Wrongful Dismissal

• Wrongful dismissal (dismissal in breach of contract)


  A 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
• Remedy for wrongful dismissal

  Damages for breach of contract
• Wrongful dismissal claims


  • Termination of the contract with no notice or short notice
  • Where the employee/worker establishes they have been constructively dismissed
  • Termination of the contract before the expiry of a limited term where there is no break clause
• Wrongful dismissal claim


  • Can be brought in the civil courts or in the employment tribunal
  • Employment tribunal's contract jurisdiction is limited
  • No limit to the amount of damages recoverable in a court action, although there is a restriction on tribunal awards (currently £25,000)
  • Claimants need to be aware that if they bring a high-value breach of contract claim in the tribunal, they will not be permitted to seek to recover any excess over £25,000 in the civil courts
• In April 2020, the Law Commission published recommendations to improve the ability of employment tribunals to resolve employment disputes effectively and justly in one place
• When considering a breach of contract claim, no account is taken of the reasonableness of an employer's action in terminating the contract
• Unfair dismissal

  A statutory claim that can be brought only by certain employees who satisfy eligibility criteria, and can be brought only before an employment tribunal
• Redundancy payment


  A statutory claim which is in the nature of a reward for past services; it is compensation for the loss of a secure job rather than for future financial losses
• There is overlap, in terms of the remedy afforded to an employee, between the three claims (wrongful dismissal, unfair dismissal, redundancy payment)
• Limitation period for wrongful dismissal claim in courts

  6 years
• Limitation period for wrongful dismissal claim in employment tribunal


  3 months of termination
• Termination of contract


  1. Termination by agreement

  2. Termination by notice

  3. Termination by expiry of fixed term

  4. Termination by dismissal

  5. Termination by resignation (constructive dismissal)
• Termination by notice


  • A contract of employment for an indefinite term may be terminated by either party giving the other proper notice
  • If proper notice is given, the contract will terminate with no liability for breach of contract, whatever the reason for the termination
• Statutory minimum notice periods

  • 1 month to 2 years - 1 week
  • 2 years to 12 years - 1 week for each year
  • 12 years plus - 12 weeks
• The statutory minimum period of notice prevails over any shorter contractual period, but the parties may agree longer periods
• In Newcastle upon Tyne NHS Foundation Trust v Haywood [2017] EWCA Civ 153, the Court of Appeal held that notice of termination of employment is given when the employee actually receives the notice
• ERA 1996 lays down the statutory minimum period of notice which must be given to employees
• The statutory minimum period prevails over any shorter contractual period
• Parties may agree longer periods, any contractual provisions should be checked as, if these are more beneficial to the employee, they will override the statutory minimum
• The day a letter was written or the day it was posted or the day the letter arrived at the claimant's house were not relevant
• Statutory minimum period of notice required to be given by an employer

  • 1 month to 2 years: 1 week
  • 2 years to 12 years: 1 week for each year
  • 12 years plus: 12 weeks
• The only statutory minimum notice required to be given by an employee is one week's notice after one month's continuous employment
• Either party may waive notice
• PILON (Payment in lieu of notice)


  The employer terminates a contract without notice or with short notice but gives the employee a payment in lieu of the notice period due
• Possibilities when employer pays PILON


  • Employee accepts the PILON, although there is no provision in the contract permitting such a payment, and agrees, expressly or impliedly, to waive the requirement for notice
  • Employer pays the employee in lieu of notice, but there is no provision in the contract permitting such a payment to be made and the employee, while taking the money, does not accept the payment as waiving his right to notice
• In Société Générale, London Branch v Geys [2013] IRLR 122, the Supreme Court settled a long-running question as to whether a party's repudiation of a contract of employment itself automatically terminates the contract, or whether the contract comes to an end only when the other party accepts the repudiation (the elective theory)
• The Supreme Court favoured the elective theory, by a 4:1 majority
• A breach of contract by the bank did not actually terminate the claimant's contract unless or until it was accepted by the claimant
• The Supreme Court rejected the suggestion that a court could easily infer acceptance: real acceptance was required in the sense of a conscious intention to bring the contract to an end or doing an act inconsistent with its continuation
• Implications of the elective theory

  • The elective theory applies equally to repudiatory breaches by an employee
  • There is no difference in principle between a resignation and a dismissal – the elective theory applies in all instances
  • A justified summary dismissal (as opposed to a repudiatory breach) will still be effective to bring a contract an end
  • For the purpose of the effective date of termination (EDT), s 97(3)(b) of the ERA 1996 provides that the EDT is 'the date when the contract of employment was terminated by the employer' (plus any statutory notice required by s 86 of the ERA 1996)
• 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
• A PILON paid under the terms of the contract is always regarded as an 'emolument' from that employment and will be chargeable to income tax
• Gross misconduct


  A term of art at common law, it does not appear in the statutory provisions that deal with the assessment of compensation for unfair dismissal. It is a contractual assessment turning on whether an individual has acted in a manner that fundamentally breaches their contract of employment so that the employer is entitled to accept the breach and terminate the contract without being required to rely on a contractual notice provision, and so can dismiss summarily without notice
• Typically, gross misconduct involves dishonesty, disobedience or incompetence on the part of the employee
• The more recent approach has been to focus on whether there has been an undermining of mutual trust and confidence so that the employer is entitled to dismiss the employee
• Any repudiatory breach of an express or implied term by the employee will justify the employer dismissing without notice
• Non-exhaustive examples of repudiatory breaches

  • Revealing trade secrets
  • Wilful disobedience of lawful orders
  • Theft from the employer or other gross misconduct
  • Negligence if sufficiently serious
• When dealing with a suspected repudiatory breach, the employer must reserve its position so as not to waive the breach if it does not intend to take immediate disciplinary action
• Dismissal without notice can be justified by discovery of sufficient grounds after dismissal has taken place
• If the employer is mistaken about the seriousness of the breach and dismisses without notice in circumstances where he is not entitled to, the employer will have dismissed in breach of contract and be liable for wrongful dismissal