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Wrongful Dismissal Notes

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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 contractnormal 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 receiptmax award at employment tribunal - PS25'000; no max award at civil courtif 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

[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?WITH NOTIC EOn a fixed term (limited term) contract, in the absence of a 'break clause' a party will be in breach of contract or if notice shorter than expressly agreed. Indefinite term contract may be terminated by either party giving the other proper notice. o There is NO breach and NO claim for wrongful dismissal if ended by proper notice.

Repudiatory breach - An employee who leaves in such circumstances

is said to be constructively dismissed. In order for an employee to treat himself as constructively dismissed within this provision, the employer's conduct must either amount to a significant breach going to the heart of the contract, or show that the employer no longer intends to be bound by one or more of the essential terms of the contract. The employee is then entitled to treat the contract as discharged at common law (Western Excavating Ltd v Sharp [1978] QB 761, CA).



Repudiatory Breach and Summary Dismissal:


Serious breach employer can terminate the contractual relationship without notice or before the end of the fixed term contract.

NO BREACH On the facts, [EMPLOYEE] was [DISMISSAL] therefore he has been actually dismissed without notice.

BREACH 'If the employee commits a serious breach (repudiatory breach) of contract, the employer can treat the contract as discharged. On the facts, actual dismissal without notice may be justified as
[EMPLOYEE] [CHOOSE FROM LIST] if [EMPLOYER] had genuine belief in [EMPLOYEES] guilt based on reasonable grounds. [EMPLOYER] could constitute this as a breach so serious that it entitles [EMPLOYER] to summary dismissal of the contract without notice. However, if there are no reasonable grounds then this will amount to actual dismissal without notice. REPUDIATORY BREACH Even if:
? Related to conduct outside of work as long as it undermines the contractual relationship.
? Justified by discovery of sufficient grounds after dismissal has taken place Summary dismissal justified:

1. Disclosure or revealing of trade secrets

2. Willful disobedience or refusal to obey lawful orders

3. Taking bribes and secret commissions

4. Guilty of dishonesty

5. Can be conduct outside of work if it undermines the contractual relationship between employer and employee

6. Theft from employer OR

Normally an employee who resigns will have NO claim for wrongful dismissal an employee is treated as dismissed if 'the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer's conduct' (ERA 1996, ss 95(1)(c) and 136(1)(c)). CONSTRUCT IVE DISMISSAL

Employee resigns because of employer's repudiatory breach of contract.

1. Breach of express or implied terms On the facts, [EMPLOYER] has...
(check any clauses for guidance on whether it could be argued that the reason is ok)?

Unilateral Reduction in salary (express term of contract) Change in job description (helpline worker now not a trainer, differences in the jobs i.e. no more face-to-face customer contact)

???Change of contractual hours (does contract permit this) (Temp change not perm) (unsocial hours - 7pm finish) Removal of a bonus Threat of change to terms and conditions and dismiss if not accepted (Greenaway Harrison Ltd v Wiles 1994) Transferring power to another on a permanent basis when employee is away is a breach of the implied term of trust and confidence Not receiving a pay rise when all his colleagues have - breach of the implied duty of trust and confidence Breach of implied duty of trust and confidence without 'reasonable and proper cause' o Unjustified accusations of theft o Allegations employee unable to do job o Failure to make reasonable adjustments o Frequent use of foul and abusive language (Horkulak v Cantor Fitzgerald International 2003)

2. Employee has resigned as a result of the employer's conduct AND resigned within a reasonable time otherwise taken as having affirmed the contract AND waived the breach This is a repudiatory (not minor) breach of [express or implied] terms of the contract which will entitle [EMPLOYEE] to resign (without or without notice) and discharge the contract for constructive dismissal (Western Excavating).
[EMPLOYEE] has a good chance despite it being difficult to prove. [EMPLOYEE]
[DID/MUST] resign within a reasonable time of the breach [DATE EXAMPLE]. o


Termination of agreement
? Where the parties at any time agree to terminate the contract, neither will be in breach of contract and no claim for WD will arise?FRUSTRATI ON

Minor breaches won't justify a resignation unless 'last straw', which is the last of many minor breaches, resignation may be justified as employers conduct is looked at as a whole (Abbey National v Robinson)

It terminates automatically by operation of law. Neither party will be in breach and neither party will have a claim against the other, other than for wages due to the date of frustration. Frustration occurs where, without the fault of either party, some event occurs which prevents performance of the contract. The event must not have been provided for by the contract.

