Wrongful dismissal is a dismissal in breach of contract, i.e. the express or implied terms of the contract of employment has been breached. If an employee is successful in bringing a claim for wrongful dismissal, the employee can claim damages, which are limited to the net value of salary and other contractual benefits that the employee would have been entitled to during their notice period. Wrongful dismissal will free the employee from any restrictive covenants within the contract of employment.
Types of wrongful dismissal
An employee can bring a wrongful dismissal claim in the following circumstances:
- There is a breach of an express or implied notice term (most common)
- The employer terminates a fixed term contract or a specific task contract prior to its expiry
- There is a breach of a contractual disciplinary or redundancy procedure
When can an employee be dismissed without notice?
If the employee’s contract contains a non-discretionary payment in lieu of notice clause, then any dismissal without adequate notice will not be wrongful, even if the employer does not make the payment in lieu of notice. Instead, an employee would need to bring a debt claim rather than a wrongful dismissal claim.
By contrast, if an employer has the discretion to make payment in lieu of notice and that is exercised, dismissal without notice will not be wrongful.
Civil Court or Employment Tribunal?
If the employee decides to bring a claim for wrongful dismissal in the employment tribunal, they have a limitation date of 3 months less a day and damages are capped at £25,000. Claims in the tribunal are usually dealt with quicker and the legal costs involved are likely to be lower than a civil claim. It is also the general rule that the unsuccessful party will not have to pay the costs of the winning party.
If the employee decides to bring a claim for wrongful dismissal in the civil courts, they have a limitation date of 6 years and there is no maximum limit for compensation that can be awarded. However, civil court claims can be expensive and the unsuccessful party will have to pay the costs of the winning party.