Unfair Dismissal & Wrongful Dismissal

Knight-Webb Solicitors are experts in Unfair Dismissal and Wrongful Dismissal claims. We have handled many claims in the employment tribunal on behalf of both employers and employees, including several high-value claims.

We have the advantage over many other London law firms in that our overheads are low, and we are able to pass these cost savings to clients in the form of lower fees. This is particularly important in employment tribunal cases as the general rule is that each side pays its own costs. This is subject to exceptions, for example if one party has behaved unreasonably.

Information on costs for Unfair Dismissal and Wrongful Dismissal claims can be found here.

What Is an Unfair Dismissal?

An employer who dismisses an employee without good reason or without following a fair procedure lays itself open to a claim for unfair dismissal. This is a statutory claim under the Employment Rights Act 1996.

The qualifying period for an unfair dismissal claim is two years’ continuous employment, although there are exceptions to the two year rule, for example where the dismissal is automatically unfair because the employee has made a protected disclosure (whistleblowing) or asserted a relevant statutory right.

To defend a claim for unfair dismissal, the employer has to establish that the reason for the dismissal was fair. The decision to dismiss also has to be within a range of reasonable responses open to a reasonable employer.

Fair reasons are as follows:

  • capability or qualification;
  • misconduct;
  • redundancy
  • the continuation of employment would contravene a statute or other enactment;
  • some other substantial reason. Some examples are personality clashes with between the employee and his/her line manager, or where the employee unreasonably refuses to accept changes to terms and conditions. Each case will be determined on its own facts.

Unless an employer can prove it has a fair reason for dismissal, the dismissal will be unfair.

Even if there is a justified reason for dismissal, the dismissal will still be unfair if the employer has not followed a correct process. This could be, for instance, where the employer has not followed a proper consultation or selection process in a redundancy situation.  For dismissals based on misconduct, or performance, the process that the employer should follow is largely governed by the ACAS Code of Practice on Discipline and Grievances, which provides that there should be sufficient investigations, evidence, warnings (in most cases) and the right to be accompanied at meetings.

If the dismissal is held to be unfair, the employer can be ordered to re-engage, reinstate or to pay compensation to the ex-employee.

Compensation for Unfair Dismissal Claims

This is made up of a basic award and compensatory award.

Basic Award

The basic award is a statutory award that involves multiplying the relevant factors of the length of continuous service  (up to a maximum of 20 years), the employee’s age and a week’s pay (as at the date of termination of your employment). The award is made up of:

  • One and a half weeks’ pay for each year of employment after age 41;
  • One week’s pay for each year of employment between ages 22 and 40;
  • Half a week’s pay for each year of employment under the age of 22.

The weekly pay which will be used to work out the basic award payment will usually be the normal weekly gross pay at the time of dismissal up to the maximum limit (which for dismissals on or after 5 April 2018 is £508). The basic award calculation is the same as the calculation for  statutory redundancy pay.

If you have been dismissed by reason of redundancy, the tribunal will reduce the basic award by the amount of any redundancy payment you have received.

Compensatory Award

In addition to a basic award, the tribunal can make a compensatory award. The tribunal will award such amount as it considers just and equitable having regard to the loss sustained by the employee in consequence of the dismissal. The employee is obliged to take reasonable steps to mitigate his/her losses, for example by taking active steps to look for a new job. The compesatory award for unfair dismissal claims is capped at  £83,682, or one year’s gross salary, whichever is the lower. The statutory cap does not apply where the dismissal is automatically unfair, for example because employee has made a protected disclosure or asserted a statutory right.

The main heads of losses that employees can claim are as follows:

  • loss of wages;
  • loss of pension, bonus and other employment benefits;
  • loss of statutory rights (typically around £300).

Assessing future loss is always going to be a speculative process for the tribunal, and will depend on whether you have managed to mitigate your loss and found another job before the hearing date, at what point, and the amount of your new salary.  The tribunal will need to identify an appropriate cut-off point for compensation if you have not secured any new employment as at the hearing date.

In making an award for compensation in these cases, an Employment Tribunal has a discretion to reduce both the basic award and the compensatory award. This can happen if a tribunal finds an employee’s conduct contributed to the situation, or where an employer can show that even if they had followed a correct process, the decision to dismiss would still have been the same (this is known as a Polkey reduction of damages).

