What Is Wrongful Dismissal & How Does It Differ From Unfair Dismissal?
Wrongful dismissal is a dismissal in breach of contract. The fairness of the dismissal is not an issue that will be considered, but whether or not there has been a breach of an express or implied term of the employment contract.
What Constitutes Wrongful Dismissal?
The types of claims that are involved in wrongful dismissal are:
- Breach of a notice term – whether express or implied
- Termination of a fixed-term or specific task contract before its expiry – unless the employer can point to a term in the contract that would allow them to dismiss
- Breach of disciplinary or redundancy procedure
- Breach of the implied term of trust and confidence
However, the employer can dismiss without notice in the following circumstances:
- Payment in Lieu of Notice (PILON) – where it is a non-discretionary term in the contract any dismissal will not be wrongful and where the term is discretionary the term will only amount to wrongful dismissal when the employer does not exercise its discretion
- An employee commits a repudiatory breach of their contract of employment – this is a question of fact for the tribunal or court to hear but the employer can rely on acts discovered after the dismissal in order to justify the decision for dismissal
What Is The Impact Of Wrongful Dismissal?
The wrongful dismissal does not automatically terminate the contract of employment. There must be an acceptance from the wronged party of the repudiatory breach in order for the contract to come to an end.
The wrongful dismissal will also free the employee from any contractual restrictive covenants in restraint of trade. Any covenants which are drafted in a way which makes them enforceable regardless of how the termination of employment took place are deemed to be unenforceable by law.
The wrongful dismissal is not entirely clear on the effect that it has on confidentiality clauses within contracts of employment. These clauses are deemed to be contractual rights but, as they are proprietary in nature, the tribunal and courts have not commented on the effect wrongful dismissal has on these clauses.
What Is The Difference Between Unfair And Wrongful Dismissal?
The terms wrongful dismissal and unfair dismissal and often used interchangeably but it is important to note that they are not the same thing and constitute different types of claims under employment law.
The key differences between unfair dismissal and wrongful dismissal are:
| Wrongful Dismissal | Unfair Dismissal |
| Common law action for breach of contract, does not deal with the issue of fairness | Governed by statute and deals with the issue of fairness of the dismissal |
| No pre-conditions to bring a claim | Pre-conditions of 2 year qualifying period and is only available to certain categories of employment status |
| The employer can rely on facts discovered after the dismissal to justify the dismissal | The employer can only rely on what was known at the time of dismissal to justify if the dismissal was fair |
| Can be brought in both the Employment Tribunal and Civil Courts | Can only be brought in the Employment Tribunal |
| The award of damages is to put the employee back in the same position as if the contract had been performed and terminated on the terms contained within it | The award for damages for unfair dismissal is a basic award calculated on a formula based on age, length of service and weeks pay, and a compensatory award given at the tribunals’ discretion for the most just and equitable outcome. |
| There are no remedies for reinstatement or re-engagement | Remedies for reinstating and re-engaging the employee are available in unfair dismissal claims |
| Within the civil courts, there are provisions to make declarations and injunctions | No provisions for declaration or injunctions as the claims can only be heard in the Employment Tribunal |
How Is A Wrongful Dismissal Claim Made?
Claims may be brought in both the employment tribunal and civil courts. There are advantages and disadvantages to both and employees must be careful when deciding where to bring their claim.
The limitation periods in which to bring a claim is one of the biggest differences between the two. In the employment tribunal, employees have 3 months in which to bring a claim. In the civil courts, the limitation period is 6 years.
There is also no cap on the maximum level of compensation in the civil courts but bringing a claim in the employment tribunal results in the employee facing a statutory cap of £25,000. The employee is also under a duty to mitigate their loss in any wrongful dismissal claim, so they must be seen to be making reasonable steps to find another job and any remuneration they get from a job will be deducted from any damages given.
Any award issued in the employment tribunal will be set off against an award issued in the civil courts so that the employee does not get the benefit of damages twice for the same action that they are bringing.
The amount of damages awarded needs to be weighed up against the fact that civil court claims are expensive to bring, take long to come to a decision and the losing party pays the costs of the other party. In tribunal claims, the cost to bring a claim is less expensive, the decisions are reached sooner and as a general rule you will not be liable for the costs of the party should you lose.
Can Multiple Claims Be Made?
There is the opportunity to bring parallel claims in both the employment tribunal and civil courts. If an employee had claims for both unfair and wrongful dismissal they could bring a claim for unfair dismissal in the tribunal and a claim for wrongful dismissal in the civil courts. However, if a successful decision has been given in a tribunal claim for wrongful dismissal, then the employee cannot bring a further claim for wrongful dismissal in the civil courts.
There are tactical decisions for why an employee would like to bring a claim for wrongful dismissal in either the tribunal or civil courts. For instance, they can pursue a claim for unfair dismissal in the tribunal and wait to see the outcome of this before they potentially pursue a claim for wrongful dismissal in the civil courts. However, caution must be taken based on the discussion above and a commercial decision has to be made when employees are making their decisions.
If you require any assistance regarding the matters related to wrongful dismissal outlined in this article, our expert team employment law can help. Based across the Kitson Boyce offices in Torquay, Plymouth and Exeter, our employment law solicitors can assist whether you are an employee bringing a wrongful dismissal claim or an employer defending a claim. To discuss your circumstances further, simply contact us via the form below or by emailing [email protected].
