Is it unlawful for an employer to dismiss an employee for incompetence?

No, under the Employment Rights Act 1996, the lack of capability or qualifications of an employee is a potentially fair reason for dismissal. Capability is defined as meaning capability assessed by reference to skill, aptitude, health or any other physical or mental quality. However, before dismissing an employee on performance grounds an employer must carry out a proper investigation into the employee's performance, give them a full and fair opportunity to rectify the problem and follow a fair dismissal procedure.