What is Wrongful Dismissal?

Andrew Willis

Andrew Willis

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15 Nov 2018

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If you breach an employee’s contract, you could be liable for wrongful dismissal. In this article, we will explore wrongful dismissal in the UK, as well as how it differs from other types of unlawful dismissal.

You might also know it as wrongful termination or wrongful discharge.

When does wrongful dismissal occur?

It occurs when you dismiss someone contrary to their contract of employment. Usually this will mean by breaching the notice period terms in the employee’s contract.

An employee will likely have a claim for wrongful dismissal if you have dismissed them:

  • Without any notice.
  • Without giving them their statutory notice.
  • Without letting them serve the full notice period in their contract.
  • By not following contractual procedure.

To have grounds for wrongful dismissal when making a claim, your employee must prove that:

  • You dismissed them in such a way that breached their contract.
  • They suffered a loss because of the contract breach—e.g. a loss of pay.

Your employee must make their claim within three months—minus one day—of the dismissal.

Dismissal without notice

Normally, dismissal without notice happens when an employee has committed an act of gross misconduct, or has breached their contract in some serious way. You may also know this as summary dismissal.

Examples of gross misconduct in the workplace can include offences like sexual harassment, violence, theft, fraud, and offering or accepting bribes.

This list of gross misconduct offences is by no means exhaustive.

Wrongful dismissal during probationary period

Wrongful dismissals, as we’ve discussed, focus mainly on notice period breaches—and this applies to employees who are serving their probation period, too.

Your staff have certain automatic legal protection from day one of their employment—including a minimum statutory notice period.

Statutory notice periods include:

  • One week for staff whose length of service is between one month and two years.
  • Two weeks for staff whose length of service is at least two years.
  • One week for every year of service after the employee’s second year up to a maximum of twelve weeks.

And typical contractual notice periods are:

  • One week for staff whose length of service is between one and six months.
  • One month for staff who have completed their probation period.

Where statutory notice is longer than the notice in your employee’s contract, the statutory notice will override their contractual notice.

Remember that it’s in your best interests to keep up-to-date on the notice periods of your staff.

Other unlawful dismissals

In addition to wrongful dismissal, other unlawful dismissals include unfair dismissal and constructive dismissal.

The difference between wrongful and unfair dismissal is that for a dismissal to be wrongful, you must breach your employee’s contract.

For the dismissal to be unfair, you need to fire your employee for a reason that is not one of the fair reasons for dismissal, as set out in Section 98 of the Employment Rights Act 1996, or, you must dismiss them without a fair procedure.

While a wrongful dismissal claim requires no amount of service, an employee needs two years’ under their belt before they can claim for unfair dismissal, unless they’re claiming for automatically unfair dismissal—in which case, you’ll have violated your employee’s statutory rights in some way, such as dismissing them for being pregnant.

People often mix up wrongful and unfair dismissal.

Wrongful dismissal compensation limit

If one of your employees makes a claim for wrongful dismissal and an employment tribunal finds you to be in breach, you must pay your employee damages for the net loss they suffered.

The limit for these damages is £25,000.

However, a wrongful dismissal payout doesn’t stop there. Your employee can also recover damages for any benefits they lost without their notice period. For example, pension, bonuses, any private healthcare, car allowance money, and any other benefits.

Consider pay in lieu of notice (PILON)

If you plan to dismiss someone, you should do so in a fair way. By paying your employee in lieu of notice, you end their employment immediately but compensate them for the notice period.

By paying your employee in lieu of their notice, you’ll likely avoid a wrongful dismissal claim and save your business a lot of money.

Talk to an Expert

Paying out compensation for wrongful termination can be very expensive.

For any queries, give Croner’s employment law experts a call on 0808 145 3379.

About the Author

Andrew Willis

Andrew Willis is the senior manager of the Litigation and Employment Department and assumes additional responsibility for managing Croner’s office based telephone HR advisory teams, who specialise in Employment law, HR and Commercial Legal advice for large organisations across the United Kingdom.

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Andrew Willis

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