Wrongful Dismissal: What It Is, How to Claim, and What You Could Get

Key Points

What Is Wrongful Dismissal?

Wrongful dismissal is a breach of contract claim. It arises when your employer ends your employment in a way that breaks the terms of your contract. In most cases, this means being dismissed without receiving the notice pay you were entitled to.

The claim is grounded in common law contract principles, not in statute. The question is straightforward: did your employer honour the terms of your contract when they dismissed you? If they didn’t, you have a claim for the financial loss that resulted from that breach.

The most common form of wrongful dismissal is being sacked on the spot, or without being paid your full notice period, when you haven’t done anything that would justify summary dismissal. But it can also cover situations where your employer failed to pay contractual benefits on termination, such as bonus payments, commission, or pension contributions.

Under section 86 of the Employment Rights Act 1996, every employee with at least one month’s continuous service has a statutory right to minimum notice. Your contract can give you more notice than the statutory minimum, but it cannot give you less. If your contract is silent on notice, the statutory minimums apply as a floor.

Wrongful Dismissal vs Unfair Dismissal

These two claims are frequently confused, but they are legally distinct. You can bring both from the same dismissal, and in many cases you should. Here is how they compare.

The critical distinction is this: unfair dismissal asks whether your employer acted reasonably. Wrongful dismissal asks whether they broke your contract. An employer can dismiss you for a fair reason and still be liable for wrongful dismissal if they failed to give you proper notice. Equally, a dismissal can be procedurally correct under your contract but still be unfair under the statutory test.

Where both claims apply, your wrongful dismissal damages will reduce your compensatory award for unfair dismissal by the same amount. The tribunal will not let you recover the same loss twice.

When Can You Claim Wrongful Dismissal?

Dismissed Without Notice (or Insufficient Notice)

This is the most common scenario. Your employer ends your employment immediately, or gives you less notice than you were entitled to, without paying you in lieu.

Your notice entitlement is the longer of your contractual notice period or the statutory minimum. The statutory minimums under ERA 1996 s.86 are:

If your contract gives you a longer notice period, the contractual term applies. For example, if your contract says three months’ notice but you’ve only worked there for two years, your entitlement is three months, not two weeks.

Some contracts include a payment in lieu of notice (PILON) clause. This allows the employer to end your employment immediately and pay you for the notice period instead. Where a valid PILON clause exists and the employer pays it, there is no breach of contract and no wrongful dismissal claim. But if there is no PILON clause and the employer simply dismisses you without notice or payment, that is wrongful dismissal.

Dismissed for Alleged Gross Misconduct (and It Wasn’t)

An employer can dismiss without notice only if the employee has committed genuine gross misconduct amounting to a repudiatory breach of contract. Section 86(6) of ERA 1996 preserves the right to terminate without notice “by reason of the conduct of the other party”.

The test for wrongful dismissal is different from the test for unfair dismissal. For unfair dismissal, the tribunal asks whether the employer had a reasonable belief in the misconduct (the Burchell test). For wrongful dismissal, the tribunal decides on the evidence whether the employee actually committed gross misconduct. It is an objective test.

This matters because an employer who genuinely believed in the misconduct may defend an unfair dismissal claim but still lose a wrongful dismissal claim if the misconduct did not, in fact, amount to a repudiatory breach. If the tribunal finds that summary dismissal was not justified, notice pay is owed.

Common employer mistakes include labelling poor performance as gross misconduct, dismissing summarily over a single minor incident, or skipping any investigation altogether.

Employer Breached Other Contractual Terms on Dismissal

Wrongful dismissal is not limited to notice pay. You may also have a claim if your employer failed to honour other contractual entitlements when dismissing you. These can include:

• Bonus or commission payments that had accrued or were due during the notice period
• Pension contributions your employer should have made during the notice period
• Private healthcare cover, car allowance, or other contractual benefits
• Share options or stock awards that would have vested during notice
• Failure to follow a contractual disciplinary procedure before dismissing you

Where the employer has an express contractual disciplinary procedure and fails to follow it, the employee may claim damages reflecting the pay they would have received had the procedure been followed correctly before any decision to dismiss was made.

No Qualifying Service Needed

This is one of the most important features of wrongful dismissal. Unlike unfair dismissal, which currently requires two years’ continuous service (reducing to six months from 1 January 2027 under the Employment Rights Act 2025), wrongful dismissal has no qualifying service requirement.

If you have been employed for at least one month, you have statutory notice rights under ERA 1996 s.86. If your employer dismisses you without paying that notice, you have a wrongful dismissal claim regardless of how long you have worked there.

This makes wrongful dismissal a vital safety net for employees with less than two years’ service who cannot bring an ordinary unfair dismissal claim. If you were sacked on the spot after six months and have no unfair dismissal rights, a wrongful dismissal claim may be your most effective route to compensation.

“I see a lot of people who’ve been sacked inside the first two years and assume they have no rights at all. That’s often wrong. If you weren’t paid your notice, you have a wrongful dismissal claim from day one. It’s a straightforward breach of contract, and for many short-service employees, it’s the claim that actually gets them a result.”

Tom Street Principal Solicitor, Tom Street & Co.

How Much Can You Claim?

What you can recover for wrongful dismissal depends on where you bring your claim and what your contract says. The aim of damages is to put you in the financial position you would have been in had the contract been performed correctly.

Employment Tribunal Claims

The employment tribunal can hear breach of contract claims under the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994. The maximum it can award is £25,000.

