Wrongful Dismissal Notes

Wrongful Dismissal

Termination

• Not every termination is a dismissal

• Statutory dismissals (s.95 Employment Rights Act 1996):

  1. Termination by employer with/without notice

  2. Termination of a fixed term contract without renewal on the same terms

  3. Constructive dismissal

1. Mutual agreement

   • Not a dismissal for either statutory or contractual purposes

   • If threat of dismissal was the reason - then there is no genuine choice and there will have been a dismissal

2. Genuine resignation

   • Not a dismissal for either statutory or contractual purposes

   • If threat of dismissal was the reason - then there is no genuine choice and there will have been a dismissal

   • What if invited to resign but only does so once negotiated a pay off?

     • Sheffield v Oxford Controls: court should consider the causation, whether it was the threat or other motivations

   • s.86 ERA 1996: employee must give one week's notice (contract can require more than any SNP) - less notice = breach of contract enforceable by employer (rarely enforced)

3. Dismissal on notice by the employer

   • This is dismissal for both statutory and contractual purposes

   • Notice periods:

     • s.86 ERA 1996

     • Employee is entitled to the greater of the contractual notice or the SMN.

       • Continuously employed for more than one month but less than two years: SMN = one week

       • Continuously employed for two years or more but less than 12 years: SMN = one for each complete year of employment week

       • Continuously employed for 12 years or more: SMN = capped at 12 weeks

     • Unless, employer pays in lieu of notice.

       • Clause should specify exactly how the payment will be calculated and whether includes bonus, commission, holidays, or basic salary.

       • Société Générale, London Branch v Geys: employer should ensure any PILON is unambiguous.

       • If this procedure is followed there can be no compensation for wrongful dismissal.

       • NB. Mandatory PILON ('will') or discretionary PILON ('may')

         • Under discretionary, employee is under a duty to mitigate their loss.

   • Wrongful dismissal = any restrictive covenants are unlikely to be enforceable (General Billposting)

PILON clauses

• If employer terminates without PILON - should negotiate a settlement agreement (this will be considered genuine compensation for loss of office)

• Termination in breach = restrictive covenants will be unenforceable.

  • If covenants are restated in a settlement agreement, additional consideration must be paid to make them enforceable.

4. Summary dismissal (without notice or PILON)

   • This is dismissal for both statutory and contractual purposes.

   • Employer only entitled where employee commits serious breach of contract that goes to the root of the contract.

5. Constructive dismissal

   • This is dismissal for both statutory and contractual purposes.

   • s.95(1)(c) ERA 1996 = employee who resigns in circumstances such that he is entitled to terminate his contract without notice by reason of the employer's conduct is treated as having been dismissed.

     • Employer's conduct must be a fundamental/repudiatory breach of contract.

   • Were the employer’s actions significant or serious enough to amount to a repudiatory breach of contract? (Note the breach must strike at the root of the contract)

   • Was the resignation a direct consequence of the employer’s breach?

     • Wright v North Ayrshire Council: it is sufficient that the repudiatory breach "played a part in the dismissal" (Nottingham County Council v Meikle)

       • Compensation may be reduced where there are also other reasons.

   • Did the employee act promptly and resign, or has the employee ‘affirmed the contract’ by continuing to work, and effectively waived his right to claim constructive dismissal?

     • Chindove v Morrisons Supermarkets plc: claim does not depend on when the employee resigned --> focus is on employee's conduct in the period leading up to resignation.

Constructive dismissal is not a cause of action in itself.

6. Expiration of fixed term contracts

   • End date must be predictable when the contract is made.

     • s.1(2) Fixed-term Regulations 2002: a contract which will terminate on:

       • Specific date/after a specified period

       • Completion of a particular task

       • Occurrence or non-occurrence of a specific event

   • Expiry of a fixed term without renewal is:

     • Dismissal for statutory purposes

     • Not a dismissal for common law purposes

   • i.e. can be used for an unfair dismissal claim but not a wrongful dismissal claim.

   • Fixed term contracts can have notice clauses.

     • If the contract does not contain a notice provision, damages for breaching that contract will run to the end of the fixed term.

   • Protection under Regulations:

     • Right to be treated no less favourably than a comparable permanent employee;

     • Right to information about any permanent vacancies;

     • Right to statutory minimum notice for short-term contracts of three months or less.

     • Employees who have been employed under a series of fixed-term contracts for four years or more will automatically become permanent employees unless continuing the fixed-term contract can be objectively justified.

7. Frustration (unforeseen circumstances)

   • Contract impossible to perform/performance would be radically different.

     • E.g. death, sickness, imprisonment.

   • Contract terminates by operation of law.

   • Not a dismissal for unfair dismissal or contractual purposes

   • BUT if frustrating event relating to employer, does constitute a dismissal for statutory redundancy payment purposes (s.136(5) ERA 1996)

Wrongful Dismissal (dismissal in breach of employment contract - e.g. insufficient notice)

• Damages to place the employee in the position they would have been in had...

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