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.
Unfair Dismissal vs Wrongful Dismissal: Key Differences
| Aspect | Unfair dismissal | Wrongful dismissal |
|---|---|---|
| Legal basis | Statutory claim | Contractual claim |
| Main focus | Whether there was a fair reason and fair process | Whether the employer breached the employment contract |
| Minimum service | Day-one right under recent reforms (previously two years, subject to exceptions) | No minimum service requirement |
| Typical issue | Dismissal without a fair process or fair reason | Dismissal without notice or in breach of contract |
| Compensation | Subject to statutory rules and limits | Usually notice pay and contractual losses |
| Where claims are brought | Employment Tribunal | Employment Tribunal or civil court |
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:
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.
Frequently Asked Questions
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 info@franklins-sols.co.uk.
Disclaimer: The information provided on this blog is for general informational purposes only and is accurate as of the date of publication. It should not be construed as legal advice. Laws and regulations may change and the content may not reflect the most current legal developments. We recommend consulting with a qualified solicitor for specific legal guidance tailored to your situation.
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.