The principal events which may frustrate a contract of employment are as follows:
? Death of either party
? Illness or injury of the employee
? Imprisonment of the employee

EXPLAINING THE CONCEPT OF CONSTRUCTIVE DISMISSAL TO A CLIENT There is an implied duty, as part of your employment contract, that your employer treats you, as their employee, with respect. If your employer commits a serious breach of this duty you would be able to treat your contract of employment as at an end and resign. As long as you resign within a reasonable time after the breach by your employer, you would be able to bring a claim known as "Wrongful Dismissal" at an employment tribunal. In such circumstances your resignation would be called a "constructive dismissal" and you would be arguing that you had been "dismissed" in breach of contract, that is, that your dismissal was wrongful. If you failed to resign within a reasonable time of the breach, a tribunal would consider you to have

"waived" the breach, which would mean that you would no longer be able to bring a claim of Wrongful Dismissal. From what you have said, you may be able to show that [Ms Evans'] conduct was sufficiently serious to amount to a breach of this implied duty and that you had no option but to resign and treat yourself as having been constructively dismissed. In order to persuade a tribunal that [Ms Evans'] behaviour was sufficiently serious to entitle you to resign and bring a Wrongful Dismissal claim against Waitway, you may be able to rely not just on this last incident but on the cumulative effect of the frequent criticism you have had to suffer.

ACTUAL DISMISSAL BEFORE THE EXPIRY OF A FIXED TERM (Employee works for a fixed period of time or completion of a task) UNLESS...

1. Terminated in accordance with 'Break Clause' - NO WD

2. Justified by the claimants repudiatory breach (e.g. gross misconduct) 'If the actual dismissal is before the expiry of a fixed term it will be deemed automatically wrongful. On the facts [EMPLOYEE] was dismissed on [DATE] and [HIS/HER] contract did not expire until [DATE] therefore [SHE/HE] has been wrongfully dismissed and is likely to succeed in a claim for wrongful dismissal'. OR

ACTUAL DISMISSAL WITH NO NOTICE OR INSUFFICIENT NOTICE (for indefinite contract) UNLESS Justified by claimants repudiatory breach (e.g. gross misconduct)
? Claimants after-discovered, but pre-dismissal conduct can justify the dismissal (Boston Deep Sea Fishing v Ansell)
? The misconduct of a managing director in taking bribes was discovered only after his dismissal - the tribunal held that the employer could rely on the latter required knowledge?Look at the contractual notice period (must not be less than statutory minimum) Implied term - 'reasonable' notice to be given, normally the more senior an employee the more notice given. A longer contractual notice period will prevail over the statutory minimum and vice versa.

'If the actual dismissal is with no notice or insufficient notice it will be deemed automatically wrongful. On the facts, [EMPLOYEE] was entitled to [NOTICE PERIOD (might have to work it out if statutory)] but this was not given therefore [EMPLOYEE] was wrongfully dismissed and is likely to succeed in a claim for wrongful dismissal'. S 86(1) ERA 1996 PERIOD OF CONTINUOUS EMPLOYMENT 1 month to 2 years 2 years to 12 years 12 years plus PILON clause

NOTICE 1 week 1 week for each year 12 weeks


2. 3.

If there is a PILON clause in the contract employer can make payment in lieu of notice = no breach of contract If contract does not contain PILON clause but employer still makes a payment in lieu, then (unless the claimant accepts the payment by way of variation of contract) there will be a breach but damages will be reduced by the amount paid so there may be no point in pursuing the claim. if an employer terminates the contract early and imposes a payment in lieu on the employee, then the employer will be in breach of contract and a wrongful dismissal claim may result.

