apply automatically to all employees with the requisite service, regardless of what the employment contract says; contractual notice provisions may provide longer periods but cannot reduce notice below the statutory floor.

Employer's minimum notice obligation

Under Section 86(1), an employer must provide the following minimum notice to terminate the employment of a person who has been continuously employed for one month or more:

• (a) One month to less than two years' continuous employment: at least one week's notice.
• (b) Two years or more of continuous employment: at least one week's notice for each complete year of continuous employment, up to a maximum of twelve weeks' notice.

The twelve-week cap applies once an employee reaches twelve years of service; an employee with fifteen, twenty, or thirty years of service is still entitled to only twelve weeks' statutory notice (though many contracts provide longer notice for senior or long-serving employees).

Practical example: An employee with seven years and three months of continuous service is entitled to seven weeks' statutory notice (complete years only count). An employee with eleven months' service is entitled to one week. An employee with twenty years' service is entitled to twelve weeks.

Employee's minimum notice obligation

Section 86(2) imposes a reciprocal—but much shorter—notice obligation on employees. An employee who has been continuously employed for one month or more must give at least one week's notice to resign. This one-week minimum does not increase with length of service; even an employee with twenty years' service owes only one week's statutory notice to the employer (though again, the contract may—and often does—require longer notice, particularly for professional, managerial, and senior roles).

Relationship to contractual notice

If the employment contract specifies a longer notice period than the statutory minimum, the contractual period governs. For example, if an employee's contract provides for three months' notice but the employee has only four years of service (yielding four weeks' statutory notice), the employer must give the full three months' contractual notice. Conversely, if the contract specifies only two weeks' notice but the employee has accumulated ten years of service (yielding ten weeks' statutory notice), the statutory ten weeks overrides the contractual two weeks. The principle is straightforward: whichever is longer applies.

Employers cannot contract out of Section 86; any clause purporting to reduce notice below the statutory minimum for an employee who qualifies is void to that extent.

Gross misconduct exception: summary dismissal

Section 86(6) provides that "This section does not affect any right of either party to a contract of employment to treat the contract as terminable without notice by reason of the conduct of the other party." In other words, if an employee commits a repudiatory breach—typically gross misconduct such as theft, fraud, violence, or serious insubordination—the employer retains the common-law right to dismiss summarily (with immediate effect and no notice or pay in lieu). When an employer lawfully exercises this right, the statutory notice entitlements under Section 86(1) do not apply, and the employee cannot claim wrongful dismissal for the lost notice period.

The question whether conduct was sufficiently serious to justify summary dismissal is a matter of contract and common law, not statute; the burden is on the employer to show that the employee's conduct amounted to a fundamental breach. If a tribunal or court later finds that the alleged misconduct did not justify summary dismissal, the dismissal will be wrongful (a breach-of-contract claim for the notice pay) and may also be unfair (if the employee has two years' qualifying service and no automatically unfair ground applies).

One-month qualifying period and continuous employment

Both the employer's and the employee's statutory notice obligations are triggered once the employee has been continuously employed for one month. "Continuous employment" is defined and calculated under Part XIV of the ERA 1996 (Sections 210–219); breaks in service and the treatment of temporary cessations, strikes, and absences are governed by those provisions. An employee dismissed with less than one month's service has no statutory notice entitlement under Section 86 (though the common law would generally require "reasonable" notice, which in practice for very short service may be only a day or a few days, and the contractual notice provisions—if any—may still apply).

Pay and rights during statutory notice

Sections 87 to 91 of the ERA 1996 confer specific pay rights on employees during the statutory notice period, including an entitlement to full pay (not merely statutory sick pay or no pay) if the employee is incapable of work due to sickness or injury during the notice period, provided that the contractual notice period is no more than the statutory minimum. (If the contractual notice exceeds the statutory minimum by at least one week, Sections 87–91 do not apply and the employee's contractual sick-pay entitlements govern instead.) Annual leave continues to accrue during the notice period under the Working Time Regulations 1998, and untaken holiday must be paid out at termination or, at the employer's election, may be required to be taken during the notice period (subject to proper counter-notice).

Claims for breach: wrongful dismissal

Failure to give the statutory (or contractual) minimum notice gives rise to a wrongful dismissal claim, which is a common-law breach-of-contract action. The claim may be brought in the employment tribunal (if the claim is for £25,000 or less) or in the civil courts. The measure of damages is the pay and benefits the employee would have received during the notice period. Wrongful dismissal is distinct from unfair dismissal (a statutory claim under Part X of the ERA 1996 that requires two years' qualifying service for ordinary claims and evaluates the substantive reason and procedural fairness of the dismissal); an employee may have both a wrongful-dismissal claim (lack of notice) and an unfair-dismissal claim (inadequate reason or procedure) arising from the same termination.

