Wrongful Dismissal

What’s the difference between wrongful dismissal and unfair dismissal?

Wrongful dismissal is based on a breach of contract when an employee is fired. Unfair dismissal is a claim that assesses the overall fairness of the dismissal.

In a wrongful dismissal claim, the length of an employee’s employment is not a factor. In unfair dismissal claims, an employee usually must prove they’ve worked continuously for at least 2 years – unless certain exceptions apply, such as automatically unfair dismissal.

Senior employees may try to claim wrongful dismissal. This is due to the lengthy notice periods involved with more senior job roles.

Dismissal without working a notice period

When an employer allows an employee to work their notice period – or pays them instead of the contractual notice period – there is generally no breach of contract or wrongful dismissal claim.

However, the employer must have a specific contractual right to make this sort of payment. This would be stated in the employee’s employment contract.

If there are no terms for notice pay in the contract, the employee may still be able to claim damages. This is unless they receive compensation that puts them in the same financial position as working their notice period.

Compensation for wrongful dismissals

The employee’s wages and contractual benefits decide the compensation for wrongful dismissal. Employees can claim any financial losses that are caused by the employer’s breach of contract.

Some of these benefits may include private health cover and the employee’s pension entitlement. In addition, an employee might claim compensation for other benefits, such as missed bonus payments – although it can be challenging to prove.

If an employee secures a new job within the notice period they would have received from their previous employer, their loss would be reduced.

The new salary earned will be considered when calculating the loss to the employee. It is important to note that the employee must make reasonable efforts to find alternative employment to mitigate their loss.

How to avoid wrongful dismissal claims

Before making any decision to terminate an employee’s contract, it’s crucial to understand their rights and entitlements to avoid any wrongful dismissal claims.

You must also have a clear understanding of how to lawfully and fairly dismiss an employee to avoid any costly mistakes.

To decrease the risk of wrongful dismissal, take proactive measures in the following areas:

• Regularly review and update all employment documents, including contracts, handbooks, and policies, to ensure they support fair and lawful practices.
• Provide training throughout your organisation to ensure that everyone is aware of the expectations, standards, and best practices for management and the workforce.
• Make sure that any disciplinaries follow a fair procedure.
• Ensure that any dismissal process is fair and is supported by valid and lawful reasons.
• Keep accurate notes and maintain effective record-keeping.
• Treat all employees fairly and consistently.

If you find yourself at risk from a claim for wrongful dismissal and an employment tribunal finds you in breach of contract, it can cause significant damage to your business. That’s why if you don’t have internal HR support it’s important to look for external help.

Expert advice on wrongful dismissals

Ending an employee’s employment can involve complex legal risks that require careful consideration and a deep understanding of the law.

If an employee claims wrongful dismissal, they may take legal action against you through an employment tribunal or court, resulting in significant expenses. It is essential to handle the dismissal process with care to avoid any potential legal complications.

Employers Direct can help you manage wrongful dismissals when needed. We provide free legal advice and will help you decide the best course of action. Contact us at 0800 152 2287 or click here.

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