Faced with a job termination, you might be wondering, do I have a claim for wrongful dismissal or unfair dismissal? Understanding the distinction is vital: wrongful dismissal breaches your contract, whereas unfair dismissal violates your statutory rights. This article cuts straight to the heart of wrongful dismissal vs unfair dismissal, offering clarity on each term, their legal parameters, and the actions you may need to consider if you’ve been let go under questionable circumstances.
Key Takeaways
- Unfair dismissal is a statutory right requiring at least two years of service as an employee.
- The employer must follow a fair process.
- The dismissal must be for one of five potentially fair reasons, which include capability, conduct, redundancy, breach of statutory duty or restriction, or some other substantial reason.
- Wrongful dismissal is a contractual claim that can occur from the first day of employment and involves a breach of contractual terms such as incorrect notice periods; claims can be pursued in Employment Tribunal with a cap of £25,000 or in civil courts with higher potential claims.
- Unfair dismissal and wrongful dismissal are distinct types of claims with different legal bases and eligibility criteria; however, employees may pursue both depending on the dismissal circumstances, and professional legal advice is often recommended to navigate potential claims.
Understanding the Basics: Unfair Dismissal Defined
Unfair dismissal is primarily a statutory right safeguarded under the Employment Rights Act 1996. It requires a minimum of two years of continuous service with an employer, and the dismissal must adhere to fair reasons and processes. The Act outlines five potentially fair reasons for dismissal:
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Capability
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Conduct
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Redundancy
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Breach of statutory duty or restriction
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Some other substantial reason
However, simply having a potentially fair reason may not suffice.
The employer must also follow a fair dismissal process.
Potentially Fair Reasons for Dismissal
A fair dismissal is conditional on the employer having a valid reason to dismiss the employee. According to the Employment Rights Act 1996, these reasons can be:
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Capability: refers to an employee’s skill, aptitude, health, or any other physical or mental quality.
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Conduct: relates to behaviour deemed inappropriate or unacceptable in the workplace.
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Redundancy: arises when business needs for particular roles cease or diminish, or the business itself undergoes changes affecting employment.
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Statutory duty or restriction breach indicates that continuing employment would contravene a statutory duty or restriction.
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The fifth category, ‘some other substantial reason’, is a catch-all that covers various other legitimate grounds not encompassed by the first four reasons.
Keep in mind, the employer bears the responsibility to validate the reason for dismissal.
The Fairness of the Dismissal Process
Even if there is a potentially fair reason for dismissal, a fair process must also be followed. An unfair dismissal claim can be triggered if an employer fails to adhere to a fair process, regardless of the validity of the dismissal reason. A reasonable process is fact-sensitive and will vary depending on the relevant reason for dismissal. It is evaluated based on whether, in the circumstances, the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee.
The fairness of a dismissal is also determined by assessing the reasonableness of the decision given the circumstances and whether the dismissal falls within a range of reasonable responses. This means that even if an employer had a fair reason for dismissing an employee, the dismissal could still be deemed unfair if the process was not reasonable (the Tribunal’s decision here may have an impact of the compensation for unfair dismissal).
Deciphering Wrongful Dismissal: A Contractual Perspective
While unfair dismissal is a statutory right, wrongful dismissal is a contractual right. It is based on the principles of contract law and is applicable when an employer breaches an employee’s contract. Unlike unfair dismissal, a wrongful dismissal claim can be made from the first day of employment, and no minimum length of service is required.
A common example of a wrongful dismissal claim relates to the notice period stipulated in the contract. If an employer dismisses an employee without notice when the contract requires at least four weeks’ notice, it could potentially constitute a wrongful dismissal.
Breach of Contract Elements
A breach of contract in wrongful dismissal occurs when an employer terminates employment without providing the correct contractual notice period or fails to pay an employee in lieu of notice, without a contractual right to do so. The damages for wrongful dismissal may include compensation for:
- Salary
- Pension entitlement
- Private health cover
- Car allowance
- Non-discretionary bonuses that should have been received during the notice period.
Contractual rights, which may be more generous than statutory rights, can include longer notice periods or greater holiday entitlements. These rights significantly affect the assessment of damages in wrongful dismissal claims.
Pursuing Claims in Civil Court
Wrongful dismissal claims can be pursued in an Employment Tribunal or civil courts like the County Court or High Court. However, the maximum amount claimable in an Employment Tribunal is £25,000. If the damages exceed this amount, an alternative option is to bring the claim to a civil court. However, presenting civil claims entails court fees, and if the claim fails, there is a higher likelihood of having to pay or contribute to the other side’s legal costs.
Different time limits apply to filing wrongful dismissal claims in the Employment Tribunal and civil courts. In the Employment Tribunal, claims must be made within three months less one day from the termination date. On the other hand, civil courts offer a six-year time limit for filing such claims.
Remember, unfair dismissal claims also have a three months less one-day time limit. An Early Acas Notification form should be completed within this timeframe before pursuing an employment tribunal claim.
Contrasting Unfair and Wrongful Dismissal Claims
In essence, unfair dismissal is a statutory right under the Employment Rights Act 1996, while wrongful dismissal is a contractual right based on the breach of an employment contract. Further, unfair dismissal claims require a minimum of two years of continuous service as an employee, while wrongful dismissal claims do not have a minimum service requirement.
Given the complexity and potential implications of these claims, it’s often a good idea to seek professional legal advice before deciding on the best course of action.
