Someone recently bought our

students are currently browsing our notes.

X

Wrongful Dismissal Notes

Law Notes > Labour Law Notes

This is an extract of our Wrongful Dismissal document, which we sell as part of our Labour Law Notes collection written by the top tier of Oxford students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Labour Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

WRONGFUL DISMISSAL NOTES
TERMNATION OF CONTRACT OF EMPLOYMENT

1. 2.

3. 

Can identify 3 different termination types:
Bilateral terminations - mutual agreement terminations (Birch v University of Liverpool [1985])
Non-lateral terminations - by operation of law (eg frustration or the death of the employer).
Unilateral terminations - dismissal by the employer, or resignation.
 Focus on unilateral termination by the employer.
Can identify 2 categories of dismissals:
o Legality of dismissal: Lawful and unlawful/wrongful dismissals

Nature of dismissal: Outright/summary and constructive dismissals.
 Focus on the distinction between lawful/wrongful dismissals.
Generally at common law, an employer is able to get rid of its employees on an indefinite contract without having to show good reason (McClory v Post Office-1992).
However, CL will treat employer as having terminated the contract of employment unlawfully where it fails to provide the employee with reasonable notice of dismissal [nor a payment made to the employee in lieu of notice] (this will breach either an express or an implied term).
o Will afford employee a 'wrongful dismissal' claim for damages in respect of net wages/salary +
other contractual benefits during notice period.
o If 'reasonable notice' given - lawful unilateral termination (Baxter v Nurse (1844)).

THE NOTICE RULE:
Common law: contract terminable by either side upon reasonable notice.
- CL rule is contingent on 3 factors: (i) custom of employee's trade (ii) standing of individual's job (iii)
frequency of payment of wage/salary [ie 1 week's notice where payment is weekly].
- This CL rule is restricted to contracts of employment of an indefinite period (Reda v Flag Ltd). NB
most contracts are of an indefinite period.
The employer therefore has 'unrestricted notice power'…and the employee is arguably placed in a precarious position.
 Jurisdiction (France) has a 'just cause' regime barring employer from dismissing, without cause.
o In USA, the 'employment-at-will doctrine developed, providing for lawful termination on summary, rather than reasonable notice - very flexible approach to hiring and firing:
- Collins - contributes to comparable mobility of US labour market. UK preferred the approach of including an (often) implied term that must give reasonable notice.
o 3 possible justifications/motivations for UK CL harnessing 'unrestricted notice rule':
(i)
By affording generous power of dismissal, protected freedom of workers to strike w/o breaching contract.
(ii)
Was thought preferable to retain some elements of the 'master/servant' law in the contract of employment. Enables employers to maintain discipline in the workplace.
Employee is focused because they know they can be fired at any moment.
(iii)
Judicial articulation of a specific philosophical approach channeled through the courts
 Freedland - Rarely ever questioned by the courts…courts treated unrestricted notice rule as an axiomatic feature of the legal contract of employment even if that orthodoxy was sometimes out of touch with social/economic reality.
1960s: Greater demands for greater protection from dismissal (Ridge v Baldwin)contributed to statutory unfair dismissal regime which was intended to confer a higher degree of security of tenure in favour of employees than that afforded by common law. WRONGFUL DISMISSAL NOTES
Statutory regulation:
 Section 86(1) ERA prescribes statutory minimum periods of notice with which the employer must comply. Takes effect as implied terms but employer must abide by an express term if included.
- In modern workplace, only on rare occasions will the contract lack an express term as to notice.
Period of continuous employment
Period of notice
More than 1 month, less than 2 years
Not less than 1 week 2 years or more but less than 12 years
Not less than 1 week for each year of continuous employment 12 years or more
Not less than 12 weeks
 S86(2)- employee who's continuously employed for 1 month or more must be given not less than 1 week's notice to terminate contract of employment.
 S86(3)- PILON (waiving right to notice in return for pay in lieu of notice).
 Court will never imply a lower notice period but may imply a higher one (Hill v Parsons).
 Newcastle Hospitals NHS Foundation Trust v Haywood 2018- in absence of express term, contractual notice of termination takes effect when it comes to employee's attention and they read it or have had the opportunity to do so [not when notice was sent]
 Termination by the employer on notice is statutory dismissal. Such dismissal may or may not be fair depending on which it was carried out.
Johnson v. Unisys [2001]
Wrongful dismissal action isn't concerned with wrongfulness of the dismissal itself, the law entitles both ER+EE to terminate relationship without cause. A wrong only arises if ER breaches contract by failing to give the dismissed
EE reasonable notice of termination and remedy for this breach of contract is an award of damages based on the period of notice which should've been given.
DISMISSAL AND BREACH OF CONTRACT OF EMPLOYMENT AT COMMON LAW:

