Support from an HR consultant in Milton Keynes to help you avoid costly dismissal mistakes and protect your business from tribunal claims.
From January 2027, the cap on unfair dismissal compensation is being REMOVED.
That changes the financial risk of getting a dismissal wrong. Considerably.
A recent tribunal case saw an employer ordered to pay over £66,000 after dismissing an employee who raised concerns about a manager. Under the new rules, that figure could have been far higher.
If you run a small business and handle employee issues without proper HR advice, this is worth understanding.
Here's what happened and what you can take from it.
The compensation cap is going and why that matters to you
Right now, there's a statutory limit on what a tribunal can award in most unfair dismissal cases. From January 2027, that limit disappears.
For a business owner, the practical effect is straightforward. If you dismiss someone unfairly, the potential financial exposure will be much greater than it is today. There's no ceiling any more.
Cases that might currently result in awards of tens of thousands of pounds could end up costing substantially more. And for a smaller business, that kind of sum can be devastating.
The case I'm going to walk you through resulted in an award of £66,295 plus £1,800 in costs. That was under the current rules, with the cap still in place. Imagine what it might look like without one.
What actually happened in this case
An engineer called Andrew Estcourt was working as a chief engineer. He raised repeated concerns that his new manager lacked the technical competence needed for the role.
Instead of looking into those concerns properly, the business decided he was being difficult. They described him as obstructive and unsupportive.
The client on the project then asked for Estcourt to be taken off it. The employer agreed and went on to dismiss him.
The tribunal found the dismissal was automatically unfair on whistleblowing grounds. The HR team involved were criticised for showing a complete disregard for fair process.
Where the employer went wrong
There were several failures here, and each one carries a lesson.
Relying on SOSR without proper evidence
The employer used something called SOSR as the reason for dismissal. That stands for "some other substantial reason." It is a legitimate basis for ending someone's employment, but only when you can back it up with solid evidence and a proper investigation. You can't just reach for it because the situation feels uncomfortable. Without that groundwork, it leaves you wide open at tribunal.
Treating a client request as grounds for dismissal
The client asked for Estcourt to be removed from the project. The employer treated that as sufficient justification to end his employment entirely. It wasn't. A client's request is a commercial matter. It doesn't give you a fair reason to dismiss someone. You still need to look at alternatives and follow a proper process before making that kind of decision.
Failing to recognise a protected disclosure
Estcourt's complaints about his manager weren't just grumbles. Because they touched on competence in a role where health and safety or legal compliance could be affected, they qualified as protected disclosures under whistleblowing law. Dismissing someone because they've made a protected disclosure is automatically unfair. It doesn't matter how polished your paperwork looks.
Running two processes with the same people
The grievance process and the dismissal process were happening at the same time, with the same decision-makers involved in both. That's a serious impartiality issue. If someone has raised a grievance, the person dealing with that grievance cannot also be the one deciding whether to dismiss them.
Practical steps you should be taking
Whether your team is two people or two hundred, the same principles apply. Here's what I'd want you to take away from this.
➡️If an employee raises a concern, investigate it properly before you take any other action. Don't jump to conclusions about their motives.
➡️When a client asks you to remove someone from a project, handle it as a commercial decision. Don't let it become an automatic route to dismissal. Consider redeployment or other options first.
➡️Keep your processes separate. Grievance handling and employment decisions need different people involved. Mixing them creates a bias that a tribunal will pick up on immediately.
➡️If you plan to use SOSR as your reason for dismissal, make sure you've gathered clear, documented evidence to support it. It's a legitimate tool, but only when used properly.
These aren't complicated steps. But skipping them is exactly how businesses end up at tribunal. With HR consultancy across the UK, I help business owners put the right processes in place so they don't find themselves in this position..
Questions worth asking yourself
If you're reading this and wondering whether your business could be at risk, here are a few things to think about.
✅Do you have a clear process for handling employee concerns or complaints, separate from any performance or disciplinary action?
✅If a client asked you to remove a member of staff from a project tomorrow, would you know how to handle that without putting yourself at legal risk?
✅Are the people making decisions about someone's employment the same people handling their grievance? If so, that needs to change.
✅Could any concerns raised by your staff about a colleague or manager qualify as whistleblowing under the law? Would you recognise one if it happened?
✅Do you have documented evidence to support any recent or upcoming dismissal decisions?
Don't wait until it becomes expensive
The removal of the compensation cap from January 2027 means the cost of getting things wrong is about to increase. For smaller businesses especially, one poorly handled dismissal could have a serious financial impact.
The good news is that most of these mistakes are avoidable. With the right advice and proper processes, you can manage difficult employee situations confidently and fairly.
How I can help to get this right
If you're dealing with a tricky employee situation right now, whether it's a performance issue, a complaint from a client, or someone raising concerns about a colleague, please get proper advice before you act.
As an outsourced HR consultant in Milton Keynes, I work with small and medium-sized businesses across the UK, to help them handle these situations the right way.
You don't need to have all the answers yourself. That's what I'm here for.
Get in touch and let's have a chat about what you're facing. I'm always happy to talk things through. 📱 0781 3084152 or email 📧 daxa@hrresultsltd.co.uk Taking your HR from 'to do' to 'done'.
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