Wrongful Dismissal (WD) and Unfair Dismissal

Winn LJ commented that the general rule to termination is that, the resolution of relations between employers and employees should be attained through simplicity of means, the tools used to gain access to legal rights and obligations should not be allowed to produce a waste of time and energy. WD is one of the tools used to assess the types of termination of employment. It is a form of termination that occurs by breach of contract; as a result this legal foundation it is also defined by the general rules that govern contracts. The breach must be in relation to an essential term , it ought to be serious enough to deny the other person of what they had contracted for , or, it displays that the other party no longer wishes to be bound by the fundamental terms of the contract ; an example of such a term is a wages, however, there are defences available to the non payment of wages . Whether there is a defence or not depends on the circumstances of each case. Dismissal can be express or constructive, express being an overt declaration to dismiss, and may also occur constructively when the employer rejects the contract by breaching a vital term, or showing that s/he has no further intention to be bound by the contract, following with the employee having no other choice but to leave; this is referred to as constructive dismissal. Lastly, the third method is the expiry of a limited term contract which applies to legislative claims. Both express and constructive dismissal forms qualify under UD.

The essence of WD is that there has been a wrongful act in the dismissal of an employee; which is where an employer discharges an employee with no or inadequate notice. The length of the notice period can be expressly approved by the parties involved and written in the contract of employment. If not, then the common law may imply a period of reasonable notice, which is reliant on the circumstances of the employment in question; for example the consideration of the worker status. Where there is an express term to terminate without cause and at any time during the course of employment, it will be enforced and overshadow the above implied reasonable notice principle. The Contracts of Employment Act changed the stance on the common law perspective on the minimum notice limit; this is now encapsulated in ERA. The legislative principle is that if an employee has been in employment from one week to two years, the length of notice is one week; over twelve years the notice period is twelve weeks; so for every added year of work an extra week is added to the notice period i.e. six year of employment gives you six weeks of notice. But if the contract stipulates for there to be a longer period of notice then that term overrides the statutory provision. However, under the ERA there is an exclusion that notice does not have to be given if the employer in question has a cause/justification for the lack of dismissal; known as summary dismissal. The test for whether the dismissal was justifiable was displayed in Laws , the court stated that where the action by the employee shows that s/he disregarded the essential conditions of the contract of services then the lack of notice is lawful i.e. gross misconduct equating to actions such as theft . The factors to take into consideration include the position of the employee, his/her past record, the social conditions at the time. A series of behaviour resulting in a breach of contract can lead to a definitive cause, referred to as the �last straw� .

UD unlike WD is not bound by the rules of contract and instead its existence is statutorily based, meaning it is governed by its own legislative provisions. Putting the aspect of automatic unfair dismissal aside, there is a criterion for both parties to follow when it comes to UD claims. To be able to bring a UD claim the employee must show that s/he is qualified, and also prove that s/he was dismissed. If the employee satisfies both conditions, then the onus of proof then transfers to the employer to prove that s/he exercised a fair reason in dismissing the other party. There are six possible reasons that will be found to be potentially fair; these being conduct , capability , retirement , redundancy , holding a position that contravenes duty or restrictions under law , and some other significant reason. If at this point the employer�s reason did not fall into this list, then the tribunal will move to provide a remedy for the employee and the employer will have lost. If the employer�s reason falls under the six reasons then the tribunal moves onto assessing the fairness of the dismissal in accordance with s. 98(4) ERA. The question whether the reason for dismissal is fair or unfair �depends on whether in the circumstances the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee�, evaluation of the size and administrative resources of the employer�s undertaking will be considered and will �be determined in accordance with equity and the substantial merits of the case� . The tribunal should not insert its decision as that of the employer; the test is that of the reasonable employer not the reasonable man.

One of the reasons for the introduction of UD was the failure of WD to remedy a dismissal which was carried out in a procedurally unfair manner.

