On the termination of employment in the UK, leaving aside issues of discrimination, human rights, and claims for a redundancy payment, an employee has two key types of potential claim against his employer.

Wrongful dismissal

The first is a claim of wrongful dismissal, which is a claim based in contract.

In essence, a claim of wrongful dismissal arises where the dismissal is in breach of the terms of the employment contract. Typically this will involve termination without giving the notice period required under the terms of the contract. (In certain limited circumstances, such as when the employee has been guilty of gross misconduct, the employee will not be entitled to notice of termination.)

The employee’s remedy for wrongful dismissal is compensation equal to the salary and benefits which he would have received had he been given the correct notice period.

As long as the employer terminates the contract in accordance with its terms, no claim for wrongful dismissal will arise.

Unfair dismissal

The second type of potential claim is one of unfair dismissal. This is a claim arising under UK legislation and can arise even where the employer has given proper contractual notice. It is a claim based on the principles of fairness and reasonableness.

Subject to certain limited exceptions, an employee must have completed at least two years continuous employment with the employer before he has the right to bring a claim of unfair dismissal and he must bring the claim within three months of the termination of his employment.

In order to defend a claim of unfair dismissal, the employer has to demonstrate that the reason or principal reason for the dismissal was one of the potentially fair reasons set out in the legislation. These include conduct; capability or qualifications (which includes reasons relating to ill health); and redundancy. In addition the employer may fairly terminate the employment if continued employment would contravene UK law; or for some other substantial reason of a kind justifying dismissal including, for example, dismissals arising as a result of a reorganisation.

Once the employer has shown that the reason for dismissal falls within those in the permitted list, he also has to show that he acted reasonably in all the circumstances, both by treating that reason as a sufficient reason to dismiss and following a fair procedure.

If the reason for the dismissal is not one of those permitted under the legislation or the employer has not acted reasonably in the circumstances of the case, then the dismissal will be unfair.

The employee is then entitled to be awarded compensation. In addition, if the employee has requested it, he may be reinstated in his original job or re-engaged by his employer in a new role. However, these orders are granted rarely as, more often than not, the relationship between the employer and employee has broken down to such an extent that it is not possible for him to return to the workplace.