Limitation Period for Compensation Claims Following Wrongful Dismissal

Wrongful dismissal is a contractual claim that arises when an employer terminates employment in breach of contract, most commonly by failing to give the correct notice or pay in lieu of notice. The remedy for wrongful dismissal is compensation, usually calculated as the financial loss caused by the breach.

In England and Wales, strict limitation periods apply to compensation claims following wrongful dismissal. The applicable time limit depends on whether the claim is brought in the Employment Tribunal or the civil courts. Choosing the correct forum and complying with the relevant deadline is essential, as late claims are usually barred regardless of merit.

What Is Wrongful Dismissal?

Wrongful dismissal is a common law claim based on breach of contract. It is different from unfair dismissal, which is a statutory claim.

A wrongful dismissal claim typically arises where:

• The employer fails to give contractual or statutory notice
• The employer dismisses the employee without paying notice pay
• The employer terminates employment in breach of an express contractual procedure
• The employer fails to pay contractual entitlements due on termination

The focus is on whether the contract was properly followed, not whether the dismissal was fair.

Compensation in Wrongful Dismissal Claims

Compensation aims to put the employee in the position they would have been in had the contract been properly performed.

Typical heads of loss include:

• Notice pay (contractual or statutory)
• Lost benefits during the notice period
• Pension contributions
• Commission or bonuses that would have accrued
• Holiday pay owed up to termination

Unlike unfair dismissal, compensation is generally limited to the contractual notice period unless additional breaches are proven.

Where Wrongful Dismissal Claims Are Brought

1. Employment Tribunal (Limited Jurisdiction)

The Employment Tribunal can hear certain breach of contract claims, including wrongful dismissal, but only where:

• The claim arises or is outstanding on termination
• The claim falls within statutory jurisdictional limits

This is governed by the Employment Tribunals Extension of Jurisdiction Order 1994.

2. Civil Courts

Most wrongful dismissal compensation claims can also be brought in:

• County Court
• High Court (for higher value or complex claims)

Civil courts have broader jurisdiction over contractual disputes.

Limitation Period in the Employment Tribunal

Core Rule

For tribunal claims, the limitation period is:

• 3 months less one day from the effective date of termination (EDT)

The EDT is usually:

• The last working day
• The end of the notice period (if worked or paid in lieu)
• The date of immediate dismissal

This applies whether or not compensation has been fully calculated at the time of termination.

ACAS Early Conciliation and Limitation

Before submitting an Employment Tribunal claim, ACAS Early Conciliation is generally required.

Effect on Time Limits

• The limitation period is paused during Early Conciliation
• Time resumes once the ACAS certificate is issued
• The claimant receives an adjusted deadline, not a full reset

Failure to account for this pause is a frequent reason for late submissions.

Limitation Period in Civil Courts

Where wrongful dismissal compensation is pursued as a contractual claim in civil courts:

• 6 years from the date of breach applies under the Limitation Act 1980

The breach typically occurs on the date of termination without proper notice or payment.

This is the most common route for higher-value claims.

Key Differences Between Tribunal and Civil Court Claims

Forum	Limitation Period	Scope
Employment Tribunal	3 months less one day	Limited contractual claims linked to termination
Civil Courts	6 years	Full contractual wrongful dismissal claims

Choosing the correct forum is essential, as jurisdictional limits can affect both time limits and recoverable compensation.

When Does the Limitation Period Start?

The limitation clock begins on the date of breach:

• For immediate dismissal without notice: the date of dismissal
• For notice cases: the date notice should have been properly given or paid
• For payment breaches: the date payment was due

Each breach may generate its own limitation period if separate contractual obligations are involved.

Extensions of Time

Employment Tribunal

Extensions are rare and only allowed if:

• It was not reasonably practicable to present the claim in time
• The claim was filed promptly once the issue was resolved

This is a strict legal test.

Civil Courts

Civil courts have limited discretion to extend limitation periods, but only in exceptional circumstances such as:

• Fraud or deliberate concealment
• Lack of capacity in specific legal contexts

These exceptions are narrowly applied.

Common Types of Compensation Disputes After Wrongful Dismissal

1. Notice Pay Disputes

Failure to pay:

• Contractual notice
• Statutory minimum notice

2. Benefits During Notice Period

Loss of:

• Pension contributions
• Healthcare benefits
• Company car or allowances

3. Bonus and Commission Claims

Disputes over:

• Accrued but unpaid commission
• Performance-related bonuses earned before termination

4. Holiday Pay

Outstanding holiday entitlement up to termination date

Common Limitation Pitfalls

1. Misidentifying the EDT

The limitation period is calculated from termination, not from later grievance outcomes or appeals.

2. Delayed ACAS Notification

Late notification reduces the remaining time available for filing a claim.

3. Assuming Negotiations Pause Time

Settlement discussions do not suspend limitation periods unless formally within ACAS Early Conciliation.

4. Wrong Forum Selection

Filing in the wrong jurisdiction can result in dismissal of the claim even if it is in time elsewhere.

Practical Step-by-Step Approach

1. Identify the effective date of termination
2. Determine whether the claim is contractual wrongful dismissal
3. Decide between Employment Tribunal or civil court route
4. Apply the correct limitation period (3 months or 6 years)
5. Adjust for ACAS Early Conciliation where relevant
6. Confirm calculation of compensation elements
7. Ensure claim is issued before expiry of limitation

Consequences of Missing the Limitation Period

If a claim is brought out of time:

• The tribunal or court is likely to strike it out
• The claimant loses the right to recover compensation
• Even valid contractual claims become unenforceable
• Costs may be awarded against late claims in civil proceedings

Final Thoughts

The limitation period for compensation claims following wrongful dismissal depends on the forum in which the claim is brought. In the Employment Tribunal, the strict limit is three months less one day from the effective date of termination, subject to ACAS Early Conciliation adjustments. In civil courts, the limitation period is generally six years under the Limitation Act 1980.

Correct identification of the termination date, proper calculation of notice-related losses, and timely action are essential. While wrongful dismissal claims are based on contract law, procedural deadlines are strictly enforced, and failure to comply will usually prevent recovery of compensation.