Settlement Agreements and Wrongful Dismissal

In most circumstances, notice must be given to terminate an employment relationship.

Where an employer fails to give the requisite period of notice specified in the contract of employment when dismissing an employee, the employee may be able to bring a claim for wrongful dismissal. Dismissing an employee will include the expiry of a fixed term contract.

An employer may dismiss an employee summarily (that is without notice) when an employee has committed an act of gross misconduct, providing the employer has undertaken a fair process, the dismissal is one of 5 potentially fair reasons and the dismissal is within the band of reasonable responses.

Gross misconduct requires the employee to have committed an act of misconduct that is sufficiently serious that it goes to the root of the contract and is a repudiatory breach of contract. The misconduct must damage the mutual trust and confidence inherent in the relationship between the employer and employee to a degree that the employer should no longer be required to retain the employee.

Wrongful dismissal is a dismissal in breach of contract. Fairness does not need to be assessed. The only assessment is whether the terms of the contract been breached. The employee will have a claim in damages if the employer, in dismissing them, breached the contract, thereby causing them loss.

Wrongful dismissal in a tribunal is limited to a statutory maximum cap of £25,000, but a wrongful dismissal claim in the civil courts is not limited. However, wrongful dismissal damages are limited to the notice period and/or the period of a relevant contractual procedure. There are additional cost considerations when an employee brings a claim through the civil courts.

Employers cannot contract out of their wrongful dismissal obligations by listing less serious acts of misconduct as gross misconduct to enable them to terminate employee’s for minor offences without paying an employee’s contractual notice.

However, just because conduct is listed as being gross misconduct in a contract or a disciplinary procedure, does not mean that summary dismissal will be automatically justified if the employee conducts himself in that way.

If you are involved in any type of dispute or need confidential advice on a settlement agreement or any other legal matter then please book a free consultation to suit you now.

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