What is Wrongful Dismissal?
Wrongful dismissal means an employee’s employment contract was terminated without serving the required period of notice. Wrongful dismissal is a contractual issue not to be confused with unfair dismissal, which is completely different and based on statute.
For example, if an employee is entitled to 12 weeks notice, an employer that dismisses immediately will wrongfully dismiss the employee unless immediate dismissal was in accordance with the employment contract.
A wrongful dismissal can still occur if the employer serves some notice (but less than that required by the employment contract)
Early termination in accordance with the employment contract
This could be because the employee has committed an act of gross misconduct, or the employer has terminated in reliance of a right to end the contract and make a payment in lieu of notice.
Wrongful Dismissal Claims
An employee that has been wrongful dismissed will have a claim for compensation (damages) for loss suffered. In the above example, unless the employee secures new employment in the 12 weeks, his claim will be valued at 12 weeks notice (net).
Relying on a prior breach
An employer may be able to defend a wrongful dismissal claim by relying on a pre-dismissal event (even though it didn’t have knowledge of it at the time of dismissal).
For example, an employer that dismisses without notice could defend a wrongful dismissal claim if it later discovers the employee had dishonestly and fraudulently claimed expenses, even though the employer didn’t dismiss for that reason at the time. This is very different to the way unfair dismissal law operates.
Election theory – not accepting the breach
If an employer purports to terminate the contract in breach (and potentially wrongfully) an employee may elect not to accept the contract as ending, for the purposes of contract law. This would mean the employment contract continued to exist. In some cases this approach could be advantages to an employee, for example if he was due a bonus if he remained employed at a later date still within his notice period.