This is essentially a breach
of contract claim by the employee. If the employer acts in
breach of the employee's contractual obligations or in breach
of his minimum statutory obligations to give the employee
notice (see notice)
the employer then becomes liable to pay the employee damages
for wrongful dismissal. This is quite distinct from the employee's
right to claim compensation for unfair
dismissal.
Where an employee has, for example, a 3 month notice clause
in his contract and the employer dismisses the employee with
immediate effect, then prima facie the employee is then entitled
to make a claim for wrongful dismissal for damages which will
reflect the 3 month notice that he should have received. The
employee will also be entitled to other contractual benefits,
such as accrued holiday pay.
Senior managers may find it more preferable to bring a claim
for wrongful dismissal, as opposed to unfair dismissal, where
they have lengthy notice periods because they stand to gain
more from damages for breach of contract (representing perhaps
the whole of the notice period they should have been given)
as opposed to the amount they could have received on an unfair
dismissal claim.
If an employee is dismissed as a result of gross misconduct,
ie theft, and the employer was justified in dismissing the
employee in this way, there can be no claim for wrongful dismissal,
as the employee will have been treated as repudiating the
implied term of trust and confidence between the parties,
which the employer then accepts by the summary dismissal.
Dismissals with pay in lieu of notice
It is common for an employer not to require an employee to
work out his notice period and to pay him in lieu of notice.
Such payment in lieu of notice is usually regarded as damages
for wrongful dismissal (unless otherwise specified in the
contract). In these circumstances, the employer would not
be in breach of contract by making a payment in lieu and it
is therefore unlikely that there could be any claim for wrongful
dismissal.
If there is no contractual right to terminate by making a
payment in lieu of notice, then the making of such a payment
may not extinguish the employee's claim for damages unless,
in all respects, the employee is put in the same position
as he would have been in if notice had been given.
Amount of damages
The amount of damages for wrongful dismissal is based on pay
and other benefits, such as the use of a company car, which
the employee would have received if the employer had complied
with his contractual obligations. An employee may put in a
claim for other contractual benefits such as discretionary
bonus payments which they will have missed out on, although
it can be difficult to prove such a claim. If the employee
finds a new job within the period of notice, which he would
have been entitled to from his old employer, then he is not
entitled to a double recovery. The new salary received must
be taken into account in calculating the loss to the employee.
It should be remembered that the employee is under a duty
to take all steps to mitigate his loss, ie seek such alternative
employment.
Any damages which an employee receives under wrongful dismissal
will reduce the amount of the compensatory award under unfair
dismissal by the same amount.
When should an employee make a claim?
An employee should make a claim for wrongful dismissal in
the Employment Tribunal within 3 months from the effective
date of termination of his employment.
Other aspects of UK employment law for employees include:
Landau
Zeffertt Weir Solicitors