The Difference Between Unfair Dismissal and Wrongful Dismissal in the UK

As an employer, dismissing your employees is probably not a task you enjoy doing but is sometimes necessary. When you dismiss your employee, you need to do so lawfully. If you dismiss them unlawfully, your employee can bring a claim against you for unfair dismissal or wrongful dismissal. This may result in you paying a compensation claim at an employment tribunal or another court. Although both unfair and wrongful dismissal is unlawful, they are entirely different types of unlawful dismissal. However, unfortunately, the phrases have been misused, so you may need clarification and clarification on what each means.

This article will explain the difference between unfair and wrongful dismissal. 

What is Unfair Dismissal

Unfair dismissal is your employees’ statutory right not to be dismissed unfairly from their employment with you. This means it is based on reasons written in law. You must meet the following three points for a fair dismissal: 

• you have a fair reason for dismissal;
• the above reason is good enough to justify your taking the action of dismissing your employee; and
• you followed a full and fair procedure.

If you meet one or two of these criteria, the dismissal is still unfair, as you need to meet all three criteria. 

The following are considered fair reasons for dismissal:

• capability;
• conduct;
• redundancy;
• statutory illegality, which means that something in the law means that your employee cannot carry out their role with you; and
• ‘some other substantial reason’, which can include many things.

There are also some reasons for dismissal, which are automatically unfair and hence an unfair dismissal. These include, for example, where your employee is:

• pregnant or on maternity leave;
• doing jury service;
• a trade union member or representative; or
• taking action, or proposing to take action, over health and safety at work.

If your employee decides to bring a claim against you for unfair dismissal, they will generally have to work for you for at least two years continuously. If your employee brings a successful, they will either:

• receive compensation;
• be reinstated; or
• be re-engaged.

Where they receive compensation, it is usually a:

• basic award; and 
• a compensatory award.

The basic award is based on age, length of service and salary. However, there is a cap on the salary element. The compensatory award is based on losses resulting from the unfair dismissal, including future loss of earnings, but is no more than one year’s salary or £80,541 if this is less than that.

What is Wrongful Dismissal?

Wrongful dismissal is when you dismiss your employee in breach of their employment contract. Therefore, it could typically occur when you dismiss your employee:

• without notice – ‘summary dismissal’; or
• without the correct notice according to the employment contract -‘summary dismissal’. 

An employee may resign due to a breach of their employment contract, which is ‘constructive unfair dismissal’, but this is not a wrongful dismissal. 

If your employee claims wrongful dismissal against you, they do not have to meet any minimum employment period. If a wrongful dismissal reaches a court or tribunal, the judge will only be concerned with contractual obligations.

Claiming wrongful dismissal is your employee’s contractual right. This means they must base their claim upon the contract rather than written law. They can bring a claim to a country court, High Court or employment tribunal. Your employee can only go to an employment tribunal where the claim’s value is no greater than £25,000, and the claim is within three months minus a day from the date you terminated them. Your employee can go through the courts where they miss the time limit for an employment tribunal.

What Are the Key Differences Between Unfair and Wrongful Dismissal?

Key Takeaways

If you need to dismiss your employee, you must do so lawfully. Therefore, you should ensure that you do not carry out an unfair or wrongful dismissal. You need to know what these mean and the difference between the two. Unfair dismissal is based on a statutory right, so you must meet specific requirements for a dismissal to be fair. Wrongful dismissal, however, is a contractual right and therefore based upon there being a breach of the employment contract. If an employee does claim dismissal, the remedies for the two can be different. Also, any compensation an employee receives is unique to their case.   

If you need help understanding the difference between unfair dismissal and wrongful dismissal, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions