Unfair dismissal or wrongful dismissal?

We very often hear both terms used when we’re speaking to clients, so we wanted to try and detail the differences between the two, of which there are many.

Having to sack an employee is not easy, or simple, but unfortunately, it’s something many, if not all businesses will have to deal with. The dismissal process can be quick, complicated and challenging and if not handled in the right way, you open the employer up to claims of unfair or wrongful dismissal. With the recent ruling (August 2017) that employment tribunal fees are unlawful. Employers are more likely to see cases like this brought against them if they have followed the correct procedures to a ‘t’.

So what’s the difference between unfair dismissal and wrongful dismissal? Firstly, unfair dismissal is covered under the Employment Rights Act 1996, whereas wrongful dismissal is a contractual right.

For an employee to prove that they have been unfairly dismissed, they need to have two years’ service with the employer. They will also need to prove that the employer has not ‘fairly’ dismissed them. There are five fair reasons under the Employment Rights Act for an employer to fairly dismiss an employee. These are:

  • Capability
  • Conduct
  • Redundancy
  • Statutory illegality
  • ‘Some other substantial reason’

If an employee has been dismissed for another reason, i.e. not one of the five ‘fair’ reasons, then they would have been unfairly dismissed.

For an employee to prove that they have been ‘wrongfully’ dismissed, they will need to prove that there has been a contractual breach.

Unlike ‘unfair’ dismissal, the employee concerned is not required to have two years continuous service, and the claim must also be brought before the tribunal within three months (minus one day) from their termination, i.e. ‘unfair dismissal’ is a day one right. There is also the opportunity to pursue an unfair dismissal claim through the civil court where a six-month limit applies to bring the case before the employment tribunal.

Unfair dismissal claims carry a maximum award of £25,000 at an employment tribunal, however, if the claim is in-excess of £25,000 the case would need to be brought before the civil courts.

In recent years, it may have been cheaper for the employee to pursue civil action. However, with the recent announcement that employment tribunal fees will be scrapped, the tribunal might again become the preferred forum.

The employment tribunal is only able to award up to £25,000 for a wrongful dismissal claim. Therefore, if the value of the employee’s claim is worth more, they would need to pursue their claim in the civil courts