Wrongful Dismissal in the UK: Notice Pay, Contractual Rights and Employee Remedies
Quick Answer: Wrongful dismissal is generally a contractual claim arising when an employer breaches the terms of an employment contract when terminating employment. The most common example is dismissal without the notice or payment in lieu of notice required by the contract. Unlike unfair dismissal, wrongful dismissal does not principally ask whether the dismissal was fair; it asks whether the employer breached the employee's contractual rights.
Being dismissed can create immediate financial uncertainty.
An employee may suddenly lose:
- Salary.
- Notice pay.
- Contractual benefits.
- Bonus entitlement.
- Commission.
- Other contractual payments.
Where an employer terminates employment in breach of contract, the employee may potentially have a wrongful dismissal claim.
Wrongful dismissal is therefore different from unfair dismissal.
An employee may have a wrongful dismissal claim even where they cannot bring an ordinary unfair dismissal claim.
Conversely, an unfair dismissal claim can succeed even where the employer has complied with the contractual notice requirements.
This article explains wrongful dismissal in the UK, including notice periods, payment in lieu of notice, gross misconduct, contractual benefits, garden leave, bonuses, commission, compensation, limitation periods and the difference between wrongful and unfair dismissal.
Legal disclaimer: This article provides general educational information only. It is not legal or employment advice and does not create a solicitor-client relationship. Employment rights and contractual claims depend on the employment contract, circumstances of dismissal, employee status, jurisdiction and applicable legislation.
Key Takeaways
- Wrongful dismissal is primarily a contractual claim.
- The most common issue is failure to provide the contractual or statutory notice owed to the employee.
- An employer may potentially dismiss without notice where the employee has committed conduct sufficiently serious to justify summary dismissal.
- Wrongful dismissal does not require a minimum period of employment in the same way as ordinary unfair dismissal.
- An employee can potentially have both wrongful dismissal and unfair dismissal claims.
- Contractual benefits can be relevant when calculating losses.
- Bonus and commission entitlement depends heavily on the employment contract and applicable scheme rules.
- Payment in lieu of notice must be examined against the contractual terms.
- Garden leave is different from dismissal without notice.
- Wrongful dismissal claims can potentially be brought in an Employment Tribunal or civil court depending on the circumstances.
- Short Employment Tribunal limitation periods can apply.
- Employees should preserve the employment contract, dismissal correspondence and pay records.
What Is Wrongful Dismissal?
Quick Answer: Wrongful dismissal generally occurs where an employer terminates an employee's employment in breach of contract.
The claim may concern:
- Notice.
- Payment in lieu of notice.
- Contractual salary.
- Contractual benefits.
- Contractual bonus rights.
- Commission.
- Other contractual entitlements.
The exact rights depend on the employment contract and circumstances.
What Is the Difference Between Wrongful and Unfair Dismissal?
Quick Answer: Wrongful dismissal is generally concerned with breach of contract, while unfair dismissal is a statutory claim concerning whether the dismissal was substantively and procedurally fair.
| Wrongful Dismissal | Unfair Dismissal |
|---|---|
| Primarily contractual | Primarily statutory |
| Focuses on breach of contract | Focuses on fairness of dismissal |
| Often concerns notice pay | Can concern the reason and procedure for dismissal |
| Does not generally require the same qualifying service as ordinary unfair dismissal | Ordinary unfair dismissal has historically involved a qualifying service requirement, subject to exceptions |
| Can potentially be brought in court or Employment Tribunal subject to jurisdiction and limits | Generally brought in the Employment Tribunal |
Can I Have Both a Wrongful and Unfair Dismissal Claim?
Quick Answer: Yes, potentially.
The same dismissal can involve both:
- A contractual breach concerning notice or other contractual rights.
- A statutory claim concerning the fairness of the dismissal.
The two claims should be analysed separately.
What Is Notice in an Employment Contract?
Quick Answer: Notice is the period between the employer communicating termination and the employment ending, unless the employer has a lawful contractual or statutory basis to terminate without notice.
The employment contract may specify:
- Notice required from the employee.
- Notice required from the employer.
- Different notice periods based on length of service.