Key Difference: Statutory vs Contractual Rights
Statutory rights are provided by legislation, while contractual rights arise from the employment contract between an employer and an employee. For example, the right not to be unfairly dismissed is a statutory right that is generally contingent on having completed at least two years of service.
Contractual rights are those agreed upon in the employment contract and may include customary rights or implied terms that are not explicitly written into the contract. In some cases, contractual rights may offer greater benefits than statutory rights, such as in the case of notice periods or redundancy payouts.
What About Constructive Dismissal
Constructive dismissal occurs when an employee resigns (without delay) because the employer fundamentally breached the employment contract. For example, all employment contracts contain an implied term of mutual trust and confidence, and breaches of this term can lead to constructive dismissal claims.
Constructive dismissal can arise from a series of incidents over time or a single severe incident. While constructive dismissal itself does not automatically result in an unfair dismissal, employees must prove that the constructive dismissal was indeed unfair, a concept termed as ‘constructive unfair dismissal’. Remember, an unfair dismissal claim arises when the employer ends the agreement, whereas constructive dismissal occurs when the employee resigns, because of a fundamental breach of contract.
The Role of Gross Misconduct
Gross misconduct refers to an act so severe that it justifies immediate dismissal without notice. Such acts destroy the trust and confidence between the employer and employee, making the continuation of employment untenable. However, even in cases of gross misconduct, employers must conduct a thorough investigation and possess evidence to substantiate the presumption of the employee’s guilt.
Failing to do so can lead to claims of both unfair and wrongful dismissal.
When an employee is dismissed for gross misconduct, employers usually do so without notice, meaning the employment ends immediately, and the employee receives no notice pay. This is one of the scenarios where an employee with at least two years of service might decide to claim both unfair and wrongful dismissal.
Navigating the Tribunal: Employment Tribunal Insights
Employment tribunals play a critical role in adjudicating unfair dismissal claims. They review the fairness of the dismissal process, taking into account:
- the employer’s adherence to fair procedures
- the actions of the employee
- a reasonable investigation by the employer into any allegations against the employee
- if the employee succeeds, the amount of compensation to be awarded.
The tribunal considers these factors when assessing a dismissal’s fairness, but each case is fact-specific.
Offering the employee a chance to appeal the dismissal is generally considered a fundamental aspect of a fair dismissal procedure.
Claiming Unfair Dismissal
In the UK, employees usually need to have two years of continuous service with their employer in order to make a claim for unfair dismissal. This requirement is often a key factor in determining eligibility for making such a claim. However, there may be other claims that apply even if you are dismissed with less than 2-years of service. Employees dismissed before two years of service may have claims for automatically unfair dismissal, discrimination or wrongful dismissal.
Before making a claim to an employment tribunal, claimants must first contact the Advisory, Conciliation and Arbitration Service (Acas). This is a requirement under UK law and the three-month time limit for making a claim is paused while Acas assists with the dispute.
Remedies and Awards
If an unfair dismissal claim is successful, the employee may be awarded a basic and a compensatory award. The basic award is calculated based on the employee’s age, length of service, and capped weekly pay. The compensatory award includes reimbursement for actual and prospective losses. These losses encompass lost earnings, possible overtime and bonuses, pension contributions, and benefits such as accommodation and medical insurance.
The employment tribunal may adjust the compensatory award based on the employee’s part in the dismissal, hypothetical fair dismissal scenarios, and the employee’s effort to mitigate their losses through new employment. Compensation is calculated using a ‘schedule of loss’ that reflects the cap on the maximum weekly pay for the basic award and the annual limit for the compensatory award. In some cases, an employer might also be liable to repay any state benefits claimed by the dismissed employee.
What Claim Should I Present
When faced with a dismissal, deciding which claim to present can be a daunting task. There are often various options and considerations to weigh, and each case is unique. If presenting a claim is deemed the best way forward, there are competing tactical considerations of the types of claims to be advanced, which are not straightforward.
Litigation can be a long and difficult process, which is why professional advice is recommended at the outset. Having legal guidance can help you understand your rights and the best course of action based on your unique circumstances.
Summary
In summary, understanding the difference between unfair and wrongful dismissal is fundamental for employees. While unfair dismissal is a statutory right contingent on at least two years of service, wrongful dismissal is a contractual right applicable from the first day of employment. Constructive dismissal, which involves an employee resigning due to a fundamental breach of contract by the employer. Navigating these claims and understanding the role of employment tribunals can be complex, so seeking professional advice is often beneficial.
Frequently Asked Questions
What is the key difference between unfair dismissal and wrongful dismissal?
The key difference is that unfair dismissal is a statutory right, while wrongful dismissal is a contractual right. Unfair dismissal is governed by the Employment Rights Act 1996, whereas wrongful dismissal is based on the relevant employment contract.
Is dismissal the same as unfair dismissal?
In conclusion, dismissal is the general term for being sacked, while unfair dismissal refers to a specific type of claim.
What is meant by unfair dismissal?
Unfair dismissal occurs when an employer terminates an employee’s contract without a fair reason or due process. This can lead to a claim by the employee if the dismissal was not handled properly by the employer (as stated, at least 2-years of continuous service is required as is bringing the claim within the relevant time limit).
What constructive dismissal?
Constructive dismissal can occur when you quit (without delay) in response to a fundamental breach of your employment contract.
What are some fair reasons for dismissal?
Some fair reasons for dismissal include capability, conduct, redundancy, breach of statutory duty, or other substantial reasons.