1. THE EMPLOYER'S UNRESTRICTED POWER OF DISMISSAL BY REASONABLE NOTICE
 Employer not required to have any reason to dismiss an EE or even hear the EE prior to dismissal or give reasons for dismissal (McClory v Post Office 1992).
 Only have to give the highest of:
a) Reasonable notice b) Notice period in written contract of employment or c) Statutory min in s86 ERA
- If none of these are given, wrongful dismissal claim in damages.
Malloch v Aberdeen Corp (1971)
Lord Reid: At common law a master is not bound to hear his servant before he dismisses him. He can act unreasonably or capriciously if he so chooses but the dismissal is valid
In Johnson v Unisys, Reda v Flag and Eastwood v Magnox Electric- HOL+ PC ruled that the unrestricted reasonable notice rule cannot be constrained by the implied term of mutual trust+ confidence.
- Reda v Flag Ltd (2002)- unrestricted reasonable notice rule is merely an implied default term so it can be displaced.
 E.g a contractual job security clause which limits the employer to dismiss for a good cause only will bbe a carve out from the implied term that a general hiring is indefinite and can be terminated lawfully by reasonable notice.
 E.g if contract says 'can only be fired for gross misconduct or long-term health only [the only just causes] then firing for redundancy will be a breach of the contract so EE
entitled to be compensated in respect of the consequences of losing his job. WRONGFUL DISMISSAL NOTES
 However, Lord Mance in Edwards v Chesterfield Royal Hospital (2011) endorsed
Hoffman in Johnson stating that the incorporation of a contractual disciplinary procedure cannot have intended to qualify the employer's common law power to dismiss without cause on giving such due contractual notice'.
 Essentially, v clear+ unequivocal language required to satisfy a court that an express term is designed to dislodge the unrestricted reasonable notice rule.


2. EMPLOYER'S POWER OF SUMMARY DISMISSAL WITHOUT NOTICE
ER doesn't need to give either CL or stat notice when EE commits a repudiatory breach of contract
(s86(6) ERA) and the dismissal is called justifiable summary dismissal.
Where EE commits a repudiatory breach of an express or implied term of contract, this entitles the
'innocent party' (employer) to summarily terminate the contract by unilaterally accepting breach.

What counts as a repudiatory breach?
 Repudiatory breach must:
- 'Make performance of the contract of service impossible' (Wilson v Racher) or
- Where employee undermines mutual trust+ confidence such that it's lost, that'll be sufficient
(Neary v Dean of Westminster).
 The legal basis for the claim is bilateral theory- employee repudiates, employer accepts+ terminates
(Société Générale, London Branch v Geys).
 The general test of whether the employee's breach of contract is repudiatory i.e. sufficiently serious to justify summary dismissal, is:
- Laws v. London Chronicle (Indicator Newspapers Ltd) [1959] "
Laws v. London Chronicle (Indicator Newspapers Ltd) [1959]
FACT  EE wilfully disobeyed an order to stay in the room while a row took place b/w 2 superiors.
S
HELD  Held it wasn't a fundi breach- conduct was not calculated to destroy employment relationship.
RATI
"Whether the conduct complained of is such as to show the servant to have disregarded the essential
O
conditions of the contract of service".
May be single act, may be the 'last straw' following a series of small breaches (Pepper v. Webb [1969]).

FACT
S
HELD



FACT
S
HELD




Wilson v Racher [1974]
Head Gardner dismissed after heated argument where he told employer to 'get stuffed and go shit yourself'
This was NOT a fundamental breach - there had been no history of inefficiency or 'dumb insolence' and the conduct was not so serious as to bring the employment relationship to an end.
Wasn't fundi repudiatory breach, should've been given his notice.