Source: Employment Rights Act 1996, Section 86 Source: Employment Rights Act 1996, Section 87

Part XI of the Employment Rights Act 1996 establishes a statutory redundancy payment scheme that entitles qualifying employees to a lump-sum payment when they are dismissed by reason of redundancy. The payment is mandatory for employers and is calculated by a formula that takes account of the employee's age, length of service, and weekly pay. Section 135(1) provides that "an employee has the right to a redundancy payment from his employer if the employee ... (a) is dismissed by the employer by reason of redundancy."

Two-year qualifying period and employee status

Section 155 of the ERA 1996 imposes a minimum continuous-employment threshold: "An employee does not have any right to a redundancy payment unless he has been continuously employed for a period of not less than two years ending with the relevant date." Only employees (as opposed to workers or self-employed contractors) qualify for statutory redundancy pay; the concept of "continuous employment" is defined and calculated under Part XIV of the ERA 1996 (Sections 210–219), with rules governing breaks in service, transfers of undertakings, strikes, and absences.

The two-year threshold is a hard floor and applies regardless of the employee's age, the size of the employer, or the sector of employment. An employee made redundant one day before completing two years' service has no statutory entitlement.

The calculation formula: age bands and service

Section 162(1) sets out the statutory calculation method. The employer must:

• (a) Determine the period of continuous employment ending with the relevant date (ordinarily the date on which notice expires or, if the dismissal was without notice, the date the termination took effect; Section 145 defines "the relevant date" for redundancy-payment purposes);
• (b) Reckon backwards from the end of that period the number of complete years of employment; and
• (c) Allow the appropriate amount for each of those years of employment.

Age-banded multipliers

Section 162(2) defines "the appropriate amount" for each complete year of service according to the employee's age during that year:

• 1.5 weeks' pay for each year of employment in which the employee was aged 41 or over;
• 1 week's pay for each year of employment in which the employee was aged 22 to 40 (inclusive); and
• 0.5 weeks' pay for each year of employment in which the employee was aged under 22.

Prior to October 2006, the upper-age multiplier applied to years worked at age 41 or above and a lower-age band applied to employees under 18; the Employment Equality (Age) Regulations 2006 (S.I. 2006/1031) removed the upper age limit for claiming redundancy pay and simplified the age structure, but the three-tier age-banded calculation remains in force.

Twenty-year cap on service

Section 162(3) provides: "Where twenty years of employment have been reckoned under subsection (1), no account shall be taken under that subsection of any year of employment earlier than those twenty years." The statutory redundancy payment is therefore based on a maximum of 20 complete years of service, even if the employee has been continuously employed for 30, 40, or more years. Continuous employment prior to the most recent 20 years is ignored for the calculation, though it may still count for other purposes (e.g., establishing continuity or avoiding a break in service).

Weekly pay cap and maximum payment

"A week's pay" for redundancy-payment purposes is calculated under Sections 221–229 of the ERA 1996 and is subject to a statutory cap that is uprated annually on 6 April each year. For dismissals on or after 6 April 2026, the weekly pay cap is £751. (For dismissals before that date, lower figures applied; the cap was £700 from April 2025 to April 2026, and the Government indexes the figure annually in line with the September Retail Prices Index.) The weekly pay used in the calculation is capped at this amount, regardless of the employee's actual earnings.

The maximum statutory redundancy payment as of 6 April 2026 is therefore £22,530, representing the sum payable to an employee aged 41 or over at the relevant date with 20 complete years of service at the maximum weekly rate: 20 years × 1.5 weeks × £751 = £22,530.

Employers may—and often do—offer enhanced (contractual) redundancy payments that exceed the statutory minimum, either by using actual weekly pay without the cap, by applying a multiplier to the statutory figure, by disregarding the 20-year service cap, or by paying an additional ex-gratia sum. The statutory payment is a floor; contractual terms or collective agreements can be more generous but cannot reduce the employee's entitlement below the statutory amount.

No reduction for gross misconduct when redundancy is the reason

Where an employer dismisses for redundancy, the employee's entitlement to statutory redundancy pay is not reduced or lost by reason of conduct occurring during the notice period, except in the narrow circumstances addressed by Sections 140 to 143 of the ERA 1996 (which permit disentitlement or reduction if the employee commits an act during notice that would itself justify summary dismissal on gross-misconduct grounds and the employer invokes the specific statutory procedures). In the ordinary case, however, an employer cannot avoid paying statutory redundancy by asserting that the employee committed misconduct after being given notice of redundancy.

