What is wrongful dismissal?

Wrongful dismissal is often confused with unfair dismissal. In law, however, the concepts are fundamentally different.

Wrongful dismissal is a type of breach of contract claim which relates to employment contracts.  Whilst employees must be able to demonstrate 2 years of continuous employment to qualify to bring an unfair dismissal claim, there is no qualifying period of employment for wrongful dismissal.

Another key difference between unfair and wrongful dismissal is that there is a cap on the amount that can be claimed for unfair dismissal, whilst for wrongful dismissals no such cap applies.

As a result, most wrongful dismissal claims involve high earning employees and many claims centre around contractual provisions other than unpaid salary or notice periods. A common dispute relates to entitlement to bonuses, commission, stock options or other benefits where an employee has been dismissed.

Where to claim? Employment Tribunal or County/High Court?

The main advantage to claiming wrongful dismissal in the Employment Tribunal is costs risk. In the Employment Tribunal the general rule is that whoever wins or loses, each party pays their own costs.

In the County or High Court, the general rule is that the loser pays the winner’s legal costs as well as their own.

This means that bringing a claim in the general courts, as opposed to the Employment Tribunal, is more risky. This is especially the case because senior employees or executives often work for large companies who have the resources to fight claims without worrying too much about losing and paying costs.

Bonus related disputes

Often, bonus related disputes will turn on whether the bonuses in question are discretionary or otherwise. Many employers will have carefully drafted clauses which seek to ensure that the employer has complete discretion on whether a bonus is payable, as well as events which disqualify the employee from entitlement to a bonus.

With employment contracts, in contrast to business to business contracts, courts are more open to consider the way in which the contract has been operated in practice and not just the strict interpretation of the contract clauses.  Accordingly, even though a clause may state that a bonus entitlement is purely discretionary, if there is a clear pattern of paying a bonus, the employee may argue that in reality, the bonus  is payable because the contract has been varied by conduct.

These types of disputes are often complex, and success or failure can depend on having an experienced and skillful solicitor on your side.