What is wrongful dismissal?
If you have been dismissed from work you could be entitled to have a claim for wrongful dismissal at an Employment Tribunal and so to get some compensation. Such a dismissal must however be done in a way which breaches your employment contract and is therefore wrongful. Breach of contract may arise if the employer dismisses you without following the obligation to give you notice or the notice which your employer gave you is improper. This right is also closely connected with your right to ask the employer follow correct procedures defined by the contract before he gives you notice. However note that dismissal which is wrongful does not have to be unfair. There is a difference between claiming for unfair dismissal and wrongful dismissal. You are entitled to bring a claim for wrongful dismissal at an Employment Tribunal for damages up to £25 000, County or High Court for damages over £25 000. Damages are counted on the basis of what you would have been entitled to if your employment contract was not wrongfully terminated. Compensation is therefore for the net loss which the employee suffered.
When can I claim?
In order to be entitled to claim for wrongful dismissal you must have been wrongfully dismissed from work. By ‘dismissed’ it is meant that your contract of employment was terminated by your employer and you did not agree with your employer on such a termination, or you did not voluntarily resign. By ‘wrongfully’ it is meant that this termination was not done in accordance with the terms of the contract. Normally employment contracts contain a clause stating what the notice period is. If there is none stated the statute imposes obligation upon the employer to follow statutory prescribed notice period. Some contracts contain a clause which offers payment to be made to the employee instead of the notice. The employer is not however allowed to make a payment instead of giving notice if an employee’s employment contract does not contain such a clause. In this instance the employer will be in breach of a contract. A payment instead of notice will be subject to taxes. Some employers pay compensation for loss of office. First £30 000 of the payment for loss of office is tax free. You will be required to mitigate your losses, for instance to look for another job. If you do not do this the court may refer to this when deciding on what amount of damages will be awarded to the employee. The judge will then reduce the amount of damages due to the fact that you did not take reasonable steps in order to mitigate your loses. Damages will also be affected if the employee does mitigate losses but it is always up to the court’s discretion to award such an amount as it thinks is fit.
Does the employer have any defence?
Claim for damages for wrongful dismissal is effectively a claim for a breach of contract. Your employer may decide to attack credibility of contract in order to avoid damages to be paid out. Your employer may decide to claim several defences against the allegation of wrongful dismissal which was made against it. Illegality of actions is one of them. E.g. if the employer and you evade taxes such actions are considered illegal and in this instance no action can be taken upon an illegal contract. Your employer may decide to claim that the contract was invalid; no action can again be taken against an invalid contract. Your employer may have inserted a clause into your contract of employment which excludes his liability for wrongful dismissal. In this case you have the right to argue protection awarded under Unfair Contractual Terms Act 1977 (UCTA). The court will consider reasonableness in inserting such a clause at the time the contract was made.
Except for the damages explained above you can be entitled to claim restraining injunction against wrongfully terminating the employment. It will however be difficult to have a good working relationship after the court gets involved. Another remedy is to make a debt claim if your employer owes you the money to which you are entitled.
Comparison with unfair dismissal
When making a claim for wrongful dismissal, the claim is based on the breach of contract by the employer due to improper notice being sent to the employee. When you claim for unfair dismissal, the court considers fairness in dismissing an employee. There is a qualifying period of 1 year in order to claim damages for unfair dismissal; this means you will have to be employed by the employer for one year. There is however no such qualifying period when you claim damages of wrongful dismissal and you are entitled to claim even if you were employed for less than one year. Claims for wrongful dismissal can be made either at Employment tribunal or at County or High Court where the amount of compensation paid is unlimited. A claim for unfair dismissal can only be made at Employment Tribunal. Damages for unfair dismissal represent the employee’s statutory compensation entitlement however damages for wrongful dismissal represent contractual entitlement for the employee. There is a cap on the amount of damages paid for unfair dismissal. There is a limitation on the time when you can make a claim. This limitation is 3 months (from the termination of the employment) at Employment Tribunal for both claims and 6 years (from the termination of the employment) at courts for wrongful dismissal. When claiming for wrongful dismissal the employer has the right to mention facts which came to its mind during the proceedings, this is not the case when there is a claim for unfair dismissal. If there is both unfair and wrongful dismissal, the court will set off the damages awarded for wrongful dismissal against the damages awarded for unfair dismissal.
It is important that you check the provisions of your employment contract. This document is a significant source of the rights to which you may be entitled.