British Home Stores alongside with ACAS Code of Practice provide a recommended procedure be followed to establish a fair dismissal. Even in the instances of gross misconduct where there is no necessity to inform the employee if s/he is caught out , the code recommends that the employee should be given the right to appeal. In British Home Stores the court provided a three part test. Did the employer believe in the reason for dismissal? Did the employer think he had reasonable grounds to uphold his belief? And lastly, did the employer conduct a reasonable level of investigation into the issue, given the circumstances? The last point emphasises the significance of procedural fairness. The leading authority on the issue was demonstrated in Polkey, Lord Mackay commented, �If the employer could reasonably have concluded in the light of the circumstances known …that consultation or warning would be utterly useless he might well act reasonably even if he did not observe the provisions of the code. Failure to observe the requirement of the code …will not necessarily render a dismissal unfair. Whether in any particular case it did so is a matter for the industrial tribunal to consider in the light of the circumstances known to the employer at the time he dismissed the employee.� So, if following the ACAS procedure of dismissal, in terms of warnings and consultations, would be reasonably assessed as useless, then the lack of procedural fairness would not automatically render the dismissal unfair, however this is a contentious area where the pendulum swings back and forth from case to case . To reiterate, WD is solely concerned with the breach of contract, the reasonableness of the employer�s conduct or contributory conduct on part of the employee does not come into play and only applies in UD.

In the past, due to the concepts having different origins they both were heard separately. UD litigations were conducted in employment tribunals whereas WD cases were carried out in county courts, High Courts (depending on how much was claimed) etc. However, this stance was somewhat altered as a result of prolonged debate on the subject; it was decided that WD claims for �25,000 or under may be heard in Employment tribunals (ET) . As a result, ET�s have parallel jurisdiction with ordinary courts over WD cases; this overlapping should not be confused as a shift of jurisdiction from one to another.

There are a number of requirements for WD claims to be heard in ET�s. Only in the event where the breach of contract has something to do with the termination of the employment contract does the ET have a right to hear the case; their jurisdiction does not allow them to hear cases regarding the contract during its actual performance. There are exclusions to this rule, ET�s cannot hear breaches relating to termination when it comes to restrictive covenants, restraint of trade or duties of confidentiality, copyright, or claims for personal injury . For example, in practice a claim that the WD rendered the restraint of trade covenant annulled, would be heard in the ordinary civil courts .Thus, where the ET does not have jurisdiction the civil courts do.

Sometimes a claim will bring out both causes of action, WD and UD, from the same facts. An employee can claim under both heads and have the possibility of winning one or both claims, but, s/he won�t be compensated twice for the same loss. Also when brought together usually the courts will decide to stay one while reaching the outcome of another. This may lead the applicant into having to make a decision which claim and jurisdiction to continue with. In relation to where the claim is heard, an important cause for favouring one authority over another is the cost prerequisite of the ET. Normally, ET claims require each party to pay for their own costs, save when a party acts vexatiously, abusively, disruptively or otherwise unreasonably; the offending party could be forced to reimburse some or all of the other party�s expenses. On the other hand, the procedure in civil courts is that the loser pays the winner�s costs. When taking a WD or UD claim further, another major deciding factor until recently was legal aid. Aid was available for WD in the manner of the green form scheme, but not for UD. There was, however, varied debate on the subject of UD not receiving legal aid and arguments for extending legal aid to tribunals. The government generally disregarded the opinion and debates based on the issue of cost. With the introduction of the conditional fee agreements the stance changed on the application of legal aid. This scheme has been commented to have lead to a flood of lawyers in ET which worked against the aim of the Donovan Report (which aided in the creation of the law of UD) where the committee made clear that ETs ought to be accessible and efficient ; the use of lawyers adds unnecessary formality and thereby decreases efficiency. As it stands now, civil legal aid is available for advice in respect of both UD and WD at ET level (not for representation before the ET), and for both advice and advocacy for appeals to the Employment Appeal Tribunal (EAT). Legal aid is still given for advice and representation in WD cases which are heard in the civil courts. The new coalition government has put forward a green paper proposal aiming to make cuts in legal aid to all those cases that are �relatively less important�. This applies to those applicants are not particularly vulnerable and those that can seek other means of dispute resolution or legal access, employment being one issue which they interpret as having fit this criteria. So the little aid that is available may be scrapped altogether should the proposal pull through.

As a result of the different judicial sources there is a difference in the limitation time period between WD and UD. WD has the luxury of six year limitation period to bring a claim to the civil courts; however, UD has a limitation period of three months from the effective date of termination. Despite this, the UD time limit can be bypassed by the �not reasonably practicable� exemption . The principle was more recently described in Peacock by the EAT as a 2 part test: was it reasonably practicable to present the claim within the 3 month time limit? If it was not then was it submitted within a reasonable time after that? This is a fairly strict and constricted assessment. A three month deadline in bringing an ET1 (previously IT1) claim form, at a legal perspective, is a fairly restricted amount of time. If brought in late, the UD claim does not succeed, and the issue may be taken on as an issue of negligence against the solicitor who erred in the late submission.

