Wrongful dismissal: What it means

Dismissal is one of the most sensitive areas of employment management and when handled incorrectly, it can leave employers exposed to legal and reputational risk, not to mention the uncertainty employees may start to feel about their next steps. Understanding what wrongful dismissal is, why it occurs, and how correct procedures should be followed is essential for both employers and employees. This guide explains the key principles of wrongful dismissal and the role HR plays in ensuring compliance and fairness.

What is wrongful dismissal?

Wrongful dismissal occurs when an employer breaches the terms of an employee’s contract during the termination of their employment. It is a contractual claim rather than a statutory employment rights claim and is focused on whether the employer complied with the agreed terms of employment. The most common breach involves failure to provide the correct notice period, either by ending employment immediately without justification or by not providing payment in lieu of notice where required. Wrongful dismissal can also occur when an employer fails to follow dismissal procedures that are written into the employment contract.

Unlike unfair dismissal, wrongful dismissal does not depend on length of service, it is an initial right for the employee, and a wrongful dismissal claim can be raised from the first day of employment.

Why an employee may be dismissed from the workplace

There are several legitimate reasons an employer may dismiss an employee. These typically fall into categories such as misconduct, poor performance or capability, redundancy, statutory restrictions that make continued employment unlawful, or other admissible business reasons.

Misconduct dismissals often relate to breaches of workplace rules or standards of behaviour. Capability dismissals may occur where an employee is unable to perform their role due to lack of skill, health issues, or persistent underperformance. Redundancy arises when a role is no longer required due to business changes rather than individual performance.

However, having a valid reason for dismissal does not automatically protect an employer from a wrongful dismissal claim. Employers must still comply with contractual notice requirements and any procedures outlined in the employment contract.

Common examples of wrongful dismissal

Wrongful dismissal most commonly occurs when employers act quickly without fully considering contractual obligations.

A common example is failure to follow disciplinary or dismissal procedures that are contractually binding. This may include not allowing the employee to respond to allegations or skipping appeal stages that are specified in the contract.

Wrongful dismissal may also arise where an employer dismisses an employee for alleged gross misconduct without sufficient investigation or evidence. If the displayed behaviour does not meet the contractual definition of gross misconduct, the employee may still be entitled to notice.

How employers can avoid wrongful dismissal

While the reasons mentioned earlier may justify dismissal in principle, wrongful dismissal focuses on whether the employer properly complied with the contract. Even where Some Other Substantial Reason (SOSR) or another fair reason exists, an employer can still be liable for wrongful dismissal if they fail to give notice or follow contractual procedures.

It is therefore essential for employers to separate the reason for dismissal from the method used to carry it out.

Avoiding wrongful dismissal begins with clear, well-drafted employment contracts. Employers should ensure that notice periods, disciplinary procedures, and dismissal processes are clearly set out and regularly reviewed to reflect current practice and legislation.

Before dismissing an employee, employers should confirm whether contractual procedures apply and whether they are legally binding. Notice periods must be respected unless there is a clear and justified reason for summary dismissal.

Employers should also document all steps taken during the dismissal process, especially investigations and meetings. Seeking HR advice before dismissing an employee can also help ensure that actions taken are lawful and defensible.

The Employment Tribunal process

The Employment Tribunal is an independent judicial body that resolves disputes between employers and employees relating to employment rights and contractual claims. Tribunals are designed to provide an accessible forum for resolving workplace disputes without the formality of traditional courts.

Wrongful dismissal claims can be brought before a tribunal, although they may also be pursued through civil courts depending on the value of the claim. Tribunals have the authority to examine evidence, hear witness testimony, and award compensation where a breach of contract is proven.

Expectations for employers

For employers, the tribunal process can be demanding. It typically begins with a formal response to the employee’s claim, followed by disclosure of documents and preparation of witness statements. Employers may need to attend preliminary hearings and a final hearing.

The process can be time-consuming and costly. In addition to potential compensation awards, employers should consider legal fees and possible reputational impact. Proper preparation and early HR involvement can significantly improve an employer’s ability to respond effectively.

The role of HR for employers and employees

HR plays a central role in preventing wrongful dismissal and managing disputes when they arise. For employers, HR ensures that policies and procedures are compliant with employment law and applied consistently across the organisation.

HR also supports managers by advising on workplace investigations, disciplinary action, and dismissal decisions. For employees, HR provides a point of contact for raising concerns and ensuring that issues are addressed fairly and transparently. Effective HR involvement helps reduce misunderstandings and ensures procedural fairness, meaning that both employers and employees can feel comfortable in a supportive, positive workspace.

Wrongful dismissal often emerges not from poor intent, but from a lack of understanding around contractual obligations and dismissal procedures. For employers, careful preparation, clear documentation, and expert HR guidance are essential to reducing the risk of this happening.

By following correct processes and seeking appropriate support, both employers and employees can navigate dismissal situations fairly and with confidence.

Where Sapphire HR can help

For many small and medium-sized businesses, maintaining an in-house HR function is not practical, whereas outsourcing HR provides access to specialist expertise without the cost and complexity of employing a full-time team. We work with small businesses across a wide range of sectors, providing practical and tailored services. This includes guidance on employment contracts, dismissal procedures, employee relations, and dispute resolution. By supporting employers before issues escalate, we can help businesses manage employment responsibilities and minimise legal risk, regardless of sector or size.