S98 ERA 1996 - The Basis of Unfair Dismissal Law

Section 98 of the Employment Rights Act 1996 is the foundation of every unfair dismissal claim. You can easily find the “textbook” summary on ACAS or CAB: an employee usually needs two years’ service, unless it’s an automatically unfair dismissal. 

The employer must show a fair reason, and the tribunal then decides whether dismissal was fair in all the circumstances.  That’s true — but it leaves people with more questions than answers. What does “fair” really mean? How do tribunals apply it in practice? 

At UnfairDismissal.org, we look past the theory and show you with clear examples how the test works.  

Step One: The Employer’s Reason  

The first part is straightforward: the employer must show the reason for dismissal. Section 98 lists five categories:  

1. Conduct – misconduct, repeated breaches, or gross misconduct.  

2. Capability or qualifications – poor performance or ill health.  

3. Redundancy.  

4. Statutory restriction – where continuing employment would break the law.  Some other substantial reason (SOSR).  

In practice, almost every employer can point to something that fits one of these categories. The real battle starts at the second step.  

Step Two: Was the Dismissal Fair?  

Even if a valid reason exists, the tribunal asks: 

did the employer act reasonably in all the circumstances? 

This is known as the “range of reasonable responses” test.  That is where cases are won and lost. Here are some practical illustrations:  

Capability and Ill Health  

Employers often rely on occupational health reports. But fairness requires looking at the whole picture, not just a single opinion.  

Example: An employee had repeated absences due to stress and was waiting for a consultant appointment that could have led to effective treatment within weeks. The employer dismissed before that appointment, saying the employee could not sustain reliable attendance. 

The tribunal found this unfair: the employer should have waited to see if the treatment worked.  

👉 Lesson: You don’t need to meet the Equality Act definition of “disabled” for dismissal to be unfair. Employers must still weigh up the medical evidence fairly at the time of dismissal.  

Misconduct  

Tribunals focus less on proving guilt beyond all doubt, and more on whether dismissal was a proportionate sanction.  

Example: Two employees were caught committing the same misconduct. One was given a written warning, the other dismissed. The tribunal ruled the dismissal unfair due to inconsistency — the penalty was out of step with how similar cases were handled.  

👉 Lesson: Consistency matters. Employers must treat like cases alike.  

Process and Alternatives  

Fairness also means following a proper process: investigation, hearing, and appeal. Employers must also consider whether dismissal is the only reasonable option.  

Example: A health and safety manager missed deadlines due to stress from personal circumstances. The company dismissed him for poor performance. But the tribunal noted that a less demanding role was available, and no evidence showed this was considered. The dismissal was ruled unfair.  

👉 Lesson: If alternatives like demotion, redeployment, or warnings are not considered, dismissal is more likely to be unfair.  

Signs of Staged or Shifting Allegations  

Tribunals also look for red flags suggesting an employer had an “exit agenda.”  

Example: An employee was suspended for allegedly sleeping at work. At the disciplinary hearing, the allegation shifted to general poor performance. The tribunal criticised this inconsistency and treated it as evidence the dismissal process was unfair.  

👉 Lesson: Employers must stick to clear allegations and give proper notice of what’s being investigated.  

Key Takeaway  

Section 98 is not about whether the employer had any reason — they always will. The real question is whether dismissal was within the range of what a reasonable employer could do. That’s why tribunals drill into the process, consistency, alternatives, and fairness at the time.  Understanding this test helps you see where unfair dismissal claims succeed or fail.

📌 Practical Checklist for Employees Facing Dismissal

• Occupational Health Reports – read carefully, correct inaccuracies in writing, and ask for addendums if key facts are missing.

• Paperwork – check your suspension letter, disciplinary invite, and investigation report. If they’re missing, request them before the hearing.

• Procedure – read your employer’s disciplinary policy and hold them to it. Ask for disclosure and adjournment if needed.

• Hearing Rights – don’t let the hearing be a closed yes/no interview. Ask questions, challenge evidence, and request alternatives to dismissal be considered.

• Minutes – check hearing notes and send corrections promptly so your record is accurate.

• Comparators – identify colleagues who received lighter sanctions in similar circumstances and raise inconsistency.

• Gross Misconduct – confirm whether the alleged misconduct is actually listed in your employer’s policy.

👉 Using this checklist won’t guarantee success at tribunal, but it will strengthen your position and help you spot unfairness as it happens.