Contractual offset and unfair-dismissal interaction

Section 122(4) of the ERA 1996 provides that if an employee receives a statutory redundancy payment and also succeeds in an unfair-dismissal claim, the unfair-dismissal basic award is reduced by the amount of the redundancy payment already received (or, if a contractual payment exceeding the statutory amount was made, by the contractual amount). This prevents double recovery for the same period of service. The compensatory award for unfair dismissal may also be reduced by any contractual redundancy payment in excess of the statutory minimum, at the tribunal's discretion.

Written statement of calculation

Section 165(1) requires: "On making any redundancy payment, otherwise than in pursuance of a decision of a tribunal which specifies the amount of the payment to be made, the employer shall give to the employee a written statement indicating how the amount of the payment has been calculated." Failure to provide the written breakdown is a criminal offence (fine not exceeding level 1 on the standard scale under subsection (2)), and the employee may serve written notice on the employer requiring a statement within not less than one week (subsection (3)).

Claiming the payment and time limits

Section 164(1) provides that an employee has no right to a redundancy payment unless, before the end of six months beginning with the relevant date, the employee has either (a) made a claim in writing to the employer, (b) agreed with the employer the amount or entitlement, (c) referred the question to an employment tribunal, or (d) presented a complaint of unfair dismissal under Section 111. Section 164(2) grants the tribunal discretion to extend the deadline by a further six months (up to 12 months in total from the relevant date) if it is "just and equitable" to do so. After 12 months, the right to statutory redundancy pay is ordinarily lost.

If the employer is insolvent and unable to pay, the employee may claim the statutory redundancy payment from the National Insurance Fund (Redundancy Payments Service) under Section 166.

Source: Employment Rights Act 1996, Section 135 Source: Employment Rights Act 1996, Section 155 Source: Employment Rights Act 1996, Section 162 Source: Employment Rights Act 1996, Section 165 Source: GOV.UK Redundancy Pay Guidance

Sections 118–124 of the Employment Rights Act 1996 (ERA 1996) set the statutory framework for financial awards by Employment Tribunals in unfair dismissal cases. There are two principal components: the “basic award” (statutory formula, similar to redundancy) and the “compensatory award” for actual loss, both subject to statutory caps that are uprated each April.

1. Basic award: statutory calculation and maximum The basic award is calculated using the formula in Section 119 (mirroring redundancy pay under Section 162):

• 1.5 weeks’ pay for each year of employment after age 41;
• 1 week’s pay per year between ages 22–40;
• 0.5 week’s pay per year under age 22.

A maximum of 20 years' service is counted (Section 119(2)). “A week’s pay” is subject to a statutory cap. For dismissals on or after 6 April 2026, the weekly pay cap is £751, so the maximum basic award becomes £22,530 (20 years × 1.5 × £751). Historical caps apply for earlier dismissals (e.g., £700 per week from April 2024 to April 2026).

Any statutory redundancy payment received for the same dismissal is deducted from the basic award (Section 122(4)). Further reductions apply for contributory misconduct (Section 122(2)), refusal of reinstatement (Section 117(3)), or dismissal during a strike (Section 122(3)).

2. Compensatory award: limits and imminent abolition of cap Section 123 ERA 1996 provides for compensation for actual financial loss (earnings, pension, benefits). Under Section 124(1ZA), the compensatory award is capped at the lower of:

• the statutory annual maximum; or
• 52 weeks' actual gross pay.

For dismissals on or after 6 April 2026, the annual maximum is £123,543. Earlier dates have lower caps (e.g., £115,115 for 2024–2026). Claims involving whistleblowing or certain health and safety dismissals are not subject to the statutory cap (Section 124(1A)).

Important change from 1 January 2027: The statutory cap on compensatory awards is abolished by the Employment Rights Act 2025; from this date, no upper limit applies except the employee’s actual loss. Employers must take note of this imminent removal.

3. Tribunal discretion and adjustment The tribunal may reduce awards in cases of employee contribution to dismissal (Section 123(6)), failure to mitigate loss (Section 123(4)), or unreasonable refusal of reinstatement (Section 117(3)). Discretion applies on the facts of each case.

Sources updated June 2026 for caps and planned statutory changes.

Source: Employment Rights Act 1996, Sections 118–124 Source: The Employment Rights (Increase of Limits) Order 2026 Source: Employment Rights Act 2025, Section 6

The United Kingdom requires employers to follow a statutory collective consultation procedure when proposing large-scale redundancies, governed by Sections 188–198 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). This is a legal requirement beyond the individual redundancy rights under the Employment Rights Act 1996.

Statutory trigger: number threshold and recent clarification

Under Section 188(1), collective consultation is triggered if an employer proposes to dismiss as redundant 20 or more employees at one establishment within 90 days or less. A recent 2026 Employment Appeal Tribunal decision (Micro Focus Ltd v Mildenhall) confirmed that only employees of the same legal employer (not wider groups) count, and only those for whom consultation has not already begun. From 2027 (date to be set by secondary legislation), the Employment Rights Act 2025 will require collective consultation if an as-yet-undetermined number of redundancies are proposed across the entire organisation in the UK—not just in a single establishment. Until brought into force, the establishment-specific threshold remains primary.

