Wrongful dismissal occurs when an employer breaches the terms of an employment contract when dismissing an employee. While many employers are familiar with unfair dismissal claims, wrongful dismissal often receives less attention. However, it’s essential to understand the distinction between the two. Wrongful dismissal focuses on the breach of contractual obligations, particularly around notice periods. An employee can still pursue a wrongful dismissal claim under 2 years after they start if their employer fails to provide the appropriate notice or acts contrary to the terms of their employment contract.
It’s important to remember that wrongful dismissal is a matter of contract law, not statutory employment rights. This means that an employee can bring a claim regardless of their length of service. The most common breaches involve:
By understanding the nature of wrongful dismissal, employers can minimise risks and avoid unnecessary legal exposure. Always ensure your actions align with the contractual terms agreed upon in writing to prevent potential disputes.
Many employers assume that because employees need two years of continuous service to claim unfair dismissal, they face no risks when dismissing staff early on. However, this is not the case when it comes to wrongful dismissal under 2 years. Unlike unfair dismissal, wrongful dismissal can be claimed by employees with any length of service if you breach their contract.
Employers must provide the correct notice period when dismissing an employee, as specified in their employment contract or by statutory minimums. Failure to do so will likely result in a wrongful dismissal claim. It’s also crucial to avoid other contractual breaches that might lead to a dispute.
Common scenarios that lead to wrongful dismissal claims include:
By dismissing employees correctly and respecting the terms of their contracts, you can significantly reduce the risk of a claim. Ensuring that your employment contracts are watertight and seeking legal advice when uncertain, is crucial to protecting your business from unnecessary legal challenges.
Employers often misunderstand the risk of wrongful dismissal claims from employees with less than two years of service. Despite the two-year qualifying period for unfair dismissal, wrongful dismissal under 2 years remains a potential legal issue. This can arise in several common scenarios.
One of the most frequent situations is failing to provide the correct notice period. If you dismiss an employee without paying the notice period stipulated in their contract, you breach the contract, leading to a wrongful dismissal claim. Another scenario occurs when dismissing an employee without following the contract’s disciplinary or dismissal procedure.
Employers should also be aware that terminating employment for reasons not permitted by the contract may result in claims. This includes dismissals for reasons outside of contractual obligations, such as unfounded misconduct accusations.
In addition, failure to provide all agreed benefits or pay due upon termination, including bonuses, commission, or holiday pay, can lead to wrongful dismissal claims.
By ensuring compliance with contractual terms and handling dismissals with care, employers can avoid wrongful dismissal claims, even for employees with under two years of service.
To reduce the risk of wrongful dismissal claims, it’s crucial that employers follow best practices in handling employee dismissals. First, ensure that all employment contracts are clear, well-drafted and compliant with the law. Contracts should specify notice periods and detail the procedures that must be followed for termination.
Providing the correct notice is key to avoiding claims of wrongful dismissal under 2 years. Ensure you follow either the contractual notice period or the statutory minimum, whichever is greater. If the employment contract contains specific disciplinary or dismissal procedures, always follow them carefully.
Another essential step is maintaining comprehensive documentation. Keeping records of performance reviews, warnings and any disciplinary actions can help protect you if a dismissal is challenged.
It’s also wise to seek legal advice before making significant decisions on dismissals. Employment law can be complex and guidance from a legal professional ensures you meet all contractual and statutory obligations.
By following these best practices, you can safeguard your business from wrongful dismissal claims and maintain a strong legal footing when managing employee dismissals.
Employers often underestimate the potential consequences of a wrongful dismissal claim. Even in cases where an employee has less than two years of service, wrongful dismissal under 2 years can still lead to significant financial and reputational damage.
The most direct consequence is financial liability. When an employee successfully claims wrongful dismissal, they may be entitled to compensation. This is usually based on the wages and benefits they would have received during their notice period. Even for employees with a short service period, these claims can quickly add up if bonuses, commissions, or other contractual benefits are involved.
Beyond financial loss, a wrongful dismissal claim can harm your business’s reputation. Legal disputes, especially if they become public, can damage relationships with current staff, clients and potential future hires. Your handling of dismissals reflects on your professionalism and adherence to employment law.
There is also the time and resource cost. Defending a claim will involve legal fees, management time, and potential disruption to operations.
To avoid these consequences, employers must ensure that dismissals are legally sound and contractually compliant.
Preventing wrongful dismissal under 2 years requires employers to adopt proactive measures. One of the most effective strategies is ensuring that employment contracts are robust and clear. These contracts should detail notice periods, dismissal procedures and any other contractual rights. Regularly reviewing contracts ensures they remain compliant with current legislation.
It is essential to follow the correct procedures when dismissing employees. Employers should always provide the notice specified in the employment contract or statutory minimum. Even if dismissing for gross misconduct, where immediate termination may be justified, it’s vital to have documented evidence to support the decision.
Seeking legal advice before proceeding with a dismissal can also safeguard against potential claims. A solicitor can help ensure you meet both contractual and statutory obligations, reducing the risk of any breaches.
Finally, using settlement agreements can be a useful tool in avoiding disputes. These agreements, when properly drafted, allow both parties to end the employment relationship on mutually agreed terms, preventing future claims.
By adopting these strategies, employers can protect themselves from wrongful dismissal claims and maintain smooth business operations.
Call John Bloor at EBS Law on 01625 87 4400 if you are an employer and need free Employment Law Advice.