Neary v. Dean of Westminster [1999]
N and his wife were organist+ choir secretary at Westmiinster Abbey. Summarily dismissed for retaining fees for concerts organised for Abbey (gross misconduct).
Held this was gross misconduct as it undermined the trust/confidence inherent in the contract of employment.
This is a question of fact and account must be taken of the institutional characteristics of the employer,
the role played by employee in institution and the degree of trust/confidence required of employee.
NB: even if the dismissal is justifiable at common law it is not necessarily fair under statute: it is possible WRONGFUL DISMISSAL NOTES
for the employee to succeed in a complaint for unfair dismissal where s/he might lose a claim for wrongful dismissal. Therefore, the rules on summary dismissal must now be read in the light of the requirement of procedural fairness in respect of unfair dismissal
Question of fact for which the appellate courts are unlikely to intervene:
Williams v Leeds United Football Club (2015)
FACT  EE used ER's internal email to send obscene images to friends+ work colleagues.
S
HELD  This was a repudiatory breach even tho the incidents happened many years before. ER entitled to accept these repudiatory breaches by summarily dismissing EE even tho it had been previously unaware of them having taken place.
RATI
 It will depend on several factors e.g nature of contract relationship, nature of contract term breached,
O
nature+ degree of breach, consequences of breach, nature of business+ position held by the employee
NB even if the dismissal is justifiable at CL, it's not necessarily fair under statute: it is possible for the employee to succeed in a complaint for unfair dismissal where s/he might lose a claim for wrongful dismissal. Therefore, the rules on summary dismissal must now be read in the light of the requirement of procedural fairness in respect of unfair dismissal.
How is the 'innocent' party's acceptance of the repudiation to manifest itself?
 Just need to clearly/unequivocally communicate that the contract is ending.
 Note - although s.86 ERA recognizes employer's right to summarily dismiss without notice. The unfair dismissal regime in Part X of ERA constrains ability to dismiss for cause without notice.
- Especially in respect of procedural requirements. This is coz fundamental element that EE has right to appeal decision of a disciplinary hearing to dismiss him/her. Where their appeal is successful and the disciplinary procedure was contractual, old contract of employment is revived.
s86(3) ERA- if ER dismisses summarily without cause or prior notice, this will be lawful if employer terminates by PILON to the employee where there is a PILON clause in the contract of employment.
- An employee has no legal right to 'keep the contract alive against his employer's will by refusing to accept wages in lieu of notice'
- Sum paid will act as a debt rather than damages (Abrahams v Performing Rights Society Ltd)
calculated by employee's notice period.
- Where there's no express PILON clause in the contract, there's little scope for any implied power for
ER to terminate by PILON so the immediate termination by PILON will constitute a breach of contract (Rabess v London Fire+ Emergency Planning Authority 2014).

3. DISMISSAL BY NON-RENEWAL OF A FIXED-TERM CONTRACT
An employer may lawfully dismiss an employee by failing to renew a fixed-term contract at the end of its duration since the common-law dictates that the contract is determined automatically at the end of the period prescribed (ex parte Khan 1973).
Unlike contracts for indefinite duration - there is no implied term that employer may determine a fixed-term contract by reasonable notice.
A fixed term contract that's determinable by notice before its term qualifies as a fixed-term contract
(Dixon v BBC 1979). WRONGFUL DISMISSAL NOTES

WRONGFUL DISMISSAL
Basic core = action by employee that employer has dismissed him/her in repudiatory breach of contract so action for damages in respect of a breach of contract.
Dismissal will be repudiatory where it involves the breach of an implied or express term which goes to the root of the contract of employment.
o Paradigm example - failure to give reasonable notice/PILON.
o Judged on ordinary contract principles: assess employer conduct in accordance with an objective test and must evidence an intention to no longer be bound by the contract
(General Billposting Co v Atkinson [1909]).
 Eg, Smith v Trafford Housing Trust [2013] - employee's purported demotion for posting a comment against gay marriage on his personal Facebook account was held to amount to a wrongful dismissal.