Consultation requirements and timetable

Consultation must begin before notices of termination are issued and at least:

• 45 days before the first dismissal if 100 or more employees are affected; or
• 30 days before if between 20 and 99 employees are affected.

Consultation must be "with a view to reaching agreement" on avoiding dismissals, reducing numbers, or mitigating consequences. Appropriate representatives (either a recognised trade union or, lacking that, elected employee reps) must be consulted. Written information must be provided as detailed in Section 188(4).

Employers must notify the Secretary of State for Business and Trade using form HR1 (per Section 193 TULRCA)—failure to do so remains a criminal offence.

Protective awards and penalties—statutory change effective 6 April 2026

If an employer fails to conduct proper collective consultation, affected employees can bring a tribunal claim. Section 189 provides for a "protective award." For consultations starting on or after 6 April 2026, the maximum protective award is increased from 90 days’ gross pay to 180 days’ gross pay per employee (per Employment Rights Act 2025, Section 28). Failure to notify the Secretary of State (HR1) may still result in an unlimited fine.

These are substantial changes—doubling the penalty exposure and adding a future, broader trigger. Employers must track annual updates and secondary legislation announcements for the precise enforcement date of the organisation-wide threshold.

Source: Trade Union and Labour Relations (Consolidation) Act 1992, Section 188 Source: TULRCA 1992, Section 193 Source: Employment Rights Act 2025, Section 28 Source: [Micro Focus Ltd v Mr James Mildenhall, [2025] EAT 188](https://www.gov.uk/employment-appeal-tribunal-decisions/micro-focus-ltd-v-mr-james-mildenhall-2025-eat-188)

Updated July 2026: Dead link for Micro Focus EAT decision replaced with correct current GOV.UK official URL; legal content and statutory references otherwise unchanged and accurate as of this update.

A settlement agreement (previously known as a compromise agreement) is the statutory mechanism under UK law for an employee to validly waive claims arising from employment upon termination, provided strict formalities are met. The statutory requirements are set out in Section 203(3) of the Employment Rights Act 1996 (ERA 1996), which covers waiver of most statutory employment rights—such as unfair dismissal and statutory redundancy pay—through a written and independently advised agreement.

Statutory requirements (ERA 1996 s.203) To be enforceable under ERA 1996, the agreement must:

• Be in writing (s.203(3)(a)).
• Relate to "particular complaints or particular proceedings" (s.203(3)(b)); a blanket waiver of all claims is not sufficient. The claims being settled must be clearly identified.
• The employee must have received independent advice from a relevant adviser (usually a solicitor, certified union official, or an advice centre worker) acting in their professional capacity, about the terms and effect of the agreement (including its impact on the ability to pursue statutory claims) (s.203(3)(c), with the definition in s.203(4)).
• The adviser must have professional indemnity insurance covering the advice (s.203(3)(d)).
• The agreement must identify the adviser (s.203(3)(e)) and state that the conditions regulating settlement agreements under the ERA 1996 are satisfied (s.203(3)(f)).

Failure to meet any of these formalities renders the purported waiver void for statutory employment claims, and the employee may still bring a tribunal claim.

Scope and key limitations Section 203(1) generally prohibits contracting out of statutory employment rights, except where these settlement agreement formalities are followed. Section 203 permits waiver of most statutory claims under the ERA 1996, such as unfair dismissal and redundancy pay. However, separate (though similar) statutory provisions apply for waiving discrimination claims (Equality Act 2010 s.147), and wrongful dismissal (a contractual claim) can be waived without statutory formalities. The prohibition in s.203(1) does not cover criminal liability or claims for personal injuries unknown at the time—these are not strictly regulated by ERA 1996 s.203 but typically are not considered waivable by such agreements as a matter of general law.

Material statutory development—confidentiality restrictions (2026 amendment) From 6 April 2026, amendments made by the Employment Rights Act 2025 and related legislation have introduced explicit limitations: confidentiality provisions (NDAs) in settlement agreements can no longer lawfully prevent disclosures regarding sexual harassment or qualifying whistleblowing acts. Any term that purports to bar these disclosures will be void to that extent. This change reflects amendments to ERA 1996 s.43B and related whistleblowing/safeguarding provisions.

Settlement agreements remain central to UK termination practice: they offer certainty and a clean legal break, but only if executed with precise statutory compliance. Employers usually contribute to the employee’s cost of obtaining legal advice as a practical necessity to satisfy s.203.

