Keith Mack
Wrongful dismissal, also called wrongful termination or wrongful discharge, is a legal concept describing the unlawful termination of employment due to a breach of the terms of the employment contract. It is often confused with unfair dismissal, which occurs when an employer terminates an employee's contract in a manner considered unjust, unreasonable, or improper according to the law. In the case of wrongful dismissal, the employer has breached either an implied or express term of the employee's contract, such as the duty to provide the employee with the minimum statutory notice period or pay in lieu of notice. This is different from unfair dismissal, which is a statutory claim arising under the Employment Rights Act (ERA) 1996. Understanding the distinction between wrongful and unfair dismissal is crucial for employers to avoid costly mistakes when terminating an employee's contract.
| Characteristics | Values |
|---|---|
| Definition | A situation in which an employee's contract of employment has been terminated by the employer, where the termination breaches one or more terms of the contract of employment, or a statute provision or rule in employment law |
| Other names | Wrongful termination, wrongful discharge |
| Related concepts | Unfair dismissal, constructive dismissal |
| Common examples | Dismissing an employee without notice, dismissing an employee without paying them in lieu of notice, dismissing an employee on the spot, unlawfully terminating a fixed-term contract prior to expiry of the term, failing to follow a contractual dismissal procedure |
| Differences from unfair dismissal | A wrongful dismissal is a contractual claim, whereas unfair dismissal is a statutory claim arising under the Employment Rights Act (ERA) 1996 |
| Time limit for tribunal claim | Three months less a day |
| Time limit for civil claim | Six years |
| Maximum award for tribunal claim | £25,000 |
| No cap on award for civil claim | True |
| Minimum service period for claim | Nil |
| Whistleblower laws | An employee who reports a legal or safety violation by the employer to an appropriate oversight agency may not be lawfully fired |
| Refusal to commit an illegal act | An employer is not permitted to fire an employee for refusing to commit an illegal act |
| Human rights violations | Do not constitute independent actionable wrongs in wrongful dismissal cases |
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What You'll Learn
Wrongful dismissal and unfair dismissal are different
Wrongful dismissal and unfair dismissal are two distinct concepts, with different legal bases and remedies.
Wrongful dismissal is a contractual claim, arising from a breach of the employee's contract of employment during the dismissal process. This could be a breach of an implied or express term of the contract. For instance, an employer may fail to provide the employee with the minimum statutory or contractual notice period, or pay in lieu of notice. Wrongful dismissal claims can be brought in an employment tribunal or civil court, with a three-month and six-year limitation period, respectively. There is no requirement for the employee to have a set period of continuous service to pursue a claim.
Unfair dismissal, on the other hand, is a statutory claim under the Employment Rights Act 1996. It occurs when an employer terminates an employee's contract in a manner considered unjust, unreasonable, or improper according to the law. To claim unfair dismissal, an employee must have two years of continuous service with the employer, unless the dismissal is automatically unfair, for reasons such as discrimination or taking part in industrial action. An employee can claim for unfair dismissal in an employment tribunal, with a three-month limitation period.
The remedies for unfair dismissal include a basic award, calculated based on age, length of service, and salary, and a compensatory award, subject to a maximum of one year's gross pay. In contrast, there is no set formula for calculating awards for wrongful dismissal, and the maximum award for such claims in an employment tribunal is £25,000, while civil courts can award more.
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Notice period breach
Wrongful dismissal, also called wrongful termination or wrongful discharge, refers to the unlawful termination of employment due to a breach of the terms of the employment contract. This differs from unfair dismissal, which occurs when an employer terminates an employee's contract in a manner considered unjust, unreasonable, or improper according to the law. In the context of a wrongful dismissal claim, this could be based on a breach of either an implied or express term.
One of the most common examples of wrongful dismissal is the breach of the implied term to provide the employee with the minimum statutory notice period. This is known as a "notice period breach". The applicable notice period is typically outlined in the employment contract or mandated by employment law. For instance, in some jurisdictions, the statutory minimum is one week for every year of service after the employee's second year, up to twelve weeks. If a notice period is not explicitly stated, the employee may be entitled to longer than the statutory minimum, depending on their role and length of service.
A notice period breach occurs when an employer terminates an employee without providing the required notice period or pay in lieu of notice (PILON). This can include dismissing an employee on the spot, without allowing them to work out their full contractual notice period. In such cases, the employer has breached their legal obligation to provide either common law reasonable notice of termination or contractual notice of termination.
