Wrongful dismissal

Definition: Wrongful dismissal (breach of contract)

Common law contractual claim for breach of contract, which may be brought by workers or employees, based solely on the fact that the dismissal by the employer was in breach of contract.

Wrongful Dismissal is dismissal of employee in breach of contract.

• How should contract have been terminated?

• How was the contract terminated?

Covers actual dismissals by employer and constructive dismissals.

The remedy is therefore damages for breach of contract.

(a) termination of the contract with no notice or short notice; or

(b) where the employee/worker establishes he has been constructively dismissed; or

(c) termination of the contract before the expiry of a limited term where there is no break clause

Debt Claim for Sum Due for failure to make payment

• Where a contract expressly allows the employer to terminate the contract either by notice or by making a payment in lieu of notice, the dismissal does not become wrongful even if the employer fails to make the payment.

• The employee’s claim in this situation is for a sum due under the contract (a debt owed), not for damages for breach of contract (Abrahams v Performing Rights Society Ltd [1995] IRLR 486, CA).

• Because the sum is for the recovery of a debt, the employee is not under a duty to mitigate losses.

Summary

a) was there a dismissal?

• Actual Dismissal, aka summary dismissal (with or without notice)

• Constructive Dismissal, employer has breached the contract terms (either express or implied, and not a minor breach); claimant exercises right to resign in response (with or without notice, within a reasonable time frame)

b) was the dismissal wrongful?

• Before end of a fixed term, unless due to break clause or claimant's breach (not minor)

• With insufficient or no notice, unless justified by claimant's breach (not minor)

  • notice period must be above statutory minimum

  • is there a PILON clause in the contract? If so, employer can replace notice with payment – in this case there is still a breach but payment will be deducted from any damages, so depending on amount may make a claim redundant

• In case of Constructive Dismissal, employer's breach renders the dismissal wrongful

Time Limits

- must claim in an employment tribunal within 3 months of dismissal

- must claim in a civil court within 6 years of dismissals

c) compensation – damages for breach of contract

• normal contractual damages for notice period or until end of fixed term (unless break clause): loss of net wages, plus any commissions, pension, health insurance, car, bonus, holiday pay, etc.

• reduced if: payments made (in lieu), benefits, duty to mitigate, accelerated receipt

• max award at employment tribunal - 25'000; no max award at civil court

• if claim for wrongful dismissal and unfair dismissal, any overlapping compensation (e.g. immediate loss of earnings) will be set off when arising from same dismissal

STATE THE CLAIM – Wrongful Dismissal

Definition: Wrongful dismissal (breach of contract)

Common law contractual claim for breach of contract, which may be brought by workers or employees, based solely on the fact that the dismissal by the employer was in breach of contract.

• No continuous employment restriction – could be on day one of your contract

Time limit

[EMPLOYEE] must make a claim for WD within 3 months of dismissal to a tribunal or within 6 years of dismissal in civil court.

Has there been a dismissal?

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