Source: Employment Rights Act 1996, Section 203 Source: Equality Act 2010, Section 147 Source: Employment Rights Act 2025, Section 43B amendment

Wrongful dismissal is a contractual claim arising when an employer terminates an employee's employment in breach of the contract of employment—most commonly by failing to give the required notice. This is distinct from unfair dismissal (a statutory right under Part X of the Employment Rights Act 1996) and is instead a common-law remedy for breach of contract.

Minimum notice requirement

Section 86 of the Employment Rights Act 1996 (ERA 1996) prescribes the minimum statutory notice period. If the employee's contract provides for a longer notice period, that contractual period prevails. Wrongful dismissal typically occurs when an employer dismisses an employee without giving the required contractual or statutory notice, or without making a payment in lieu of notice (PILON), where the contract or custom allows it. The ERA does not specify the PILON mechanism itself, but English common law recognises that summary dismissal without lawful cause (such as gross misconduct) entitles the employee to damages for lost notice.

Damages and claims

The typical remedy is damages equal to the value of salary and benefits the employee would have earned during the notice period. The ERA and the cited GOV.UK guidance confirm the right to minimum statutory notice and the employer's liability for breach. Additional elements of the damages calculation and PILON require reference to common law and civil procedure, as the specific measurement of damages and inclusion of benefits is not stated in these statutes.

Summary dismissal (gross misconduct)

Section 86(6) ERA 1996 preserves the employer's right to terminate without notice in cases of gross misconduct, but the burden is on the employer to prove that the conduct was sufficiently serious.

Wrongful dismissal claims may be brought by any employee (regardless of service length). For the current tribunal limit or time limits for tribunal/court claims, the ERA and GOV.UK guidance do not specify these figures; further research in the tribunal rules or through practice guides would be required.

Source: Employment Rights Act 1996, Section 86 Source: GOV.UK — Employment law and insolvency: statutory notice on termination

The Employment Rights Act 1996 (ERA 1996) and related statutes enumerate several grounds on which dismissal by an employer is automatically deemed unfair—meaning dismissal for such a reason is irredeemably unlawful, irrespective of the employer’s rationale or processes, and that the statutory two-year qualifying period for ordinary unfair dismissal claims does not apply (see Section 108(3)). Employees gain immediate, day-one protection on these grounds.

Core "automatically unfair" dismissal categories and statutory authority:

• Pregnancy, childbirth, or leave connected to family rights (ERA 1996 s.99): Any dismissal for reasons connected to pregnancy, maternity leave, adoption leave, shared parental leave, or paternity leave.
• Exercise of health and safety rights or functions (ERA 1996 s.100): Any dismissal connected to an employee performing health and safety activities, raising safety concerns, or serving as a health and safety representative.
• Whistleblowing—making a protected disclosure (ERA 1996 s.103A): Any dismissal because an employee made a "protected disclosure" under the Public Interest Disclosure Act regime.
• Trade union membership or activity (Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) ss.152-153, linked through ERA 1996 s.98(6)): Any dismissal on grounds of union membership, non-membership, or participation in union activity is automatically unfair.
• Assertion of a statutory employment right (ERA 1996 s.104): Dismissal connected to an employee claiming a statutory entitlement under the ERA or associated law—such as the right to minimum wage, paid leave, or itemised pay statements.

Qualifying period and process:

• Section 108(3) ERA 1996 expressly removes the normal two-year qualifying period for these categories.
• For these protected grounds, the employer’s motive for dismissal is determinative; evidence of the true reason for dismissal is key and on challenge the tribunal weighs whether the automatic ground factually accounts for the dismissal (Section 99(3), s.100(1), s.103A, s.104(2)).

Remedies:

• Successful claimants under these grounds are entitled to the same remedies as for ordinary unfair dismissal (see summary and caps in ERA 1996 Part X and s.124), but not all categories are exempt from the statutory cap—notably, dismissals for whistleblowing (s.124(1A)) or certain health and safety grounds may result in uncapped compensation. Other categories remain subject to the general award limits unless otherwise provided.

Other potential automatically unfair categories—such as dismissal due to jury service, flexible working requests, or for reasons connected to a TUPE transfer—exist in statute, but are not detailed here for practical focus and have varied citation and remedy structures.

Source: Employment Rights Act 1996, Section 99 Source: Employment Rights Act 1996, Section 100 Source: Employment Rights Act 1996, Section 103A Source: Employment Rights Act 1996, Section 104 Source: Trade Union and Labour Relations (Consolidation) Act 1992, Sections 152–153 Source: Employment Rights Act 1996, Section 108

Dismissal on grounds of capability or performance (skill, competence, health, or qualifications) is a potentially fair reason under Section 98(2)(a) of the Employment Rights Act 1996 (ERA 1996), but employers must meet both substantive and procedural hurdles to avoid a finding of unfair dismissal.