- Payment in lieu of notice.
How Much Notice Am I Entitled To?
Quick Answer: The contractual notice period normally governs, subject to minimum statutory notice requirements.
The contract should be reviewed carefully.
If the contract provides no express notice period, statutory minimum notice rules can become relevant.
What Is Statutory Notice?
Quick Answer: Statutory notice is the minimum notice entitlement prescribed by employment legislation in qualifying circumstances.
The statutory minimum can depend on the employee's length of service and other circumstances.
A contract can provide a longer notice period.
Can an Employer Dismiss Me Without Notice?
Quick Answer: Potentially, but summary dismissal without notice generally requires a contractual or legal basis.
The most common context is serious misconduct amounting to gross misconduct.
Without such a basis, dismissal without notice can potentially amount to wrongful dismissal.
What Is Summary Dismissal?
Quick Answer: Summary dismissal is termination without the normal notice period.
It is commonly associated with gross misconduct.
However, the employer must still establish that the contractual and legal requirements for dismissal without notice are satisfied.
What Is Gross Misconduct?
Quick Answer: Gross misconduct is conduct sufficiently serious to justify dismissal without notice where the employment contract and applicable legal principles permit it.
Potential examples include:
- Serious dishonesty.
- Violence.
- Serious insubordination.
- Serious harassment.
- Major breaches of trust.
- Serious breaches of workplace rules.
The classification depends on the contract, workplace policies and circumstances.
Can an Employer Dismiss Me Without Notice for Gross Misconduct?
Quick Answer: Potentially. Serious misconduct can justify summary dismissal in appropriate circumstances.
However, the employer should still investigate the allegation and follow a fair process where appropriate.
Unfair dismissal and wrongful dismissal remain separate questions.
Can I Claim Wrongful Dismissal If I Was Accused of Gross Misconduct?
Quick Answer: Potentially. An accusation of gross misconduct does not automatically establish the employer's contractual right to dismiss without notice.
The facts and contractual terms must be examined.
Does an Employer Have to Prove Gross Misconduct in Court?
Quick Answer: The precise contractual test depends on the claim and circumstances.
In a wrongful dismissal dispute, the court or Tribunal can consider whether the employer had a contractual basis to terminate without notice.
Can I Claim Wrongful Dismissal If the Employer Did Not Follow Its Disciplinary Procedure?
Quick Answer: Potentially, but failure to follow an internal disciplinary procedure does not automatically create a wrongful dismissal claim.
The key question for wrongful dismissal is whether the employer breached a contractual obligation.
If the procedure was contractual, the position can be different from a merely non-contractual workplace policy.
Is an Employee Handbook Part of the Employment Contract?
Quick Answer: It depends on the wording and contractual structure.
Some provisions may be contractual while others may be expressly stated to be non-contractual.
The employment documents should therefore be reviewed as a whole.
What Is Payment in Lieu of Notice?
Quick Answer: Payment in lieu of notice, commonly called PILON, is a payment made instead of requiring the employee to work through the notice period.
Whether an employer can make a PILON depends on the contract and circumstances.
Can My Employer Pay Me Instead of Giving Notice?
Quick Answer: Potentially. Many employment contracts contain an express payment-in-lieu provision.
Where there is no contractual PILON provision, the legal consequences can be more complicated.
What Should Notice Pay Include?
Quick Answer: Notice pay depends on the contractual terms and circumstances.
Potential components can include:
- Basic salary.
- Contractual allowances.
- Contractual benefits.
- Commission.
- Bonus entitlement where contractually due.
The exact calculation should be based on the employment contract and applicable scheme rules.
Can I Claim Benefits During My Notice Period?
Quick Answer: Potentially. Contractual benefits can form part of the loss caused by wrongful dismissal.
Examples may include:
- Health insurance.
- Company car benefits.
- Accommodation benefits.
- Other contractual benefits.
The precise entitlement depends on the contract.
Can I Claim Lost Bonuses After Wrongful Dismissal?
Quick Answer: Potentially. Bonus entitlement depends on whether the bonus was contractual, discretionary and what conditions applied at the time of dismissal.