'Elective' (bilateral) v 'automatic' (unilateral theory of termination
Unilateral: employer can bring contract of employment to an end, even by an unlawful repudiation if it brings the relationship to an end as well (Sanders v Neale)
Bilateral: EE is entitled to keep contract in force by refusing to accept a repudiation by the employer
(conforming with ordinary contractual principles (legit interest- White & Carter v MacGregor 1962).
- Legit interest could be to maintain the contract in force to keep the relationship in existence so as to assert the rights to a fair hearing (Dietman v Brent Borough 1988).
- Fact that employer's repudiatory breach short of dismissal (ie constructive dismissal) clearly needs to be accepted by the employee.
-FACTS

However, does it lack explanatory force in outright wrongful dismissal context? (ie summary dismissal)- ie where employer fires employee in repudiatory breach of contract?
Once ER dismissed EE (lawfully or unlawfully) surely employment relationship has ended- basically impossible to offer specific remedies ie no SP or injunction to enforce EE's rights pursuant to employment contract (Ridge v Baldwin). Thus what role is played by EE electing to accept contract?
Authority suggests unilateral act automatically brings contract to an end (Francis v Municipal
Councillors of Kuala Lumpur).
Gunton v Richmond upon Thames [1981] - elective theory adopted half-heartedly. COA sought to reconcile the two theories by holding that employee's acceptance of an employer's wrongful dismissal in repudiatory breach of contract should be easily inferred ie that courts are directed to presume EE had accepted the ER's outright dismissal in repudiatory breach.
However, practicality/desirability of general rule in favour of 'readily inferred acceptance' was subsequently doubted by Boyo v London Borough of Lambeth [1994]:



Boyo v. Lambeth LBC [1994]
Accountant had 1 month notice clause in his contract but if gross misconduct, he could be dismissed w/o notice. He was arrested for fraud and suspended on full pay.
Council were concerned about length of time/proceedings so council wrote to Boyo saying contract had been frustrated.
If unilateral theory applied= letter would've brought contract to end automatically so unfair+
wrongful dismissal claim (UD wouldn't succeed coz fraud), WD wouldn't succeed for gross misconduct. So instead argued bilateral theory giving him chance to reject or accept council's breach. WRONGFUL DISMISSAL NOTES

HELD


OPINIO
N

When the crim charges were dismissed, he started proceedings against the council asserting he'd be ready+ willing to work and claimed arrears of salary on basis that he was affirming the contract
(elected to reject breach thus brought action in debt for arrears in salary so no duty to mitigate loss necessary unlike if he'd brought an action in damages).
Held the bilateral theory applied. Got round the fact that the choice to terminate was in the hands of the wrongdoing employer- said it came to an end when ER accepted repudiation by submitting himself to the disciplinary processdamages restricted to 5 months for contractual disciplinary procedure and 1 month notice period.
Unanimous COA didn't clearly endorse elective approach but felt bound by Gunton which they said produced law which was 'distinctly lacking in rhyme or reason'.
Barnard: So does the elective theory/acceptance view mean that, as in Boyo, where the employer summarily dismisses an employee, even without justification, the employee retains the option to accept or reject the breach and in the meantime sitting in the sun and claim his wages for ever,
possibly as an action for debt for which there is no duty to mitigate loss?

Although, according to Buckley LJ in Gunton it takes very little to signify agreement (ie accepting termination) ie looking for another job or by the employer following the procedure prescribed by the contract.
Courts have struggled with middle way: drawing distinction in Rigby v Ferodo (1988) b/w:

1. Repudiation of the contract by employer which isn't aimed at bringing relationship to an end
(e.g by changing terms such as pay or an employer's failure to pay wages/salary as agreed) and

2. Repudiation of the entire relationship.
Elective applies to (1)- EE can choose whether to accept or reject breach, contract doesn't automatically end as a result of employer's conduct, it requires acceptance of employee.
Unilateral applies to (2): ie you're fired wrongful dismissal or employee walks out.
Societe Generale (London Branch) v Geys [2012]- like all other contracts, employment contract isn't autonmatically terminated by a repudiatory breach
FACTS
 Employee of D bank entitled to 3 months notice of dismissal or PILON.
 EE was summarily dismissed on 29th Nov 2007.
 18th Dec- money paid by D into C's account but the explanation that this money was in fact PILON
money wasn't given to C until 6th Jan.
 2ND Jan C had written to D stating he'd affirmed the contract.
 NB: If contract still subsisted post 31st Dec, entitled to higher bonus on termination.
 2 issues:

1. Was 18th Dec payment (PILON) a valid termination? SC held that it was not because there was an implied term in the contract of employment that clear and unambiguous notification to the employee should be given that D's payment was in lieu of notice. Only on the 6th January was there a valid termination.

