Shared Flashcard Set


Wrongful Dismissal

Additional Law Flashcards




What is wrongful dismissal
Claim for breach of contract arising from a failure to provide any notice (or PIL)/inadequate amount of notice
What is the checklist for wrongful dismissal
1) Employee?
2) Dismissal – actual or constructive
3) Breach of contract by employer – insufficient notice under statutory minimum notice, no notice given, PILON clause, early termination of a FTC with no ‘break clause’, breach of an express term
4) Employers defence – if employee conducted an act of gross misconduct (i.e. one off acts such as theft, swearing at client, punching colleague), the dismissal could justify as summary dismissal (dismissal without notice/payment in lieu)
5) Quantum – starting point: net loss of salary & other contractual benefits for the notice period (i.e. company car, private health care)/remainder of FTC
What is constructive dismissal and what are the elements
When an employee resigns by reason of the employer’s conduct, is entitled to terminate without notice.

To establish CS:
1) Were the employer’s actions significant/serious enough to amount to a repudiatory breach of contract?
2) Was the resignation a direct consequence of the employer’s breach?
3) Did the employee act promptly and resign or has the employee ‘affirmed the contract’ and waived his right to claim constructive dismissal
--> Chindove v Morrisons Supermarkets plc – EAT held that the time period should not be looked at in isolation, but also the employee’s conduct leading up to the resignation

Constructive dismissal is a piggyback claim – if constructive dismissal can be proven, they can also claim for unfair/wrongful dismissal
Give examples of breach of contract
1) Giving insufficient notice under s 86 ERA 1996
2) PILON clause - gives the employer a right to terminate the contract immediately and pay remuneration in relation to the notice period, rather than to allow the employee to work out the period of notice
--> if there is no express PILON clause, the employer will be in breach of contract without the consent of employee
3) Early termination of FTC with no break clause
Forums in which you can bring a claim for wrongful dismissal
Employment Tribunal
Time limit - 3 months of EDT + early conciliation procedure
Damages - up to £25k
Costs - parties bear their own costs

County/High Court
Time limit - 6 years from EDT
Damages - Unlimited
Costs - Loser pays winner’s costs
Types of heads which you can claim damages for:
1) Bonuses
2) Mitigation
3) Accelerated receipt
4) loss of reputation
Clark v Nomura International plc
HC held that the employer’s decision to award a nil bonus to an employee who had earned substantial profits for the company was irrational. HC order for £1.35mil paid to Mr Clark had the employer complied with its contractual obligations
Brown v Baxter
Established that stigma damages will only be awarded where the employee’s difficulty in finding a new job is attributable to the dismissal
Tax treatment on termination of employment
1) Contractual payments - employee given full notice/put on garden leave, any pay and benefits during that period will be taxable. Payments for other contractual promises (i.e. outstanding contractual bonuses, entering into a new restrictive covenant) are also taxable
2) genuine compensation for loss of office (payment made to employee in connection with termination such as wrongful/unfair dismissal and discrimination) – first £30,000 is tax free
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