Relevant documents include:
- Employment contract.
- Bonus scheme rules.
- Previous bonus awards.
- Performance records.
- Terms governing eligibility.
Can I Claim Lost Commission After Wrongful Dismissal?
Quick Answer: Potentially. Contractual commission can form part of a wrongful dismissal claim depending on the contract and how commission is calculated.
Can I Claim Loss of Shares or Stock Options?
Quick Answer: Potentially, but share schemes and option arrangements often contain detailed provisions concerning termination.
The scheme rules should be reviewed separately from the employment contract.
What Is Garden Leave?
Quick Answer: Garden leave occurs when an employee remains employed and normally continues to receive contractual pay and benefits during the notice period but is instructed not to perform their usual duties.
Garden leave is therefore different from summary dismissal.
Can My Employer Put Me on Garden Leave?
Quick Answer: Potentially, where the contract gives the employer the relevant right or the arrangement is otherwise legally permissible.
The employee remains employed during the garden leave period.
Can I Start a New Job While on Garden Leave?
Quick Answer: Usually, an employee remains bound by their existing employment contract during garden leave.
Restrictions on working for another employer can therefore apply.
The contract and any express garden-leave provisions should be reviewed.
Can an Employer Dismiss Me Instead of Putting Me on Garden Leave?
Quick Answer: The employer's rights depend on the contract and circumstances.
If the employer terminates employment immediately without contractual justification, wrongful dismissal issues can arise.
What Happens to My Holiday When I Am Wrongfully Dismissed?
Quick Answer: Accrued holiday entitlement can potentially be payable when employment ends, subject to the applicable statutory and contractual rules.
The calculation should account for:
- Accrued holiday.
- Holiday already taken.
- Contractual holiday entitlement.
- Relevant payment rules.
Can I Claim Unpaid Salary After Dismissal?
Quick Answer: Potentially. Unpaid salary can constitute a contractual or statutory payment claim.
Check:
- Final payslip.
- Employment contract.
- Payroll records.
- Bank statements.
- Hours worked.
Can I Claim Unpaid Expenses After Dismissal?
Quick Answer: Potentially, where the expenses were contractually or otherwise lawfully payable.
Receipts and employer policies can provide important evidence.
Does Wrongful Dismissal Require Two Years' Service?
Quick Answer: No. Wrongful dismissal is a contractual claim and does not generally depend on the same qualifying service requirement that has historically applied to ordinary unfair dismissal.
An employee may potentially have a wrongful dismissal claim even with a short period of employment.
Can I Claim Wrongful Dismissal During Probation?
Quick Answer: Potentially. Probation does not automatically remove contractual notice rights.
The employment contract should be checked for the applicable notice provisions.
Can I Claim Wrongful Dismissal If I Have Worked for Only a Few Months?
Quick Answer: Potentially. Contractual notice rights can exist from the beginning of employment, subject to the contract and statutory minimum requirements.
Can I Claim Wrongful Dismissal If I Am a Fixed-Term Employee?
Quick Answer: Potentially. Fixed-term contracts can contain specific termination provisions.
Ending a fixed-term contract early may create contractual issues if the employer lacks a contractual right to terminate early.
Can an Employer End a Fixed-Term Contract Early?
Quick Answer: Potentially, but the contract should be reviewed for an early termination clause and notice provisions.
If the employer terminates contrary to the contractual terms, a wrongful dismissal claim may arise.
Can I Claim Wrongful Dismissal If My Contract Was Verbal?
Quick Answer: Potentially. An employment contract can contain both written and implied terms.
The absence of a comprehensive written contract does not necessarily mean that no contractual rights exist.
What Are Implied Terms in an Employment Contract?
Implied contractual terms can arise from the nature of the employment relationship, statute, common law or established workplace practices.
Potential examples include:
- Mutual trust and confidence.
- Duty to pay wages for work performed.
- Certain duties of fidelity.
The precise scope of implied terms depends on the circumstances.
Can a Breach of Trust and Confidence Lead to Wrongful Dismissal?
Quick Answer: Potentially. A fundamental breach of the implied term of mutual trust and confidence can potentially support a constructive dismissal claim.