Statutory framework and definition Section 98(2)(a) ERA 1996 identifies "capability or qualifications for performing work of the kind which the employee was employed to do" as a potentially fair reason for dismissal. Section 98(3) clarifies that “capability” relates to health or any other physical or mental quality. However, merely asserting inadequacy is not sufficient—the employer must demonstrate genuine underperformance or unfitness, based on facts available at the time of dismissal.

Reasonableness and fair procedure: Section 98(4) and the ACAS Code Even with a valid capability reason, Section 98(4) ERA 1996 requires that the employer acted reasonably in treating that reason as sufficient for dismissal. Employment Tribunals apply the "band of reasonable responses" test: Was dismissal a reasonable conclusion for a reasonable employer faced with those facts? Central to fairness is a procedurally sound process.

Employers should:

• Clearly communicate standards and expectations to the employee in writing.
• Give warnings identifying shortcomings and offer a reasonable period for improvement (with support/training where relevant).
• Hold at least one formal meeting where the employee can respond.
• Offer the right to be accompanied at those meetings (typically by a colleague or a trade union representative).
• Document all steps taken.
• Consider redeployment or alternative roles before dismissal, especially if ongoing health issues are implicated.

The statutory ACAS Code of Practice on Disciplinary and Grievance Procedures sets out key process steps. Tribunals expect close adherence; significant deviations without good reason typically result in a finding of procedural unfairness and, under Section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992, may increase compensation awards by up to 25%.

Where incapability is due to ill-health, additional reasonableness obligations may arise under the Equality Act 2010 if the employee is disabled; a fair dismissal may require reasonable adjustments. Medical evidence and consultation are expected.

Summary and tribunal enforcement Failure to follow a fair process—even where performance was genuinely inadequate—leaves dismissal vulnerable to challenge. Tribunals scrutinise both the employer’s substantive grounds (was performance genuinely deficient and properly assessed?) and procedural fairness (were warnings and opportunities given?). For capability dismissals, adherence to both the ERA 1996 and the ACAS Code is critical.

Source: Employment Rights Act 1996, Section 98 Source: ACAS Code of Practice on Disciplinary and Grievance Procedures (legislation.gov.uk)

Section 165 of the Employment Rights Act 1996 (ERA 1996) requires that, when an employer makes a statutory redundancy payment to an employee (except where a tribunal decision specifies the amount), the employer must at the same time provide the employee with a written statement indicating how the payment was calculated. This obligation is immediate at the time of payment. The statutory language is clear: “On making any payment to an employee ... the employer shall give to the employee a written statement indicating how the amount of the payment has been calculated” (Section 165(1)).

The statute does not specify the format, but the written statement must allow the employee to understand the basis for calculation—including length of service, relevant age bands, weeks' pay, and the total redundancy payment. The requirement serves to ensure transparency and provide employees a basis for contesting incorrect or inadequate payments.

If the employer fails to provide the statement, the employee may give written notice requiring the employer to furnish the calculation statement within not less than one week (Section 165(3)). Failure to comply is a statutory offence: Section 165(2) provides that an employer “who without reasonable excuse fails to comply” with the requirement is “liable on summary conviction to a fine not exceeding level 1 on the standard scale.”

This is a statutory duty on all employers making redundancy payments under the ERA 1996; Section 165 does not provide exclusions for employer size, sector, or the number of redundancies. The core requirement is triggered whenever a qualifying statutory redundancy payment is made outside of a tribunal award.

Source: Employment Rights Act 1996, Section 165

Employers in the United Kingdom proposing to dismiss as redundant 20 or more employees at a single establishment within a 90-day period are subject to statutory collective consultation and notification obligations under Sections 188–198 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).

Thresholds and statutory consultation periods The duty to consult is triggered when an employer proposes to dismiss 20 or more employees (at one establishment) within 90 days (TULRCA s.188(1)). Consultation must begin at least 30 days before the first dismissal if 20–99 employees are affected, and 45 days in advance if 100 or more are affected (s.188(1A)-(1B)). The obligation is establishment-specific, not company-wide.

Consultation content and process Consultation must be “with a view to reaching agreement” on ways to avoid dismissals, reduce numbers, or mitigate the impact. Employers must consult with appropriate representatives (recognised union or, if none, elected employee representatives) and provide written details covering: reasons for redundancy, numbers and descriptions of employees affected, criteria for selection, procedure/timetable for dismissals, and how redundancy payments will be calculated (s.188(2)-(4)).

HR1 notification: advance notice to government Section 193 requires employers to notify the Secretary of State (Redundancy Payments Service) using Form HR1. This notice must be given at least 30 or 45 days before the first dismissal, aligned with the statutory consultation period. Failure to submit HR1 is a criminal offence: TULRCA s.194 expressly provides that the employer (and in some circumstances, its officers) may be liable for an unlimited fine on summary conviction.

