Wrongful Dismissal: What HR Needs to Know

Wrongful dismissal is a contractual claim that arises when an employer dismisses an employee in breach of their contract of employment. It has nothing to do with whether the dismissal was fair — that falls under statutory unfair dismissal rules. Wrongful dismissal is simply about whether the employer followed the contract.

What is wrongful dismissal?

The most common example is failing to give the correct notice. If an employee is entitled to three months’ notice but only receives one, the employer has breached the contract, and the employee can claim the value of the notice they should have received.

However, wrongful dismissal can also arise from breaching other express, implied, or incorporated contractual terms - not just notice clauses.

Notice periods: express, statutory and implied

HR teams should remember there are three potential notice periods:

1. Express contractual notice – set out clearly in the contract.
2. Statutory minimum notice – under section 86 of the Employment Rights Act 1996:
   • at least one week’s notice after one month’s service;
   • increasing by one week per year of service from year two;
   • capped at 12 weeks.

If the contract gives less, the statutory minimum overrides it.

1. Implied reasonable notice – only used where the contract is silent. The courts imply a “reasonable” period depending on the role, but it can never be less than the statutory minimum. This is now rare, as most contracts specify notice.

When dismissal without notice is lawful

Dismissal without notice — summary dismissal — is not wrongful where the employee has committed gross misconduct, meaning a fundamental breach of contract that destroys the employment relationship. The employer can then treat the contract as terminated immediately, without notice or pay in lieu.

However, HR should avoid “instant” dismissals. Even in clear gross misconduct cases, employers should follow a fair disciplinary process, both because it may be contractually required, and to reduce unfair dismissal or discrimination risks.

Summary 

Wrongful dismissal is ultimately about contract compliance. Ensure notice provisions are correct, check statutory minimums, follow procedures, and assess conduct carefully before deciding whether notice can be withheld. 

If you need any help with these issues, please contact our team on 01635 896 336 or email employment@fentonelliott.co.uk

Disclaimer: This summary is for general awareness and insight, not legal or professional advice and readers should seek professional advice for their situation.