Two commonly misunderstood terms in employment law are Unfair Dismissal and Wrongful Dismissal. Although they sound similar, they differ in their legal basis, focus, and remedies.
Legal Basis
Unfair dismissal is governed by the Employment Rights Act 1996 and focuses on whether the employer’s decision to terminate the employee was justified and handled fairly. Employees are required to have a period of two years qualifying service to challenge their dismissal as unfair, if they believe it was without a valid reason or carried out improperly.
Wrongful dismissal, however, arises from contract law rather than statutory law. It occurs when an employer breaches the terms of an employee’s contract—for example, failing to provide the correct notice period (or payment in lieu of notice). A wrongful dismissal claim does not focus on the reason for dismissal but rather on whether the employer adhered to the agreed contractual terms.
Focus
For Unfair Dismissal, the focus is on the reason and process of dismissal—for example, being dismissed for discriminatory reasons, without a valid reason such as redundancy, or not following a proper disciplinary or grievance procedure.
For Wrongful Dismissal, the focus is on the contractual rights of the employee. An employee might claim wrongful dismissal if the employer dismisses them without serving the correct notice period or breaches other contractual terms.
Eligibility
To make a claim for Unfair Dismissal, employees generally need a minimum of two years of continuous employment. However, some dismissals, such as those related to discrimination or whistleblowing, are deemed automatically unfair and do not require a qualifying period.
For Wrongful Dismissal, there is no minimum service requirement. Any employee with a valid contract can bring a claim if their contractual terms are breached.
Remedies
Remedies for Unfair Dismissal are determined by a tribunal and can include the following:
- Reinstatement to the employee’s former role
- Re-engagement in a similar role
- Compensation, which often consists of a basic award and a compensatory award based on lost earnings and future prospects
Remedies for Wrongful Dismissal are primarily damages to compensate the employee for the financial loss caused by the breach of contract. This typically covers the unpaid notice period or other contractual entitlements, such as bonuses or benefits.
Recent Changes to the Law
The government has recently introduced reforms to enhance worker protections and modify existing employment practices. One of the biggest changes is a new day-one right to claim Unfair Dismissal, removing the previous requirement of two years of continuous employment.
This change benefits employees by providing immediate protection against unfair dismissal, which can improve job security and confidence. However, for employers, it means greater responsibility from day one to document termination reasons properly and ensure legal compliance.
Conclusion
Unfair Dismissal and Wrongful Dismissal both relate to termination of employment, but they differ in their legal foundations, focus, and remedies. Employers must follow correct procedures and uphold contractual obligations to reduce the risk of legal disputes.
For employees, understanding the differences can help in seeking the appropriate legal advice if they believe their dismissal was unfair or unlawful.
If you are facing a dismissal issue and would like to seek legal advice, please contact our Employment Law team on 01604 936512 / 01908 953674 or email [email protected].
Written by Danijela Milivojevic
Trainee Solicitor, Dispute Resolution at Franklins Solicitors LLP
Specialises in private client, employment, and litigation matters, with additional experience in commercial and residential property. Currently completing her final seat in litigation as part of her solicitor training.
Danijela Milivojevic is a Trainee Solicitor at Franklins Solicitors LLP. She joined the firm in 2022 as a Paralegal after completing her Law degree at Nottingham Trent University and the Legal Practice Course at the University of Law in Birmingham.
Danijela has completed seats in Private Client and Employment, and is currently undertaking her final seat in Litigation. She also has experience in both commercial and residential property.
Outside of work, Danijela enjoys CrossFit, going to the gym, and spending time with family and friends.
