What are the differences between Unfair Dismissal and Wrongful Dismissal?

Two commonly misunderstood terms in employment law are Unfair Dismissal and Wrongful Dismissal, although they sound similar, they differ in their legal basis, focus and remedies.

Legal Basis

Unfair dismissal is governed by the Employment Rights Act 1966 and focuses on whether the employer’s decision to terminate the employee was justified and handled fairly. Employees are required to have a period of two years qualifying service in order to challenge their dismissal as unfair, if they believe it was without a valid reason or carried out improperly.

Wrongful dismissal, however, arises from contract law rather than statutory law. It occurs when an employer breaches the terms of an employee’s contract e.g., failing to provide the correct notice period (or payment in lieu of notice). A wrongful dismissal claim does not focus on the reason for dismissal but rather on whether the employer adhered to the agreed contractual terms.

Focus

For Unfair Dismissal, the focus is on the reason and process of dismissal, for example being dismissed for discriminatory reasons, without a valid reason e.g redundancy or not following a proper disciplinary or grievance procedure. For Wrongful Dismissal, however, the focus is on the contractual rights of the employee. For example, an employee might claim Wrongful Dismissal if the employer dismisses them without serving the correct notice period and the dismissal breaches other terms of their contract.

Eligibility

To be able to make a claim for Unfair Dismissal, employees generally need to have a minimum of two years qualifying period of continuous employment to bring a claim. Certain dismissals, for example those related to discrimination or whistleblowing are deemed automatically unfair and do not require a qualifying period.

For Wrongful Dismissal, there is no minimum service requirement and any employee with a valid contract can bring a claim for Wrongful Dismissal if their contractual terms are breached.

Remedies

Remedies for Unfair Dismissal are determined by a Tribunal and can include the following:

1. Reinstatement to the employee’s former role

2. Re-engagement in a similar role

3. Compensation, which often consists of a basic award and a compensatory award based onlost earnings and future prospects

Remedies for Wrongful Dismissal is primarily damages to compensate the employee for the financial loss caused by the breach of contract. This damage usually covers the unpaid notice period or other contractual entitlements e.g., bonuses or benefits.

Recent changes that have been made to the law

The government has recently introduced some reforms to the law which aims to enhance worker protections and modify existing employment practices. One of the biggest changes they have introduced is a day one right to claim Unfair Dismissal instead of needing to have a minimum of two years of continuous employment. This is beneficial to employees as they would gain immediate protection against being unfairly dismissed, which would improve their sense of security and confidence in their workplace. However, for employers, it would mean they would need to be more diligent from day one in documenting reasons for termination to ensure it complies with the law.

To conclude, Unfair Dismissal and Wrongful Dismissal both relate to the termination of employment, however their distinctions lie in the underlying laws, focus and remedies. Employers must ensure that they follow the correct procedures and contractual obligations to minimise the risk of disputes.

For employees, understanding these key differences can help in seeking the appropriate legal advice if they believe their dismissal was unfair or unlawful.

 If you are facing a dismissal issue and would like to seek legal advice further, please contact our Employment Law team on 01604 936512 / 01908 953674 or email info@franklins-sols.co.uk.