Penalties and protective awards If proper consultation is not carried out, affected employees may claim a "protective award" of up to 90 days’ gross pay per affected employee (s.189). For collective redundancies where the first consultation begins on or after 6 April 2026, Section 28 of the Employment Rights Act 2025 increases the maximum protective award to 180 days’ gross pay. As of June 2026, this change is prospective and not yet in force.

Individual redundancy consultation and statutory notice/pay rules under the Employment Rights Act 1996 also continue to apply in parallel to collective obligations.

Source: TULRCA 1992, Section 188 Source: TULRCA 1992, Section 193 Source: TULRCA 1992, Section 194 Source: GOV.UK – Redundancies: consultation and HR1 form Source: Employment Rights Act 2025, Section 28

The statutory redundancy pay formula under Employment Rights Act 1996 Part XI is based on an employee’s age and years of continuous employment, but it is also subject to a statutory cap on both weekly pay and maximum reckonable service.

Statutory calculation under ERA 1996 Section 162

An eligible employee receives:

• 0.5 week’s pay for each full year of service under age 22;
• 1 week’s pay for each full year from age 22 to 40;
• 1.5 weeks’ pay for each full year at age 41 and over.

Only a maximum of 20 years can be counted towards the redundancy payment, regardless of total service (Section 162(3)).

Cap on a week’s pay, and maximum redundancy payment (2026 update)

For redundancies on or after 6 April 2026, the statutory cap for a week’s pay is £751 (as per The Employment Rights (Increase of Limits) Order 2026). If actual average weekly pay exceeds £751, the calculation uses £751. Thus, the maximum statutory redundancy payment is:

20 years × 1.5 weeks × £751 = £22,530 (for someone aged 41+ for all 20 years).

The cap is uprated every April—verify the relevant limit based on the actual redundancy date. Historical caps apply to earlier dismissals (for example, £700 for dismissals between 6 April 2025 and 5 April 2026).

Practice notes

• The cap and service multipliers apply only to the statutory redundancy payment. Employers may offer enhanced redundancy terms, disregarding the statutory cap, if set by contract or policy.
• Statutory redundancy pay is exempt from tax up to £30,000 (ITEPA 2003 s.403), but any additional contractual payment may be taxable.

Employers must give a written statement of the calculation when paying statutory redundancy (ERA 1996 s.165). This ensures transparency and enables employees to challenge any underpayment. The calculation method and limits are set out in primary legislation and updated by statutory instrument each April.

Source: Employment Rights Act 1996, Section 162 Source: The Employment Rights (Increase of Limits) Order 2026 Source: GOV.UK — Redundancy pay: your rights

Dismissal for misconduct—particularly gross misconduct—is a core permitted ground for fair dismissal under UK law, but it must comply with both statutory reasonableness and procedural fairness. Section 98(2)(b) of the Employment Rights Act 1996 (ERA 1996) explicitly recognises "conduct" as a potentially fair statutory reason for dismissal. Gross misconduct—though not defined in the statute—is established by longstanding case law to mean serious acts (theft, violence, fraud, etc.) that fundamentally breach trust, entitling the employer to summarily dismiss the employee without notice. Section 86(6) ERA 1996 provides that either party may treat the contract as terminable without notice “by reason of the conduct of the other party.”

However, even where alleged misconduct could amount to gross misconduct, ERA 1996 Section 98(4) requires the employer to demonstrate that dismissal was reasonable "in all the circumstances," not automatic. Tribunals apply the "band of reasonable responses" test, developed in case law (notably British Home Stores Ltd v Burchell [1978] IRLR 379), requiring that the employer: (1) genuinely believed the employee was guilty of the alleged misconduct; (2) had reasonable grounds for that belief; and (3) conducted as much investigation as was reasonable in the circumstances. These analytical steps derive from Tribunal precedent and are not laid out verbatim in the statute.

Process is vital: The ACAS Code of Practice on Disciplinary and Grievance Procedures (2015, current as of 2026) details a fair procedure. This includes (i) written notice to the employee of the allegation, (ii) an investigation, (iii) a disciplinary hearing where the employee can respond (with the right to be accompanied), and (iv) a right of appeal. Failure to adhere to a reasonable disciplinary process will often render a dismissal unfair, even if misconduct is established. Under Section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992, Tribunals may increase compensation by up to 25% for unreasonable employer non-compliance with the ACAS Code.

Where gross misconduct is proven and process is fair, statutory and contractual notice rights are typically lost: dismissal is with immediate effect. A defective process or an over-harsh conclusion exposes the employer to unfair dismissal (statutory) and possibly wrongful dismissal (contractual) liability.

