Wrongful Dismissal Basics

Many people confuse wrongful and unfair dismissal. They are distinct legal claims:

• Wrongful dismissal is a breach of contract claim. It arises when your employer terminates your employment without giving you the notice required by your contract (or the statutory minimum if longer). It says nothing about the fairness of the dismissal — only about whether the correct procedure (notice) was followed.
• Unfair dismissal is a statutory claim under the Employment Rights Act 1996. It requires two years of continuous employment (with exceptions) and asks whether the reason for dismissal was fair and whether a fair procedure was followed.

You can bring both claims simultaneously if both apply to your situation. For example, if you are summarily dismissed for gross misconduct without notice, but you dispute that your conduct amounted to gross misconduct, you could claim both wrongful dismissal (for the unpaid notice) and unfair dismissal (for the unfair reason/procedure).

Your entitlement to notice is the longer of:

• The notice period in your employment contract, or
• The statutory minimum notice period under the Employment Rights Act 1996

The statutory minimum is:

• One week's notice after one month's continuous employment
• One additional week for each complete year of employment, up to a maximum of 12 weeks

If your employer fails to give you the required notice and does not pay you in lieu (garden leave or a payment in lieu of notice — PILON), they are in breach of contract. The value of your wrongful dismissal claim is broadly equivalent to the pay you would have received during your notice period.

An employer can lawfully dismiss without notice for gross misconduct — but what constitutes gross misconduct must be assessed objectively. If the employer cannot show the conduct was genuinely gross, the dismissal may still be wrongful.

Wrongful dismissal can be claimed in two forums:

• Employment Tribunal: Quick, free, and no qualifying period of employment needed. Compensation is capped at £25,000. The time limit is three months less one day from the effective date of termination (after going through Acas Early Conciliation).
• Civil courts (County Court or High Court): For larger claims (above £25,000) or those outside the Tribunal's jurisdiction. The limitation period is six years. Court fees apply but compensation is not capped.

For most employees, the Employment Tribunal is the more accessible and appropriate route. You must notify Acas and complete Early Conciliation before lodging a Tribunal claim.

Note that wrongful dismissal compensation is limited to actual financial loss — what you would have earned during the notice period, less any earnings from new employment during that period. It does not compensate for the unfairness of the dismissal.

Many wrongful dismissal claims are resolved through the Acas Early Conciliation process before reaching a tribunal hearing. After you notify Acas, a conciliation officer will contact both parties and facilitate negotiations. This is free, confidential, and voluntary — neither party is compelled to settle.

If a settlement is reached, it will usually be recorded in a COT3 agreement (the Acas settlement form) or, if the employer requires you to waive a wider range of claims, in a formal settlement agreement. For a settlement agreement to be valid, you must receive independent legal advice from a qualified adviser — usually a solicitor — about the terms and their effect on your ability to bring claims. The employer typically agrees to pay the cost of that advice.

When negotiating a wrongful dismissal settlement, consider the following:

• The value of the claim is broadly the notice pay you are owed — but you may also have an unfair dismissal claim, which can be included in negotiations
• You have a legal duty to mitigate your loss — any earnings from a new job during the notice period will reduce your recoverable damages
• Other contractual benefits (pension contributions, a car allowance, private medical insurance, a bonus) that you would have received during the notice period can also be claimed
• Any PILON clause in your contract that permits your employer to pay in lieu of notice rather than requiring you to work it out will make the calculation more straightforward

If Early Conciliation does not produce a settlement, Acas will issue a certificate and you can proceed to lodge your claim at the tribunal using the ET1 form. The claim must be lodged within the time limit shown on the certificate.

Where a wrongful dismissal claim is worth more than £25,000 — typically for senior employees on long contractual notice periods — the civil courts (County Court for claims up to £100,000, High Court for larger claims) offer an alternative forum. The key advantage is no cap on compensation; the key disadvantages are court fees and a potentially slower process. Many senior employee wrongful dismissal disputes are resolved through without-prejudice negotiations or mediation rather than litigation, particularly where the sums are large and the reputational stakes are high for both parties. A specialist employment solicitor can advise on the most effective route for your particular circumstances. In all cases, start by compiling your contract of employment, payslips, the dismissal letter, and any correspondence about the circumstances of the dismissal — this documentation is the foundation of any claim or negotiation. The more organised your evidence at the outset, the more efficiently a solicitor can advise you.

One point worth noting is the interaction between a wrongful dismissal claim and any injunction sought to enforce a garden leave or post-termination covenant. If your employer failed to give you proper notice but simultaneously seeks to enforce restrictive covenants on the basis of the (invalid) termination, you have a strong argument that the covenants are unenforceable because the employer cannot benefit from their own breach. The interplay between notice pay entitlements, PILON provisions, and covenant enforceability is one of the most nuanced areas of employment law — always take early specialist advice before accepting any payment or signing any settlement agreement that could affect these rights.