Constructive Dismissal

For the purposes of an unfair dismissal claim, the dismissal can be actual dismissal or constructive dismissal. Constructive dismissal occurs where the employer has fundamentally breached the contract of employment, the employee has resigned in response to the breach and the employee does not delay unreasonably before resigning.

What is Wrongful Dismissal?

A wrongful dismissal claim is a claim by an employee against an employer for breach of contract. Common situations would be where an employee has been dismissed without notice or with insufficient notice or where the employee resigns without notice in circumstances amounting to constructive dismissal.

A dismissal will not be wrongful where an employment contract expressly provides that the employer may terminate without notice by making a payment in lieu of notice and the employer makes a payment in lieu of notice.

If a wrongful dismissal claim is upheld, the employer becomes liable to pay  damages for wrongful dismissal, which will reflect the losses the employee has sustained flowing from the employer’s breach. The employee is under an obligation to mitigate his/her losses by taking adequate steps to look for a new job. The damages recoverable will be the salary and other benefits that would have been earned or accrued during the contractual notice period (such as pension entitlement, private health cover, car allowance, bonus, and loss of stock options) less any remuneration received through new employment.

A dismissal without notice will not constitute wrongful dismissal if the employee is guilty of gross misconduct or has otherwise fundamentally breached the employment contract.

Gross Misconduct

Gross misconduct is generally seen as misconduct serious enough to overturn the contract between the employer and the employee thus justifying summary dismissal. Acts which constitute gross misconduct must be very serious and are best determined by organisations in the light of their own particular circumstances. Examples of gross misconduct are:

  • theft or fraud
  • physical violence or bullying
  • deliberate and serious damage to property
  • serious misuse of an organisation’s property or name
  • deliberately accessing internet sites containing pornographic, offensive or obscene material
  • serious insubordination
  • unlawful discrimination or harassment
  • bringing the organisation into serious disrepute
  • serious incapability at work brought on by alcohol or illegal drugs
  • causing loss, damage or injury through serious negligence
  • a serious breach of health and safety rules
  • a serious breach of confidence.

If an employer considers an employee guilty of gross misconduct and thus liable for summary dismissal, it is still important to follow a fair procedure as for any other disciplinary offence. This will include establishing the facts of the case before taking any action, holding a meeting with the employee and allowing the employee the right of appeal. It should be made clear to the employee that dismissal is a possibility. A short period of suspension with full pay to help establish the facts or to allow tempers to cool may be helpful.

Choice of civil court (County Court or High Court) or Employment Tribunal for wrongful dismissal claims

Wrongful dismissal claims can be brought in the Employment Tribunal or the civil courts (High Court or County Court). Claims in the employment tribunal for breach of contract are subject to a ceiling of £25,000. However, there is no maximum limit in the High Court or County Courts. The choice of forum depends on a number of factors including the following:

  • Civil court claims can be expensive and the losing party will tend to pay the costs of the winning party. In the Employment Trbunal,  an adverse costs order is the exception to the general rule that each side pays its own costs, win or lose. As the employer generally has deeper pockets than the employee, employees may prefer to bring claims in the employment tribunal. The tribunal is also a more informal forum, and no tribunal fees are payable. Employment judges are more familiar with employment disputes.
  • If the employee is bringing multiple claims such as unfair dismissal or discrimination claims, in addition to a wrongful dismissal (breach of contract) claim, then it would simplify proceedings for all the claims to be heard in one forum.
  • If there has been a delay in filing proceedings, the civil courts may be a more appropriate forum. There is a difference in limitation periods: in the tribunal it is three months (plus any extension due to participation in Acas early conciliation), though it may be extended by such period as the tribunal considers reasonable where they are satisfied that it was not reasonably practicable to present the complaint within the time limit. In the civil courts, the limitation period is six years.
  • The advantages of a civil claim are particularly apparent where an employee is highly paid and has a long notice period or is on a fixed-term contract with no provision for early termination. A claimant in those circumstances may well stand to gain more from a wrongful dismissal claim in the civil courts than the the employment tribunal where damages are capped at £25,000, particularly with the new rules on the taxation of post-employment notice pay.

The information on this website is for general guidance only and does not constitute legal advice. For advice on unfair dismissal claims or wrongful dismissal claims, please Contact Us on 0207 207 6195 or email sunita@knightwebb.com to discuss your requirements in detail.