Wrongful dismissal occurs when an employee is dismissed in a way that breaches the contract of employment, for example where an employee is dismissed without notice, or with less notice than is stipulated in the contract. Unlike unfair dismissal (which relates an employer’s breach of an employee’s statutory rights), there is no need for a qualifying period for an employee to claim damages for wrongful dismissal.
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What is wrongful dismissal?
A wrongful dismissal claim is in essence a breach of contract claim by an employee against an employer. Unlike for claims for unfair dismissal, fairness is not the issue, the only question is whether the express or implied terms of the contract of employment have been breached.
A wrongful dismissal claim arises where the employer, in dismissing the employee, breached the (express or implied) terms of the contract which thereby caused the employee loss.
Wrongful dismissal is a separate claim to unfair dismissal
Unfair dismissal claims arise where an employee who has completed the qualifying period service is dismissed in circumstances that are not one of the 5 potentially fair reasons set out in the Employment Rights Act 1996 (ERA 1996). On the other hand, wrongful dismissal is the common law action for breach of contract.
For unfair dismissal claims, the function of the Employment Tribunal (EAT) is to consider whether the dismissal was fair (see for example the judicial comments Rawson v Robert Norman Associates Ltd UKEAT/0199/13). On the other hand, for wrongful dismissal claims, the EAT is primarily concerned with whether a breach of contract occurred.
For unfair dismissal claims, an employer must have completed the 2 year qualifying period of service (section 108(1) ERA 1996: to claim, an employee must have served 2 years continuous employment (there are special rules on events breaking continuity which we are able to advise you on)). However, these qualifying periods do not apply in relation to a wrongful dismissal claim.
Are there time limits for making a wrongful dismissal claim?
If the wrongful dismissal claim is being brought at the EAT, then an employee must make a claim within 3 months from the date of termination. If the wrongful dismissal claim is being brought in the civil courts, then a claim can be brought within 6 years of the termination of the employment contract.
Examples of wrongful dismissal
Wrongful dismissal claims arise when a contract for employment is breached, for example where:
- An employee is dismissed in breach of a notice term (express or implied);
- An employee is dismissed when on a fixed-term contract before the contract has expired; or
- An employee is dismissed in breach of redundancy or contractual disciplinary procedure.
Remedies for wrongful dismissal
If a wrongful dismissal claim is brought at the EAT, the compensatory amount for breach of contract is capped at a statutory maximum of £25,000. However, if the claim for breach of contract is issued at court, then the damages a court can rule on are not capped at £25,000.
If it is found that the employee was wrongfully dismissed then the employer would be liable to pay damages to put the employee in the position they would have been in had the contract been terminated correctly pursuant to the terms in the contract. Damages recoverable includes the salary and other benefits that the employee would have been entitled to during the contractual notice period including pension entitlement and bonus.
Given the statutory cap on damages at the EAT, employees on a high salary with a lengthy notice period can potentially achieve more in damages for breach of contract if a claim for wrongful dismissal is brought in the civil courts.
Unlike for unfair dismissal claims, the remedies of re-instatement or re-engagement of the employee are not available in wrongful dismissal claims.
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