This cap has not changed since 1994, and the Employment Appeal Tribunal noted in Ugradar v Lancashire Care NHS Foundation Trust (2019) that it is “capable of producing real injustice” at its present level. For most employees, though, £25,000 will be enough to cover the notice pay owed.

The main advantage of claiming in the tribunal is cost risk. In the employment tribunal, the general rule is that each side pays their own legal costs, win or lose. That makes it a lower-risk option for employees.

Civil Court Claims

If your claim is worth more than £25,000, you may be better off claiming through the county court or High Court. There is no cap on damages in the civil courts.

The limitation period is also longer: six years from the date of the breach, compared to three months minus one day in the tribunal. This gives you much more time to bring a claim, although there is rarely a good reason to delay.

The trade-off is costs. In the civil courts, the general rule is that the losing party pays the winning party’s legal costs as well as their own. For an employee claiming against a well-resourced employer, this can be a significant risk. If your claim is substantial, particularly if you are a senior employee with a long contractual notice period, the civil court route may be worth it. But get legal advice before committing.

What Damages Cover

Wrongful dismissal damages cover the financial loss flowing directly from the breach of contract. This typically includes:

• Salary for the unpaid notice period
• Pension contributions your employer would have made during notice
• Private healthcare, car allowance, or other contractual benefits
• Bonus or commission payments due during the notice period (provided they are not genuinely discretionary)
• Holiday pay that would have accrued during the notice period
• Share options that would have vested had you served your notice

There are some important limits. You have a duty to mitigate your loss, which means you must take reasonable steps to find alternative employment. If you start a new job within what would have been your notice period, your new earnings will be deducted from the damages.

Unlike unfair dismissal, you cannot claim damages for the manner of dismissal, distress, hurt feelings, or reputational harm in a wrongful dismissal claim. The claim is purely about financial loss from the contract breach.

If you are claiming both wrongful and unfair dismissal, any damages for wrongful dismissal will reduce your unfair dismissal compensatory award by the same amount. The tribunal will not allow double recovery for the same period of lost earnings.

How to Make a Wrongful Dismissal Claim

Step 1: Check Your Contract

Start by reviewing your contract of employment (or written statement of particulars). Look for:

• Your notice period: is it the statutory minimum, or does the contract specify something longer?
• A PILON clause: does your employer have the right to pay in lieu of notice? If so, and they paid it, there may be no breach.
• Bonus and benefits clauses: are there any payments or benefits that should have been honoured on dismissal?
• Disciplinary procedures: does the contract incorporate a specific procedure that should have been followed?

If your contract says nothing about notice, the statutory minimums under ERA 1996 s.86 apply. Your employer cannot contract out of statutory notice.

Step 2: Contact Acas for Early Conciliation

Before you can submit a claim to the employment tribunal, you must contact Acas (the Advisory, Conciliation and Arbitration Service) for early conciliation. This is a mandatory step for all tribunal claims.

Acas will offer to help you and your employer reach a settlement without going to a tribunal hearing. The early conciliation period lasts up to six weeks (or longer by agreement). If settlement is not reached, Acas will issue an early conciliation certificate, which you need before you can file your claim form.

The time you spend in early conciliation pauses the clock on your time limit, so you will not lose time by going through the process.

Step 3: Submit Your ET1 Claim Form

If early conciliation does not resolve matters, you must submit your claim to the employment tribunal within three months minus one day from the effective date of termination of your employment. This is the date your employment actually ended, not the date you received a dismissal letter.

On the ET1 form, you should tick the box for breach of contract. If you also have an unfair dismissal claim (because you have two or more years’ service), you can include both on the same form.

“The three-month time limit catches people out more than anything else. By the time you’ve got over the shock of losing your job, checked your contract, and thought about what to do, weeks have already gone. Contact Acas early. Even if you’re not sure whether you have a claim, starting early conciliation protects your position.”

Tom Street Principal Solicitor, Tom Street & Co.

Step 4: Consider the Civil Court Alternative

If your claim is worth more than £25,000, the employment tribunal cannot award you the full amount. In that case, consider bringing your claim in the county court or High Court instead.

Civil court claims have a six-year limitation period, so there is more time. But the costs rules are different: if you lose, you will normally have to pay the other side’s legal costs. That can add up quickly, particularly against a large employer with deep pockets.

For most employees, the tribunal is the safer option. But for senior employees with long contractual notice periods, significant bonus entitlements, or share option losses, the civil court route can make financial sense.

Wrongful Dismissal and Gross Misconduct

Employers regularly argue that they were entitled to dismiss without notice because the employee committed gross misconduct. If genuine gross misconduct occurred, the employer is within their rights. But the bar is high.

Gross misconduct must amount to a repudiatory breach of contract by the employee, meaning conduct so serious that it goes to the root of the employment relationship. Typical examples include theft, fraud, serious violence, or a deliberate refusal to carry out lawful instructions.

The important point for employees is this: in a wrongful dismissal claim, the tribunal looks at whether the gross misconduct actually happened. This is different from unfair dismissal, where the question is whether the employer had a reasonable belief. An employer who genuinely but mistakenly believed the employee was guilty may still lose a wrongful dismissal claim.

Where an employer labels something as gross misconduct that clearly is not, such as a minor performance issue or a personality clash, they will struggle to defend a wrongful dismissal claim. The employee’s notice pay will be owed.