What is the difference between unfair dismissal and wrongful dismissal?

  • Unfair dismissal is a statutory claim and looks at the fairness of the dismissal
  • Wrongful dismissal is a claim of a breach of contract made by an employer

What is Unfair Dismissal

Unfair dismissal is a statutory right available to employees who believe they have been dismissed unfairly or unreasonably by their employer.

Employees must have completed two years’ service before they are able to bring an unfair dismissal claim.

There are, however, some dismissals which are deemed to be “automatically unfair”. These cases have no qualifying period.

What is Wrongful Dismissal?

Wrongful dismissal claims that an employer has breached the contract of employment. A typical breach is when an employee has been released and has not received notice from their employer within the minimum notice period.

What is the Time Limit for a Wrongful Dismissal Claim?

3 months from the date of termination is the maximum period for a claim to be submitted to the tribunal.

Wrongful Dismissal Claims

£25,000 is the capped total for damages for wrongful dismissal. An employee is only to be compensated for the ‘net loss’ suffered due to the wrongful dismissal. However, the employee can claim benefits that they might have earned during the contractual notice period. This can include, bonuses, health care or pension entitlements for example.

When is Employment Dismissal Fair?

The law says that it is fair for employers to dismiss an employee for one of the following five reasons:

  • Misconduct at work
  • Lack of capability (or qualifications) to do the job
  • Redundancy
  • Illegality
  • Some other substantial reason

However, even if the employer convinces a Tribunal that they dismissed their employee for one of those reasons, they still have to show that they followed a reasonable procedure as set out in the Acas (Advisory, Conciliation and Arbitration Service) Code of Practice.

 When do I Need to Bring a Claim for Unfair Dismissal?

  • The time limit for lodging a claim for unfair dismissal at the Employment Tribunal is three months, less one day, from the effective date of termination of the contract of employment. So, for example, if an individual was dismissed on 10th January, they would have until 9th April to bring a claim.
  • This time limit is strictly applied.

What Payments are Available for Unfair Employment Dismissal?

If a Tribunal finds in favour of the employee, it can order:

  • Reinstatement – a return to the original job with no loss of money or security
  • Re-engagement – getting another job with the same employer
  • Compensation – a basic award calculated in a similar way to a redundancy payment plus a compensatory award to compensate the employee for the financial losses incurred as a result of the dismissal

If an employee has been unfairly dismissed, they will usually be entitled to a basic award depending on their weekly pay, capped at £538 per week for each year of employment and adjusted for age (no Basic Award is payable where a statutory redundancy payment has been paid) and a compensatory award based on their losses up to a current maximum of £88,519 – but limited also to a year’s pay.

Unless the employee is a very high earner, it is rare for Tribunals to award the maximum amount. Most will award compensation for loss of earnings to the date of the hearing plus a limited amount to compensate for future loss.

A Tribunal will set the compensatory award with a view to covering the time during which someone is unemployed. This will consider the efforts they have made to find

another job. An unfair dismissal can, however, result in a reduced or nil compensatory award if it is found unfair for procedural reasons alone and the Tribunal thinks a fair procedure would have made no real difference. It is also important to note that the Tribunal will consider whether the Claimant has made genuine attempts to mitigate their loss by, for example, applying for alternative work or seeking benefits.

Reinstatement and re-engagement are rarely ordered by Tribunals.

Tribunals can adjust awards up or down by up to 25% if they think that either the employer or employee unreasonably failed to follow the ACAS Code of Practice (www.acas.org.uk). Employees might lose out, too, if they were partly to blame for their dismissal.

What are the Types of Unfair Employment Dismissal?

Constructive Dismissal at work

Constructive dismissal claims can be pursued when an employee resigns in response to a significant and fundamental breach of their contract of employment by their employer. These cases are hard to win. Not every breach of contract will entitle an employee to resign and claim constructive dismissal. Claims for constructive dismissal must be lodged in the Tribunal within three months less one day of the last day of employment.

Again, Tribunals can adjust awards up or down by up to 25% if they think that either the employer or employee unreasonably failed to follow the ACAS Code of Practice (www.acas.org.uk).

Wrongful Dismissal at Work

Unlike unfair dismissal, which is a statutory right, wrongful dismissal is a contractual right. Typically, an employer wrongfully dismisses by failing to give the correct notice. In those circumstances’ compensation is usually loss of earnings for the notice

The minimum statutory periods of notice required from an employer are:

  • 1 month to 2 years of employment = 1 weeks’ notice
  • 2 years to 12 years of employment = 1 week for each year worked
  • 12 years plus of employment = 12 weeks’ notice
  • Failure to pay statutory notice may give rise to a claim for unlawful deduction from wages

Unless an employee is guilty of gross misconduct, an employer must either allow them to work out their notice or make a payment to cover that notice period. The notice period is whatever the contract says, subject to the statutory minimum. Even if
an employee has been wrongfully dismissed, they are under a duty to do their best to find alternative employment (to ‘mitigate’ their loss). In assessing what their losses are, they must offset any earnings they receive during that period and any earnings they ought to have received, assuming they had made reasonable attempts to find alternative employment.

Frequently Asked Employment Dismissal Questions

What is the Basic Award for Unfair Dismissal Claims?

If it has been decided by a tribunal that you have been dismissed unfairly, there are two forms of compensation that you will get:

  • The basic award is a fixed total and calculated on a statutory formula
  • The compensatory award which is designed to compensate you for the money that you did not receive because of the loss of your job

What Factors Impact the Basic Award Pay for Employment Dismissal?

  • Your age on the day of the dismissal
  • The length of time you worked at the employer’s before the day of dismissal
  • Your gross weekly pay

Can the Basic Award Pay be Reduced for Unfair Dismissal?

It can be reduced by the tribunal if:

  • Your have received redundancy pay
  • Your employer has offered your job back and you rejected it
  • Your conduct during the process has been at fault

How Much Can I Earn for Unfair Dismissal?

  • Maximum in compensation you can earn is = £88,519
  • Maximum in basic award is = £16,140

Check here to calculate your statutory redundancy pay.

Are Wrongful Dismissals Easy to Prove?

Wrongful dismissals are hard to prove because you must prove intent by the employer which can be difficult. It is important that you make notes and create documents regarding the dismissal as any information may be useful when submitting a claim. Getting a solicitor on your side to help guide you through the process and gather as much information can be critical to the success of the case.

Here at Morrish Solicitors, we have years of experience helping clients claim compensation for unfair dismissal. Contact us on 033 3344 600 if you require expert legal advice or representation.