The breach must be sufficiently serious.
Can I Claim Constructive Dismissal Instead of Wrongful Dismissal?
Quick Answer: Potentially. Constructive dismissal can involve both contractual and statutory elements.
An employee may resign following a fundamental contractual breach and potentially bring a constructive unfair dismissal claim if the relevant statutory requirements are satisfied.
What Is the Difference Between Wrongful and Constructive Dismissal?
Quick Answer: Wrongful dismissal generally involves an employer breaching the employment contract when ending employment. Constructive dismissal involves the employee resigning because of a fundamental breach by the employer.
Can I Claim Wrongful Dismissal If I Resigned?
Quick Answer: Potentially, but the legal claim may be framed differently.
If resignation resulted from a fundamental breach, constructive dismissal may be relevant.
Can I Claim Wrongful Dismissal If I Was Dismissed for Misconduct?
Quick Answer: Potentially. The issue is whether the misconduct justified summary dismissal under the contractual and legal framework.
A dismissal can be unfair even where it is not wrongful, and vice versa.
Can an Employer Dismiss Me Without Notice for Poor Performance?
Quick Answer: Poor performance will not ordinarily justify summary dismissal merely because the employer is dissatisfied with performance.
The contractual and factual basis for dismissal should be examined.
Can an Employer Dismiss Me Without Notice for Absence?
Quick Answer: Potentially only where the contractual and legal requirements for summary dismissal are satisfied.
Absence-related dismissal can also raise capability and disability discrimination issues.
Can I Claim Wrongful Dismissal If I Was Dismissed Because of Discrimination?
Quick Answer: Potentially. Discriminatory dismissal can give rise to a separate Equality Act claim, while contractual notice issues can create a wrongful dismissal claim.
Can I Claim Wrongful Dismissal If I Was Dismissed for Whistleblowing?
Quick Answer: Potentially. Whistleblowing can create statutory protection against certain forms of dismissal, while contractual notice issues can be considered separately.
Can I Claim Wrongful Dismissal If I Was Dismissed During Maternity Leave?
Quick Answer: Potentially. Maternity-related dismissal can involve statutory employment protections as well as contractual issues.
How Much Compensation Can I Get for Wrongful Dismissal?
Quick Answer: Compensation generally aims to put the employee in the financial position they would have occupied had the contract been properly performed, subject to legal principles concerning causation, mitigation and recoverability.
The value depends on:
- Notice period.
- Salary.
- Contractual benefits.
- Bonus.
- Commission.
- Holiday entitlement.
- Other contractual losses.
Is There a Cap on Wrongful Dismissal Compensation?
Quick Answer: The applicable limit depends on where and how the claim is brought.
Employment Tribunal jurisdiction for breach-of-contract claims is subject to statutory limits, while the civil courts operate under different jurisdictional rules.
The appropriate forum can therefore matter.
Can I Claim Future Loss After Wrongful Dismissal?
Quick Answer: Wrongful dismissal damages are generally concerned with the contractual loss caused by the breach, particularly the notice period.
Claims for losses extending beyond the contractual notice period can be legally more complex and should not be assumed to be recoverable.
Can I Claim for Emotional Distress in Wrongful Dismissal?
Quick Answer: Ordinary wrongful dismissal damages are generally focused on financial contractual loss rather than compensation for distress or hurt feelings.
Separate legal claims may be available where the facts involve discrimination or another actionable wrong.
Can I Claim for Damage to My Reputation?
Quick Answer: Reputation-related losses are not ordinarily part of a straightforward wrongful dismissal damages claim.
Different causes of action may potentially arise depending on what the employer has said or done.
Can I Claim If My Employer Refuses to Give Me a Reference?
Quick Answer: The position depends on the contract and circumstances.
An employer may have contractual or other obligations concerning references, but there is not generally an automatic right to a positive reference.
Can I Bring a Wrongful Dismissal Claim in an Employment Tribunal?
Quick Answer: Potentially. Employment Tribunals have jurisdiction over certain breach-of-contract claims arising or outstanding on termination, subject to statutory limits and jurisdictional requirements.
