Q: What’s the difference between ‘unfair’ and ‘wrongful’ dismissal?
Sep 17 2007
Answered by: Peter Done Ask a question
Wrongful dismissal applies to an alleged breach of contract by the employer. Prior to the Industrial Relations Act 1971, if any employee was wrongfully dismissed by their employer they could only pursue a breach of contract claim (for wrongful dismissal – or some other breach of contract) in the County Court. It meant hiring a solicitor and if you lost your claim not only did you have your solicitor’s costs to pay but those of the other side as well.
Since damages awarded were limited to those for lawful notice (all contracts being capable of termination by notice), if the (ex) employer had paid notice (or pay in lieu) then there were virtually no additional damages to be claimed – a lot of effort and risk for very little return.
Contracts could therefore be terminated for little or no reason at all, simply by the giving of lawful notice.
Clearly this would be “unfair” in the greater world. Consequently the Government introduced the Industrial Relations Act 1971 (now the Employment Rights Act 1996) which introduced the concept of fairness into dismissals. Indeed it went so far as to state that there were only five potentially fair reasons for dismissal – conduct, capability, redundancy, legal prohibition or some other substantial reason. From 1st October 2004 retirement was added to the list making, now, only six potentially fair reasons for dismissal.
In addition, what constitutes “fair” has been defined by a mixture of law, case law and codes of practice. From 1st October 2004 the statutory disputes resolution procedure was introduced making it automatically unfair if the relevant disciplinary/dismissal process was carried out without “a letter, meeting and appeal”. Part of the problem is that conforming to “letter, meeting, and appeal” does not make the action “fair” it simply makes it “not automatically unfair”.
Something like 80% of cases that are lost at Tribunal are lost because of faults in procedure (and small businesses lose twice as often at Tribunal as do larger ones). Employers therefore need to ensure that they comply with all aspects of statute, contract law and best practice to ensure they are not guilty of unfair dismissal.
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