Difference between unfair dismissal and wrongful dismissal

Unfair dismissal and wrongful termination: two terms often used interchangeably, but are they really the same? If you’ve ever wondered about the distinction between the two, and how it affects your rights as an employee in the United Kingdom, you’re in the right place. Prepare to uncover the nuances, challenge common beliefs, and gain a deeper understanding of the intricacies of UK employment law.

Key Takeaways:

• Unfair dismissal is a statutory right under the UK’s Employment Rights Act 1996, while wrongful dismissal is a contractual right.
• Unfair dismissal claims require two years of continuous service and proof that a fair reason for dismissal was not satisfied, whereas wrongful dismissal focuses on breach of contract.
• Unfair dismissal claims can be pursued before an employment tribunal and may result in compensation, while wrongful dismissal claims can be taken to civil court and involve claims for damages.

Unfair Dismissal

To establish an unfair dismissal claim, you must fulfill the two limbs test. First, the two years of continuous service is required. This means that you need to have worked for the same employer for at least two years before making a claim.

Next, the two limbs test examines the fairness of your dismissal. The first limb focuses on the fair reasons for dismissal outlined in the Employment Rights Act. These reasons include capability, conduct, redundancy, statutory illegality, and some other substantial reason. If you were dismissed for a reason that does not fall under these categories, your dismissal may be deemed unfair.

The second limb assesses the fairness and reasonableness of your employer’s conduct during the dismissal process. It takes into account the size and resources of the employer. If your employer’s actions were not fair and reasonable, your dismissal may be considered unfair.

If you are successful in your unfair dismissal claim, you may be entitled to compensation. This can include both a basic award and a compensatory award.

Basic Award:

The basic award is calculated based on your age, length of service, and weekly pay. The statutory maximum for the basic award is £16,320 (as of 2021/2022).

Compensatory Award:

The compensatory award aims to compensate you for the financial losses you have suffered as a result of your unfair dismissal. It takes into account factors such as your loss of earnings, future loss of earnings, and any expenses you have incurred. The compensatory award is subject to a statutory cap, which is set at £89,493 (as of 2021/2022), or one year’s gross pay, whichever is lower.

In addition to compensation, if you are successful in your unfair dismissal claim, you may also be entitled to reinstatement or re-engagement. Reinstatement means being placed back into your old position as if you had never been dismissed, while re-engagement involves being offered a suitable alternative role within the company. However, these remedies are relatively rare in practice.