Summary Employment Law - WRONGFUL DISMISSAL revision notes / exam structure

WEEK 2 – WRONGFUL DISMISSAL

OVERVIEW

• Common law contractual claim for breach of contract, which may be brought by
workers or employees, based solely on the fact that the dismissal by the employer
was in breach of contract
• SO remedy is therefore damages for breach of contract (i.e. any outstanding pay
and benefits) for the duration of the employees notice period > aims to put the
employee in the position they would have been in had the contract been properly
performed
• Successful claim prevents an employer from enforcing any PTCs

• Examples include:
1. Termination of the contract with no or short notice; or
2. Where the employee / worker establishes he has been constructively
dismissed; or
3. Termination of the contract before the expiry of a limited term where there
is no break clause

• Employer defence:
» Where they can show that the employee was in repudiatory breach of
contract i.e. a fundamental breach of the employment contract by the
employee which was sufficiently serious to entitle the employer to treat the
contract as void

, Effect of wrongful dismissal

If the contract terminates in circumstances where:

1. Neither party is in breach of contract, or
2. The employee is rightfully dismissed for his own breach

the restrictive covenant can be enforced by the employer provided it is not void
as being in restraint of trade

HOWEVER, General Billposting Company Ltd v Atkinson [1909] AC 118 - an
otherwise valid restrictive covenant cannot be enforced if the employee has been
wrongfully dismissed by the employer SO where there is a repudiatory breach of
contract by the employer, the employee is released from the obligations under the
covenant

Argus Media Ltd v Halim [2019] EWHC 42 (QB)) - it remains unanswered as to
whether Billposting applies in circumstances where the employer breaches the contract
between resignation and termination but the employee only accepts the breach after the
employment has ended.

Support for the view that confidentiality covenants can survive wrongful dismissal can be
found in Campbell v Frisbee [2003] ICR 141.

Where the contract expressly provides that payment may be made in lieu of notice, the
employer may dismiss the employee without proper notice and still be able to enforce
any restrictive covenants (provided they are otherwise reasonable) BECAUSE the
employer is not then in breach of contract - THIS IS THE PRINCIPAL REASON FOR
THE INCLUSION OF A PILON PROVISION

v If employer commits a repudiatory breach of contract i.e.:
o The employee resigns in light of the breach (i.e. they are constructively
dismissed).
o The employer sacks the employee and in-so-doing commits the repudiatory
breach (i.e. termination without notice where there is no PILON clause).


Any valid restrictive covenants CANNOT BE ENFORCED



Employee’s viewpoint

Ideally, an employee would want to avoid restrictive covenants, or limit them so as not to
prejudice his ability to change employment. However, it may be in the employee’s
interest to agree to a restrictive covenant which is patently too wide and hence
unenforceable.

, LIMITS

Claim must be brought:
• 3 months MINUS 1 DAY from the date of dismissal

NB: NO CONTINUOUS EMPLOYMENT RESTRICTION. An employee is eligible to bring a
claim of Wrongful Dismissal from Day 1

A breach of contract claim can be brought in:

1. Courts

Limitation period is 6 years (Limitation Act 1980, s5)

There is no upper limit on the level of damages which may be awarded

If the claim is worth < than £5,000 and is pursued in the county court, it will automatically be
referred to the small claims track

2. Employment tribunal

If a wrongful dismissal claim is pursued in the employment tribunal, there are certain
preconditions:

a. the claim must be for breach of a contract of employment or other contract
connected with employment and must arise or be outstanding on the termination of
employment (ETA 1996, s 3(2));

b. the only remedy available is compensation;

c. the employment tribunal will not be able to award > than £25,000 in respect of a
contract claim (1994 Order, art 10);

d. the tribunal cannot hear all claims arising out of an alleged breach – e.g. claims
relating to contractual terms of confidentiality and restrictive covenants are
excluded (1994 Order, arts 3, 5);

e. the employer will be able to raise a counterclaim (alleging that the employee has
also breached the contract of employment);

f. the claim will have to be brought within 3 months of termination

ETA 1996, ss 3 and 8; Employment Tribunal’s Extension of Jurisdiction
Order 1994

An employment tribunal’s contract jurisdiction is limited (Employment Tribunals Act (ETA)
1996, ss 3 and 8; Employment Tribunal’s Extension of Jurisdiction Order 1994)


NOTE: Claimants need to be aware that if they bring a high-value breach of contract claim in
the tribunal, they will NOT be permitted to seek to recover any excess over £25,000 in the
civil courts. Fraser v HLMAD [2006] EWCA Civ 738 - once the claimant had lodged an ET1
claim form, which included a claim for breach of contract for wrongful dismissal, the claims
had ‘merged’ and there was no independent claim left which he could pursue