Employment & Labor

Wrongful dismissal, also called wrongful termination or wrongful discharge, is an idiom and legal phrase, describing a situation in which an employee's contract of employment has been terminated by the employer in circumstances where the termination breaches one or more terms of the contract of employment, or a statute provision in employment law. It follows that the scope for wrongful dismissal varies according to the terms of the employment contract, and varies by jurisdiction. Note that the absence of a formal contract of employment does not preclude wrongful dismissal in jurisdictions in which a de facto contract is taken to exist by virtue of the employment relationship. Terms of such a contract may include obligations and rights outlined in an employee handbook.

Being terminated for any of the items listed below may constitute wrongful termination:[1]

  • Discrimination: The employer cannot terminate employment because the employee is a certain race, nationality, religion, sex, age, or in some states, sexual orientation.
  • Retaliation: An employer cannot fire an employee because the employee filed a claim of discrimination or is participating in an investigation for discrimination. This "retaliation" is forbidden under civil rights law.
  • Employee's Refusal to Commit an Illegal Act: An employer is not permitted to fire an employee because the employee refuses to commit an act that is illegal.
  • Employer Not Following Own Termination Procedures: Often, the employee handbook or company policy outlines a procedure that must be followed before an employee is terminated. If the employer fires an employee without following this procedure, the employee may have a claim for wrongful termination.

Wrongful dismissal will tend to arise first as a claim by the employee so dismissed. Many jurisdictions provide tribunals or courts which will hear actions for wrongful dismissal. A proven wrongful dismissal will tend to lead to two main remedies: reinstatement of the dismissed employee, and/or monetary compensation for the wrongfully dismissed.

A related situation is constructive dismissal, in which an employee feels no choice but to resign from employment for reasons imposed by the employer.

One way to avoid potential liability for wrongful dismissal is to institute an employment probation period after which a new employee is automatically terminated unless there is sufficient justification not to do so. The dismissed employee may still assert a claim, but proof will be more difficult, as the employer may have broad discretion with retaining such a temporary employee.

Wrongful Dismissal should not be confused with Unfair Dismissal, Wrongful Dismissal is based on contract law. Any claim for Wrongful Dismissal will therefore mean looking at the employee's employment contract to see if the employer has broken the contract.

The most common breach is where the employee is dismissed without notice or the notice given is too short. Obviously either party can end the employment relationship if they give the necessary notice. This will either be the legal minimum or what is stated in the employee's contract.

However, the employer can justify dismissing the employee without notice (Summary Dismissal) if the employee commits a serious breach of the contract, for example theft. The employer does not have to have proof of the theft, suspicion is enough. The employer can also rely on evidence that is only found after the dismissal.

Another example of wrongful dismissal is a failure by the employer to follow a contractual disciplinary procedure.

Wrongful dismissal claims can be brought in the Employment Tribunal, County Court or High Court depending on the value of the claim.

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