Wrongful dismissal

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Wrongful dismissal claims

Legal basis of wrongful dismissal

Wrongful dismissal occurs when the employer terminates the contract of employment and in doing so breaches the contract. The most common example of wrongful dismissal is terminating the contract of employment without giving the appropriate notice. Another common example is terminating employment in breach of a contractual dismissal and disciplinary procedure.

To be successful in bringing a claim of wrongful dismissal the individual must be able to show two things:

i.    That s/he was dismissed in breach of contract
ii.    That s/he has suffered loss as a result

Terminating an employment contract without notice

As already noted, the most common claim of wrongful dismissal is that the correct notice period has not been given, or the employee has been dismissed without notice. If the employee has committed gross misconduct (e.g. theft, fraud, assault) and has been summarily dismissed as a result there would be no requirement to pay notice, and this would not be wrongful dismissal.

It is important to note that summary dismissal should not be seen as an automatic outcome of a gross misconduct situation. Each situation should be assessed based on the facts. If the employee has acted with complete disregard to the contract of employment then it is likely to be appropriate to summarily dismiss.

To avoid any confusion about this, an employer must ensure that the company disciplinary procedure clearly defines gross misconduct, giving a non-exhaustive list of examples, and must also ensure that it is made clear that this could lead to summary dismissal.

Qualifying period for wrongful dismissal claims

Unlike unfair dismissal, there is no qualifying period of service required to bring a claim of wrongful dismissal. It is possible, therefore, that any employee who is dismissed could bring a claim of wrongful dismissal if there has been a breach of contract.

Damages for wrongful dismissal

The remedy for wrongful dismissal is damages. The remedy puts the employee back into the situation that s/he would have been if there had been no breach of contract. So, for example, if the employee has not received the correct notice period the damages would be payment for the notice period which should have been given. If the employee has been dismissed in breach of a contractual disciplinary procedure there will be an award of typically around two weeks to reflect the additional time the employee would have been working if the procedure had been followed.

There is no additional payment for injury to feelings, and no damages are given for any future loss.

The damages are the net salary which the employee would have earned, as well as the value of any benefits (e.g. private health insurance, bonuses, company car, commission).

When an employee has a new job

If an employee has been successful in seeking alternative employment the damages will be reduced accordingly. For example, if the employee was not given three months’ contractual notice but found employment after two months the amount earned would be deducted from the amount of damages that the employee would have been entitled to. The focus is on putting the employee back into the situation s/he would have been in if there had been no breach of contract.

If the employee got a new job with better remuneration and hence there had been no loss, the employee would receive no damages.

The employee is expected to mitigate their loss. If the employee has made no attempt to find alternative employment the damages can be reduced to reflect this. The Courts would assess what the employee should have done to seek alternative employment, and when it is likely that the employee would have been successful.

Time limit

An employee has six years from the date of termination in which to bring a claim of wrongful dismissal in the County/High Court, but just three months from the date of termination in the Employment Tribunal.

Bringing the claim

An employee could bring a claim of wrongful dismissal in the Employment Tribunal or the County/High Court. If the value of the claim is worth more than £25,000 it cannot be heard in the Employment Tribunal and must be heard in the County/High Court. The individual can choose where to bring a claim with a value less than £25,000.

It is not possible to bring the claim in the Employment Tribunal and get the first £25,000 awarded and to then go to the County/High Court for the remainder of the award.

If the employee is claiming both unfair dismissal and wrongful dismissal, and is successful in both claims, s/he will not receive ‘double compensation’. So, if the employee is arguing that s/he was wrongfully dismissed because a contractual disciplinary procedure was not followed s/he might be awarded two weeks’ pay to reflect the additional time that the employee would have been employed whilst the disciplinary procedure was followed. This would be the damages for wrongful dismissal.

If the employee successfully claimed unfair dismissal the compensatory award would compensate the employee for loss of earnings from the date of dismissal to the date of the Employment Tribunal hearing, along with the possibility of compensation for future loss.

If the employee had been awarded pay relating to two weeks of employment from the date of dismissal for wrongful dismissal this amount would not also be awarded as part of the compensatory award for unfair dismissal.

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