2. Difference between 'elective or automatic' termination - elective theory favored.
HELD
1: UKSC held not valid termination coz there was an implied term in the contract of employment that clear+ unambiguous notification to employee should be given that D's payment was in lieu of otice.
Only on 6th Jan was there a valid termination.
2: Elective theory favoured.
 Lord Wilson majority: automatic theory would turn normal contract principles on their head.
- The fact in employment contracts, restrictive covenants and injunctions have been granted after a repudiatory breach is plainly inconsistent with automatic theory. WRONGFUL DISMISSAL NOTESNumerous practical uncertainties would arise if automatic theory were to be accepted (i) would it only apply to outright/immediate wrongful dismissals? (ii) only employers or workers as well?
- No point conferring upon a party an election when it is deprived of real value (coz no equitable relief).
'In proposing that the court should endorse the automatic theory, the Bank invites it to cause the law of
England and Wales in relation to contracts of employment to set sail, unaccompanied, upon a journey for which I can discern no just purpose and can identify no final destination. I consider, on the contrary, that we should keep the contract of employment firmly within the harbour which the common law has solidly constructed for the entire fleet of contracts in order to protect the innocent party, as far as practicable, from the consequences of the other's breach'.
 Lord Sumption dissent: he says trite general law that a repudiatory breach must be accepted to be effective is subject to exceptions and qualifications:
- e.g White v Carter- general rule that innocent party can't treat repudiated contract as continuing if
(i) performance on his part requires cooperation and (ii) contract isn't capable of specific perform.
- As contracts of employment require cooperation and normally aren't specifically enforceable,
White and Carter exception applied so repudiation= automatic termination.
- He used the fact that EE can't sue for debt after wrongful dismissal only damages as strong evidence of this fact.
Burrows, "What is the effect of a repudiatory breach of a contract of employment?" (2013) on Geys
 Often choice between unilateral/bilateral theory makes no difference - occasionally it does (Geys).
- Wilson: preferred elective theory. Sumption dissenting: preferred automatic.
 Lord Wilson approach.
- Would contradict standard thinking in contract law that wrongdoer can dictate when termination occurs -
can choose termination date when best for them and most detrimental to innocent party.
- Cited cases where restrictive covenants/injunctions have been ordered despite a repudiatory breach by employee/employer - these are clearly inconsistent with automatic theory.
- No authority until much later on in the case law. Difficulties also arise in terms of what types of firing does the theory apply to- ie just to wrongful dismissals, to contracts of services as well as contracts of employment?
 Lord Sumption approach (which Burrows finds unconvincing):
- Trite general law that repudiatory breach must be accepted to be effective is subject to exceptions/qualifications (White and Carter)innocent party cannot treat contract as subsisting if performance of the contract requires cooperation of repudiating party and SP will not be ordered.
- Employment contracts at their very core require cooperation. Therefore, repudiation must trigger automatic termination (ie fall into the White and Carter exception).
- Also used evidence that debt (ie unpaid wages) normally not claimable and have to bring a claim in damages
(which is limited by duty to mitigate). Sumption says the only rational explanation of the rule that a wrongfully dismissed EE can't sue for wages once EE has been dismissed is that there is no longer a contractual obligation to pay the wages and therefore no debt on which to sue coz contract terminated on dismissal as contract is cooperative agreement, requires mutual confidence of both sides, once ER brings it to an end, EE can't treat is as subsiting.
 But Sumption's analysis actually represents a leap forward, incorrect reading of White+ Carter: - White+Carter actually said that the only legal restriction on the free choice to keep contract open is when there is 'no legitimate interest'…it is true that factually if performance depends on cooperation that will prelude keeping it open but that is a factual rather than a legal restriction (which Sumption fails to see).
o The case didn't really say a lot about termination and to the extent that it did it strongly endorsed the idea that termination is a matter for election of innocent party.

Buy the full version of these notes or essay plans and more in our Labour Law Notes.