Source: Employment Rights Act 1996, Section 98 Source: Employment Rights Act 1996, Section 86 Source: ACAS Code of Practice on Disciplinary and Grievance Procedures (2015, current at 2026) Source: Trade Union and Labour Relations (Consolidation) Act 1992, Section 207A

Section 92 of the Employment Rights Act 1996 (ERA 1996) entitles certain employees to a written statement of the reasons for their dismissal—a procedural requirement distinct from both the right to notice and the ability to claim unfair dismissal. Employers must be aware of service-based eligibility thresholds, statutory timelines, and the risk of tribunal penalty for non-compliance.

Current statutory framework and qualifying period (through 31 December 2026)

• Under Section 92(2), employees with at least two years’ continuous service at the effective date of termination are entitled to a written statement of dismissal reasons from the employer, whether or not they request one.
• Under Section 92(4)-(5), women dismissed while pregnant or during their statutory maternity leave period, or employees dismissed during adoption leave, are entitled to a written statement on request, regardless of their length of service (this protection applies from day one of employment).
• Other employees (with less than two years’ service and not qualifying under the above categories) must request written reasons within 14 days of dismissal; employers must supply the statement within 14 days of request (Section 92(3)).

Statutory amendment with effect from 1 January 2027

• The Employment Rights Act 2025 amends Section 92, reducing the qualifying period for the automatic right to written reasons for dismissal from two years to six months’ continuous service. Effective date: 1 January 2027.
• The two-week pay remedy under Section 93 remains unchanged; no amendments alter the employer’s timeline to respond or the procedure for tribunal enforcement as of this update.

Obligations, scope, and practical implications

• The written statement must specify the principal reason for dismissal (Section 92(6)); there is no prescribed format, but the reason must be clear and direct.
• Failure to comply entitles the employee to bring an employment tribunal claim (Section 93(1)), which may order both provision of the reasons and an award of up to two weeks’ pay (Section 93(2)-(4)).
• The right to request (for those under threshold) is strictly time-limited to 14 days after dismissal.

Practice point: From 1 January 2027, employers must treat all employees with at least six months’ continuous service as automatically entitled to written reasons for dismissal without request. Distinguish between this trigger and the rules covering written particulars of employment (Section 1 ERA 1996) or unfair dismissal itself (Section 94, with its own qualifying period and exceptions).

Source: Employment Rights Act 1996, Section 92 Source: Employment Rights Act 1996, Section 93 Source: Employment Rights Act 2025, Section 16

The Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE", SI 2006/246) protect employees in the United Kingdom when a business or part of a business is transferred to a new employer or where a "service provision change" (outsourcing, insourcing, or retendering) occurs. TUPE’s core principle is that affected employees assigned to the undertaking transfer automatically to the new employer (the “transferee”) on their existing terms, including continuous service—Regulation 4. Most statutory and contractual rights transfer, except for certain occupational pension rights (Regulation 10).

Automatic unfair dismissal: Regulation 7 Regulation 7 provides that where the sole or principal reason for a dismissal is the transfer itself, or a reason connected to the transfer that is not an "economic, technical, or organisational reason entailing changes in the workforce" (ETO reason), the dismissal is automatically unfair. This covers dismissals by both the outgoing employer (transferor) and the incoming employer (transferee) at any time before or after the transfer. Where there is a genuine ETO reason—typically a true redundancy or restructuring that would have occurred regardless of the transfer—the dismissal may be potentially fair, but the usual unfair dismissal protections under the Employment Rights Act 1996 (ERA 1996) still apply. There is no qualifying period for claims of automatically unfair dismissal under TUPE; the protection is "day one"—see Regulation 7(8) and cross-read with section 108(3)(d) ERA 1996.

Consultation and other statutory duties: Regulations 13–16 TUPE obliges both old and new employers to inform and, where appropriate, consult with employee representatives or recognised unions about the transfer, its legal, economic, and social implications, and any proposed "measures" (including dismissals), under Regulations 13–16.

Scope and limitations

• TUPE protection applies regardless of workforce size; exclusions are strictly limited.
• Dismissals primarily due to a transfer, and not for a valid ETO reason entailing workforce changes, will expose the employer to a claim for automatically unfair dismissal before an employment tribunal.
• Employment contracts cannot contract out of these rights; any purported waiver is void for statutory rights under TUPE.

Source: Transfer of Undertakings (Protection of Employment) Regulations 2006, Regulation 7 Source: Transfer of Undertakings (Protection of Employment) Regulations 2006, Regulation 4 Source: Transfer of Undertakings (Protection of Employment) Regulations 2006, Regulations 13–16 Source: Employment Rights Act 1996, section 108(3)