This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Comprehensive guide to how to establish a breach of contract in dismissal claims in England and Wales, explaining the elements of a breach, evidential requirements, common contractual issues such as notice and PILON, loss calculation, time limits and practical steps for claimants.
When employment ends in England and Wales, the employment contract governs how that relationship must lawfully conclude. If an employer terminates employment in a way that fails to comply with contractual obligations, the employee may have grounds to bring a breach of contract claim - commonly known as a wrongful dismissal claim. Establishing that a breach of contract has occurred is a legal foundation for such claims and is critical to securing compensation for losses. This article explains how breach of contract arises in dismissal disputes, the elements employees must demonstrate, key legal and procedural considerations, and practical steps to support a claim.
What Is a Breach of Contract in Dismissal?
A breach of contract in the context of dismissal means that the employer failed to honour terms of the employment contract when ending the employment relationship. This most frequently arises in wrongful dismissal claims, where the dismissal process itself contravenes express or implied terms. Typical contractual breaches include failing to provide proper notice, ignoring payment in lieu of notice (PILON) rules, and terminating fixed‑term contracts early without authority.
Wrongful dismissal is distinct from unfair dismissal, which relates to statutory protections under the Employment Rights Act 1996. The central issue in wrongful dismissal is whether the contract was breached, not whether the dismissal was fair. The tribunal or court will focus on contractual terms and whether the employer complied with them.
Core Elements to Establish Breach of Contract
To succeed in a breach of contract claim arising from dismissal, an employee must demonstrate three core elements:
1. Existence of a Contract of Employment
The first step is to show that a contract of employment existed between the employee and the employer. Contracts can be written, verbal, or partly implied by conduct. Even in the absence of a formal written contract, tribunals may infer contractual terms based on consistent practices, documentation, and obligations accepted by both parties.
2. Dismissal Occurred
The employee must establish that they were dismissed - that is, their employment ended at the employer's initiative. This includes direct dismissal, dismissal on a fixed‑term contract without valid authority, or constructive dismissal where the employer's actions amounted to a fundamental breach of contract leading to resignation accepted as dismissal. Evidence like termination letters, emails, or official notices help establish this element.
3. Breach of Contract When Dismissing
This is the critical element: showing that the employer breached specific contract terms at the point of dismissal. The most common areas of contractual breach include:
a. Failure to Give Proper Notice
An employer must give the amount of contractual notice specified in the contract or the statutory minimum notice - whichever is greater. Statutory minimum notice rights are implied into every employment contract and, for employees with at least one month's service, range from one week's notice (for under two years' service) to up to 12 weeks' notice (after 12 years' service).
If an employer dismisses without giving the required notice (and without a valid contractual PILON clause), this constitutes a breach. A contractual PILON clause permits payment instead of notice; where no such right exists in the contract, paying in lieu of notice may itself be a breach.
b. Terminating Fixed‑Term Contracts Early
If a fixed‑term contract specifies an end date and contains no valid early termination clause, ending that contract prematurely without consent amounts to a breach. The employee can seek damages for the loss of earnings they would have earned had the contract run to term.
c. Breach of Contractual Procedures
Some contracts include procedural terms - such as disciplinary or redundancy procedures - that must be followed before termination. Failing to comply with these procedures may breach the contract even if notice was given. Landmark case Gunton v Richmond upon Thames LBC established that where contractual procedures exist, employers can be liable for damages for failing to follow them.
Evidence to Establish Contractual Breach
To establish a breach of contract in dismissal, employees should compile clear evidence, including:
- A copy of the employment contract and any variations or staff handbooks incorporated into it.
- Correspondence showing the date and manner of termination (such as dismissal letters or emails).
- Evidence of notice periods owed and not given, including payslips or payroll records.
- Documentation of contractual procedures that should have been followed but were not.
- Any PILON clauses and whether payment was made in accordance with them.
Tribunals typically expect written evidence to support each element of the alleged breach. Without clear evidence, breaches may be difficult to prove.
Loss and Remedial Consequences
Once a breach of contract is established, the employee must also demonstrate loss resulting from that breach - typically loss of pay and benefits they would have received during the notice period. Damages in wrongful dismissal cases are normally calculated to put the claimant in the position they would have been in had the contract been honoured. This usually involves:
- Notice pay and related benefits.
- Loss of bonuses or commissions that would have accrued during the notice period.
Employment tribunals apply a cap to wrongful dismissal compensation (currently around £25,000), and where losses exceed that figure, claimants may pursue remedies in the civil courts, where higher awards are possible.
Constructive Dismissal and Contract Breach
In some cases, an employer's conduct amounts to a fundamental breach of contract, allowing an employee to treat their contract as ended - a concept known as constructive dismissal. Constructive dismissal claims require the employee to show that the employer's conduct was so serious that it went to the root of the contract and effectively repudiated it, justifying resignation and treating that resignation as dismissal. Tribunals examine express and implied terms, including the implied term of mutual trust and confidence, to determine whether a fundamental breach occurred.
Time Limits and Claim Process
Wrongful dismissal claims based on breach of contract must be made within three months less one day from the effective date of termination if pursued in an employment tribunal. Claimants must generally participate in early conciliation with ACAS before filing. Claims can also be brought in the civil courts (County or High Court) within a six‑year limitation period for breach of contract claims, often used where the value exceeds tribunal limits.
Practical Steps to Establish a Breach
- Review the Contract: Identify express and implied terms relevant to dismissal, such as notice, termination procedures and PILON rights.
- Document the Dismissal: Keep all communications about the termination, including emails, letters and meeting notes.
- Assess Notice Compliance: Compare what the contract required with what was given; calculate notice owed.
- Compile Financial Evidence: Prepare evidence of pay and benefits lost due to the breach.
- Seek Early Advice: Discuss your case with ACAS or a legal adviser to clarify prospects and appropriate forums for claims.
Common Questions
Can I claim wrongful dismissal even without a written contract?
Yes. Even in the absence of a written contract, tribunals may infer terms from conduct, handbook terms or established practices. The key is proving the contractual obligation existed and was breached.
Does gross misconduct prevent notice rights?
An employer may dismiss without notice only where a valid contractual right exists or where an employee's conduct amounts to a lawful summary termination (e.g., gross misconduct). Otherwise, failure to provide notice is a breach.
Is unfair dismissal the same as breach of contract?
No. Unfair dismissal is a statutory claim about fairness and procedures, while breach of contract is a contractual issue - a dismissal may be both unfair and a breach of contract in certain circumstances.
Key Takeaways
Establishing a breach of contract in dismissal involves demonstrating that an employment contract existed, that the employment was terminated by the employer, and that the employer failed to comply with contractual terms when dismissing the employee. Key breaches include inadequate or absent notice, improper use of PILON, and failure to follow contractual procedures. Employees must support their claim with evidence and demonstrate financial loss from the breach. Time limits are strict, and early preparation and professional advice help ensure claims properly articulate the contractual breaches and losses to maximise the likelihood of a successful outcome.