It is important to note that wrongful dismissal claims are contractual claims, and employers can be held liable for breaching the terms of the employee's contract during the dismissal process. Employees can pursue wrongful dismissal claims through employment tribunals or civil courts, and it is recommended that they seek legal advice to understand their rights and options.
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Fixed-term contract breach
Wrongful dismissal, also called wrongful termination or wrongful discharge, is a situation in which an employee's contract of employment has been terminated by the employer, breaching one or more terms of the contract of employment, or a statute provision or rule in employment law. A wrongful dismissal claim may arise out of an actual dismissal or when an employee resigns in response to a breach of contract by the employer, known as constructive dismissal.
To minimise the risk of a wrongful dismissal claim, employers should keep careful records, follow a fair process, and clearly identify the statutory reason for dismissal. Employers must also understand the key legal distinctions between wrongful and unfair dismissal to avoid making costly mistakes. For example, an employer may dismiss an employee for a legitimate and fair reason, but if they did not follow the correct termination procedures, that dismissal may still be wrongful.
Employees should also seek expert advice prior to terminating their employment to ensure that the dismissal is lawful and fair and to explore the possibility of a settlement agreement. Employees with a wrongful dismissal claim can notify the Advisory, Conciliation, and Arbitration Service (Acas) and participate in early conciliation to resolve the dispute without going to a tribunal.
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Discrimination
Many states also have civil rights laws that protect workers from discrimination. For instance, California's Fair Employment and Housing Act (FEHA) prohibits various forms of discrimination. Similarly, in Canada, wrongful dismissal considers whether the worker was dismissed fairly and whether they were adequately compensated. While each case is unique, discrimination is one of the most prevalent forms of wrongful termination. This includes overt discrimination based on protected characteristics, as well as more subtle forms of retaliation against employees who exercise their legal rights. For example, it is illegal to terminate an employee because they filed a claim of discrimination or participated in an investigation for discrimination.
Employees who believe they have been wrongfully terminated due to discrimination are advised to seek legal counsel and report their termination to the appropriate authorities. In the US, employees can file a report with the Equal Employment Opportunity Commission (EEOC) and seek protection under whistleblower laws. Understanding wrongful termination requires familiarity with various aspects of employment law, including anti-discrimination statutes, whistleblower protections, and contract law.
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Whistleblower laws
Wrongful dismissal, also known as wrongful termination or wrongful discharge, occurs when an employer breaches one or more terms of an employee's contract, or a statute provision or rule in employment law. This often involves failing to provide the minimum statutory or contractual notice period before termination.
In the context of wrongful dismissal, whistleblower laws safeguard employees who report legal or safety violations by their employer to the appropriate authorities. For instance, an employee who discloses information about their employer's legal violations or refuses to commit an illegal act is protected from being fired as a result of their whistleblowing activities. This is considered an automatic unfair dismissal, and employees have the right to claim compensation for any negative consequences they suffer.
To establish a successful whistleblowing claim, several factors come into play, including the information disclosed, the disclosure process, and the detriment or dismissal suffered. The information disclosed must pertain to specific categories, such as criminal offences, breaches of legal obligations, miscarriages of justice, danger to health or safety, or damage to the environment.
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Frequently asked questions
Wrongful dismissal, also called wrongful termination or wrongful discharge, is a situation in which an employee's contract of employment has been terminated by the employer, where the termination breaches one or more terms of the contract of employment, or a statute provision or rule in employment law.
Wrongful dismissal is a contractual claim, whereas unfair dismissal is a statutory claim arising under the Employment Rights Act (ERA) 1996. A dismissal may be wrongful but not unfair. For example, an employer may have dismissed an employee for a legitimate and fair reason, but if they did not follow the correct termination procedures, that dismissal may still be wrongful.
Common examples of wrongful dismissal include an employer unlawfully terminating a fixed-term contract prior to the expiry of the term or failing to follow a contractual dismissal procedure. Another example is dismissing an employee without providing the requisite notice period or pay in lieu of notice.
If an employee wants to pursue a claim for wrongful dismissal, they can bring it to an employment tribunal or civil court. Before going to a tribunal, the employee must notify the Advisory, Conciliation, and Arbitration Service (ACAS) and participate in early conciliation, which will attempt to facilitate a settlement between the employee and employer. If early conciliation does not result in a settlement, the employee's solicitor will lodge their claim with an employment tribunal.
In the United States, there is no single "wrongful termination" law, but rather several state and federal laws and court decisions that define this concept. In Canada, wrongful dismissal is based on two conditions: whether the worker was dismissed fairly and whether they were adequately compensated.