Can I Bring a Wrongful Dismissal Claim in Court?
Quick Answer: Potentially. A contractual claim can potentially be brought in the civil courts, subject to limitation, jurisdiction and procedural requirements.
The appropriate forum depends on the nature and value of the claim.
How Long Do I Have to Bring a Wrongful Dismissal Claim?
Quick Answer: The limitation period depends on the forum and legal basis of the claim.
Employment Tribunal breach-of-contract claims can be subject to a short limitation period, while contractual claims in the civil courts are generally governed by different limitation rules.
Because limitation rules can be decisive, employees should obtain advice promptly.
Does Acas Early Conciliation Apply to Wrongful Dismissal?
Quick Answer: Acas Early Conciliation requirements can apply to Employment Tribunal proceedings, but the precise position depends on the claim being brought.
Employees should check the applicable procedural requirements before issuing proceedings.
Can I Appeal a Wrongful Dismissal?
Quick Answer: An internal appeal may be available under the employer's procedures, but an internal appeal is different from a legal claim for wrongful dismissal.
An appeal should not be allowed to cause a claimant to miss a statutory limitation deadline.
Should I Accept Payment in Lieu of Notice?
Quick Answer: If an employer offers a payment in lieu, the employee should compare the payment with the contractual entitlement before accepting it as full and final settlement.
Check:
- Salary.
- Benefits.
- Bonus.
- Commission.
- Holiday pay.
- Any settlement terms.
What If My Employer Says the Payment Is Full and Final Settlement?
Quick Answer: Read the settlement wording carefully.
A full-and-final settlement may affect your ability to pursue further claims depending on the legal document and applicable law.
What Is a Settlement Agreement?
Quick Answer: A settlement agreement is a legally binding agreement under which an employee generally agrees to waive specified employment claims in exchange for agreed consideration.
Specific statutory requirements apply where statutory employment claims are being waived.
Do I Need Legal Advice Before Signing a Settlement Agreement?
Quick Answer: Yes, where the agreement is intended to waive statutory employment claims, the employee must generally receive advice from an independent adviser who satisfies the relevant statutory requirements.
Do not sign a settlement agreement without understanding which rights are being waived.
What Evidence Do I Need for a Wrongful Dismissal Claim?
- Employment contract.
- Contract amendments.
- Employee handbook.
- Dismissal letter.
- Notice correspondence.
- Final payslip.
- Bonus and commission records.
- Holiday records.
- Emails and messages.
- Disciplinary documents.
- Evidence of contractual benefits.
- Settlement correspondence.
Why Is the Employment Contract Important?
Quick Answer: Wrongful dismissal is primarily contractual, so the employment contract can be the central document in determining the employee's rights.
Review provisions concerning:
- Notice.
- Termination.
- Gross misconduct.
- PILON.
- Bonus.
- Commission.
- Benefits.
- Garden leave.
Wrongful Dismissal Claim Checklist
- ā Obtain your employment contract.
- ā Check the contractual notice period.
- ā Check whether a PILON clause exists.
- ā Review any gross misconduct provisions.
- ā Obtain the dismissal letter.
- ā Check the final payslip.
- ā Calculate unpaid salary.
- ā Calculate notice pay.
- ā Check holiday entitlement.
- ā Review bonus and commission provisions.
- ā Record contractual benefits.
- ā Preserve relevant correspondence.
- ā Check the appropriate limitation period.
- ā Consider Acas Early Conciliation if applicable.
- ā Obtain professional advice where the contractual position is disputed.
Frequently Asked Questions
What is wrongful dismissal?
Wrongful dismissal is generally a contractual claim arising when an employer breaches the employment contract by terminating employment.
Is wrongful dismissal the same as unfair dismissal?
No. Wrongful dismissal is primarily contractual, while unfair dismissal is a statutory claim concerning the fairness of termination.
Can I claim wrongful dismissal without two years' service?
Yes, potentially. Wrongful dismissal does not generally depend on the same qualifying service requirement historically applicable to ordinary unfair dismissal.
Can my employer dismiss me without notice?
