An employee can make a claim for wrongful dismissal in a much wider range of circumstances than for unfair dismissal as this guide explains.

At a Glance

 

  • Wrongful dismissal claims are available to all staff, regardless of length of service.
  • A wrongful dismissal does not necessarily consider whether the dismissal was “fair”, or with cause.
  • An employer dismisses wrongfully if they dismiss without full notice or money in lieu of notice.
  • Notice periods are as set out in the contract, or in accordance with the statutory minimum.
  • Notice is not necessary for cases of gross misconduct.
  • Wrongful dismissal is a common law right, not a statutory right, so restrictions imposed by statute do not necessarily apply.
  • A wrongful dismissal can be filed at the same time as an unfair dismissal; employers would only have to pay the value of one award though, even if both claims succeeded.
  • Wrongful dismissal claims can be brought in the county court or High Court, as well as in the employment tribunal.

Overview

A dismissal occurs when:

  • an employer terminates an employee's employment with or without notice, or
  • when an employee is employed under a limited term contract and the contract is terminated by virtue of the limiting event without being reviewed under the same contract, or
  • the employee terminates the contract, with or without notice, in circumstances in which he is entitled to terminate it without notice by virtue of the employer's conduct.

Employers often believe that their staff have no rights within the first year of employment (two years for employments commencing in April 2012), and they can be dismissed on a whim with no legal rights to complain. Putting aside the numerous grounds employees could use for an unfair dismissal, a wrongful dismissal is open to any employee, regardless of how long they’ve worked – a claim could even be made if the employee was dismissed before their starting date.

A wrongful dismissal does not consider whether the dismissal was “fair” in law, but whether the dismissal process was properly followed, with due notice given (this is at least one week for employees with one month’s service; “reasonable” notice for employees with less service).

Employers also need to be aware that with wrongful dismissals these are contractual breaches, not just unlawful in a statutory sense. What this means for employees is that they could bring a claim in the county courts, rather than the employment tribunals, and this can then give employees six years to make a claim instead of the three months required by the tribunals.

Wrongful dismissals are different from unfair dismissals, and in many cases the awards are much smaller – generally the value of any pay that would have been earned had the correct processes been followed. There is no compensatory limit for wrongful dismissal if the claim is lodged in the county court or High Court, but for well-paid staff a wrongful dismissal can be more attractive than an unfair dismissal as unfair dismissals have a limit on awards.

Unfair dismissals are capped at £78,962 from 6 April 2016 and due to a change in the rules for calculating compensation many unfairly dismissed employees will have to accept lower claims from 29 July 2013. Wrongful dismissals have a cap on awards of £25,000 before the employment tribunal, but no cap applies before the county court or High Court.

While the costs of settling a claim will normally be quite small for employers, consideration still needs to be given to the cost of defending a claim – the legal fees for advice & representation on the case. In practice, the cost of doing things properly will not be great (perhaps a couple of weeks wages for the employee while the employer pursues a disciplinary process and any notice period per the contract, with minimal costs for legal support where required), and therefore employers should at least go through this process.

Employers will normally have a disciplinary procedure in place (this is a legal requirement to be included in any Statement of Particulars), and this should be followed for many dismissals.

For cases not involving a disciplinary aspect, it could be enough to dismiss without anything more than providing the notice in the contract (or “reasonable” notice for staff without a contract & less than a month’s service).

A wrongful dismissal can be filed at the same time as an unfair dismissal, but employers would only have to pay the value of one award even if both claims succeeded – the courts will only award up-to the amount of any losses/compensation (according to statute or the contract) once, and the employer would not have to face the risk of a further claim.