Wording PILON
? 'may make a payment in lieu of notice to the employee'.
? 'employee was entitled to notice or payment in lieu' Note: employee statutory minimum notice to employer is one week after one month's employment (s 86(2)). OR

? The employer's repudiatory breach (see above) renders the resulting dismissal wrongful automatically. [EMPLOYEE] is likely to succeed in a claim for wrongful dismissal'



1. 'Damages for WD are damages for breach of contract; they should try to put the employee in the position he would have been in if the contract had been performed properly (Robinson v Harman).

2. Loss claimed mustn't be too remote, the loss must arise naturally from the breach (Hadley v Baxendale)

3. The correct measure of damages following the employer's repudiatory breach of contract was the amount the employee would be entitled to receive if dismissed in accordance with the terms of the contract (Boyo v Lambeth London Borough Council [1994])

1. Breach of an express term relating to notice

2. Breach of a statutory term relating to notice

3. Breach of any term, provided it is a repudiatory breach by the employerLOSS OF NET WAGES


? Fixed term contract salary for the remainder of the term (Watch for clause where only 6 months' worth of salary will be awarded) NET WEEKLY PAY x REMAINDER OF THE TERM =ACCRUED HOLIDAY PAY??

Salary would have earned during the proper notice period NET WEEKLY PAY x PROPER NOTICE PERIOD =

Break clause it would be for the salary earned during the period of notice from the break clause. It is awarded net of taxes and national insurance Under Working Times Regs (14) 1998, the employee will be entitled to payment in lieu of any holiday he was entitled to but hadn't yet taken Check clause in contract Employee can claim damages for loss of other benefits to which he was entitled under the contract such as:
? Commission


DISCRETIO NARY PAYMENTSFringe benefits such as a company car Loss of pension rights including loss of pension position earned to date of dismissal and loss of future pension opportunity if employee was entitled to a pension (see page 76)
? Tips Damages can usually be claimed for pecuniary losses only, so damages cannot generally be claimed for loss of future prospects or injured feelings Cannot recover contractual damages for psychiatric injury arising from dismissal (HL Johnson V Unisys Ltd 2001 claimant can recover damages for psychiatric illness where the employee's loss arose from the employer's breach of the implied duty of trust and confidence during the subsistence of the employment relationship (Gogay v Hertfordshire County Council) NO discretionary payments i.e. Christmas bonus

Once his employment has ended he must take steps to obtain suitable further employment.
? He will be in breach of this duty if he refuses to accept a reasonable offer of re-employment.
? He is only under a duty to accept reasonable offers of re-employment not any other job offered.
? Award will be reduced by the amount which would have been earned had the employee taken the correct steps
? Income from new job will be deducted from the damages
? Any PILON payment will be deducted from the amount the employee is entitled to claim (recover loss suffered only)
? If employer paid money in lieu of notice to the employee, this would be taken into account.
? Other benefits such as jobseekers allowance (JSA) and income support will also be set off against the damages. Exception: any pension that becomes payable during period (public policy)
? Normally damages will be awarded after the employees contract could have been properly terminated by the employer
? However in a long fixed-term contract the employee may receive his damages before he would have earned some of his salary that they represent
? In this case a deduction will be made from the damages as the accelerated receipt will allow the employee to invest the money and obtain a return on it (can only be compensated for loss suffered)DEDUCTION FROM AWARD




ACAS (applies to Employment Tribunal cases only)

? Employee will not be compensated twice so any Dismissal Claim Payment compensation for unfair dismissal will be deducted.
? Compensation may be (s 207A TULR(c) Act 1992): o Increased by up to 25% for an unreasonable failure to follow the Acas Code of Practice o Decreased by up to 25% for an unreasonable failure to follow the Acas Code of Practice An employer is exempt from paying tax on termination payments, including

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