Potentially, where the contract and circumstances permit summary dismissal, such as serious misconduct. Otherwise, dismissal without notice may create a wrongful dismissal claim.
What is payment in lieu of notice?
Payment in lieu of notice is a payment made instead of requiring the employee to work during the contractual notice period.
Can I claim lost bonuses?
Potentially. Bonus entitlement depends on the contractual terms and applicable bonus scheme.
Can I claim lost commission?
Potentially. Contractual commission can form part of the loss depending on the employment contract and commission rules.
Can I claim if I was dismissed for gross misconduct?
Potentially, but the key question is whether the circumstances gave the employer a contractual right to dismiss without notice.
Can I bring a wrongful dismissal claim in an Employment Tribunal?
Potentially. Employment Tribunals have jurisdiction over certain breach-of-contract claims subject to statutory limits.
Can I bring a wrongful dismissal claim in court?
Potentially. Contractual claims can also fall within the jurisdiction of the civil courts.
Can I claim wrongful and unfair dismissal together?
Potentially. The two claims concern different legal rights and can arise from the same dismissal.
What compensation can I receive?
Compensation generally reflects contractual financial loss, particularly notice pay and associated contractual benefits, subject to the applicable legal rules.
What This Means for You
If you have been dismissed, do not assume that the only question is whether the dismissal was fair.
First examine your contract.
What notice period does it provide?
Does it contain a payment-in-lieu clause?
Does it define gross misconduct?
Are bonus and commission rights contractual?
Are there contractual benefits that should have continued during the notice period?
These questions can determine whether the employer complied with its contractual obligations.
The reason for dismissal is also important.
If the employer says that you committed gross misconduct, the question for a wrongful dismissal claim is not simply whether the employer believed that your conduct was inappropriate.
The contractual and legal basis for summary dismissal must be considered.
Wrongful dismissal should also be distinguished from unfair dismissal.
An employee can potentially have a wrongful dismissal claim without satisfying the qualifying requirements for ordinary unfair dismissal.
Likewise, an employee can potentially have an unfair dismissal claim even where the employer paid the contractual notice.
Evidence is therefore critical.
Keep the employment contract, dismissal letter, disciplinary documents, pay records, bonus documents, commission statements and relevant correspondence.
If the employer has offered a settlement or payment in lieu of notice, examine the terms before accepting the payment as full and final settlement.
Finally, act promptly.
Wrongful dismissal claims brought in the Employment Tribunal can be subject to short limitation periods, while civil contractual claims operate under different rules.
Conclusion
Wrongful dismissal in the UK is fundamentally concerned with contractual rights.
The most common claim arises when an employer terminates employment without providing the notice or payment required by the employment contract.
Other contractual losses can potentially involve:
- Salary.
- Contractual benefits.
- Bonus.
- Commission.
- Holiday pay.
- Other contractual entitlements.
Summary dismissal without notice can potentially be lawful where serious misconduct justifies termination under the contractual framework.
However, an allegation of gross misconduct does not automatically establish the employer's right to dismiss without notice.
Wrongful dismissal is distinct from unfair dismissal.
Unfair dismissal focuses on statutory fairness, including the reason for dismissal and whether the employer acted reasonably.
Wrongful dismissal focuses primarily on contractual breach.
The same dismissal can potentially give rise to both claims.
Constructive dismissal presents another situation where an employee resigns following a fundamental breach by the employer.
Employees should therefore examine their employment contract, dismissal correspondence, notice entitlement, bonus and commission provisions, benefits and final payments.
Where a dispute exists, limitation periods should be checked immediately because the appropriate legal forum can affect the applicable deadline.
The central question in a wrongful dismissal claim is ultimately straightforward: did the employer have a contractual right to terminate employment in the way it did?
Answering that question requires careful examination of the employment contract, the circumstances of dismissal and the employee's resulting financial loss.
Legal Disclaimer
This article is provided for general educational and informational purposes only. It is not legal or employment advice and does not create a solicitor-client relationship. Wrongful dismissal law can depend on contractual terms, employee status, jurisdiction, the reason for dismissal and the forum in which a claim is brought. Always obtain appropriate professional advice for a specific employment dispute.