Another key difference is that ET�s powers are also restricted in the remedies they can enforce; they cannot order injunctions or declarations as they are a creation of legislation, they do not have the same nature and inherent powers of the civil courts.

Distinctions between the two types of dismissal are demonstrated in the varying circumstances that would make someone eligible to bring the claim under each one. For example, a WD claim can be brought by anyone involved in a contract of services. UD, on the other hand, concerns employees alone.

There is no qualifying period for WD unlike UD. To qualify in bringing a UD claim requires someone to have initially 6 months of employment, it was raised by previous governments, first to a year in 1979 and then to two years in 1985 . Reason for the length was to exclude part timers from claiming UD and economic necessity. Both reasons came under attack under EU law and the part time worker restriction was removed as it indirectly discriminated against female workers, which cannot be justified by the governments aim for economic benefit . The courts then later reduced the two year limit to one year�s continuous employment in order to aid to the access of UD remedies. However, more recently there has been some indication of an extension in the qualifying period once more. The government has stated it aims to get rid of the red tape that may hinder businesses. Lord Young, the enterprise tsar under the coalition government, commented on a radio programme saying that an increase in the �qualifying period to two years was being considered�. He justified the proposal mentioning the two year limit had previously aided in improving employment statistics. Hurly Nick comments that UD claims have �increased year-on-year, but so too have nearly all types of discrimination claims�. If the 2 year limit goes to plan claimants who are dismissed �with less than two or three years’ service are more likely to frame their claims around discrimination… with compensation for discrimination technically unlimited and, in fact, more costly to businesses, arguably these complaints pose a much greater threat than UD, therefore, such a change is likely to bring about the opposite effect to that which is desired�. However, as of yet there is no sign of this measure being taken on as official government policy.

There are specific rules around the upper age limit in claiming UD; contrastingly, WD does not have an upper age limit. The exception to UD that causes most concern is that employees that are over 65 or their �normal retirement age� are not able to seek UD. This exception was not over turned but instead fitted in with the arrival of the Employment Equality (Age) Regulations . This act is merely an illusion of actual change; although now there is no upper limit for a claim, the regulations force employees to retire at 65 or at the employers normal retirement age (not less than 65).

Another difference was displayed in Devis, where The House of Lords held that an employer�s decision of dismissal is based on the facts known to him at the time of dismissal; s/he cannot then in retrospect validate the UD by bringing up a different reason to dismiss which s/he found out after the dismissal . Though, if there is new evidence brought during the point of appeal the tribunal may look at it so long as it coincides with the original ground for dismissal , it does not, however, allow the employer to set up a whole new ground for dismissal . Although, at common law WD can retrospectively be justified in this way . Furthermore, previously the employer had no duty to provide a reason for WD; this position was altered under ERA, it states �an employee is entitled to be provided by his employer with a written statement giving particulars of the reasons for the employee�s dismissal�.

Possible remedies under WD include claimants being awarded damages, or enforce injunctions and declarations. The main remedy, damages, intends to place the innocent party in the position s/he would have been in had the contractual obligations been fulfilled properly. Contrastingly, for UD cases, the main awards include re instatement or re-engagement. In reality however, the common perception is that the tribunal, although unintended, deal with giving the wronged party compensatory awards and/or basic awards as their main means of redress. The reason being it is often difficult to re-integrate employees who have suffered vexatious behaviour on part of their employer. The amount of the compensatory award is based on the heads established in Norton Tool and the amount given will be what the tribunal considers to be just and equitable in all circumstances . The entitlement of the basic award under UD is the amount given once UD has been established; the basic award is determined based on the period of continuous employment backtracking from the date of termination awarding the appropriate amount for each of the years. There is, however a limit to both the basic award and compensatory award. The basic award limit under statute is the maximum amount for a week�s pay �380 making the total limit amount �11,400 with a minimum basic award of �4,200 applicable to a number of situations . The compensatory amount is capped at �66,300. However, there is no cap on the award of damages by the civil courts for WD. Also, a major difference between these awards and damages given on WD is that they are assessed on the form of dismissal that occurred, and in some circumstances, may increase because of factors like future employability, unlike WD.

To conclude the main differences in reaching an effective remedy ranges from factors s claimant�s eligibility for each claim to their remedy caps.