Remedies Available After Wrongful Termination

Wrongful termination occurs when an employer breaches the terms of an employment contract or legal obligations in ending a contract. Remedies are the legal outcomes available to an employee after a successful claim for wrongful dismissal or related disputes. In England and Wales, remedies vary depending on whether a claim is brought to an Employment Tribunal or a civil court, and on the legal basis of the claim - for example, contract breach (wrongful dismissal) or statutory unfair dismissal. This article explains the remedies available, how they are calculated, procedural requirements including time limits, limitations on awards, and other practical considerations for employees and solicitors.

Understanding Wrongful Termination and the Legal Basis for Remedies

Wrongful termination (often called wrongful dismissal) is a contract law claim that arises when an employer ends employment in breach of the contract, most often by failing to give the required notice or by not following contractual procedures. This differs from statutory unfair dismissal, which is based on rights under the Employment Rights Act 1996 and assessed for fair reason and fair process. Remedies available for wrongful termination reflect these distinctions and are centred on contractual losses.

Remedies in Employment Tribunals

Damages for Wrongful Dismissal (Tribunal)

In an Employment Tribunal, the remedy for wrongful dismissal is damages - financial compensation designed to put the employee in the position they would have been in had the contract been properly performed. Remedies include:

• Notice pay and contractual benefits that would have been received during the proper notice period.
• Loss arising from failure to follow contractual procedures, including any delay caused by improper process.
• Other contractual entitlements, such as accrued holiday pay or bonuses where appropriate.

Tribunal damages for wrongful dismissal are generally capped at a statutory limit of £25,000. If the employee seeks a greater sum, they may pursue the claim in the civil courts where there is no such cap and a longer limitation period of six years applies.

Unlike unfair dismissal, tribunals do not order reinstatement or re‑engagement in wrongful dismissal claims; the sole remedy is monetary compensation for breach of contract.

Remedies for Statutory Unfair Dismissal

Even though this article focuses on wrongful termination, many cases involve overlaps with statutory unfair dismissal claims. A successful unfair dismissal claim can attract additional remedies beyond contract damages.

Compensation Awards

If an Employment Tribunal finds a dismissal was unfair under statutory law, it can order several remedies, prioritised as follows:

1. Reinstatement – returning the employee to their former role on the same terms.
2. Re‑engagement – placing the individual in a comparable role with the employer.
3. Compensation Awards – monetary payments if reinstatement/re‑engagement are inappropriate or refused.

Tribunals are required to consider reinstatement or re‑engagement before compensation but these outcomes are rare in practice. Many employees have moved on or the employer‑employee relationship is considered untenable.

Components of Compensation

Compensation for unfair dismissal typically comprises two distinct elements:

Basic Award
This award resembles statutory redundancy pay and is based on age, length of continuous service, and gross weekly pay, with a statutory cap on weekly pay. From April 2025, the maximum basic award reflects statutory redundancy calculations (capped at £719 gross weekly pay).

Compensatory Award
This is designed to compensate for actual financial losses resulting from the dismissal. It can include:

• Lost earnings (net) from termination to the date of hearing, and, where appropriate, projected future losses;
• Lost employer pension contributions and contractual benefits;
• Job search and retraining costs; and
• Loss of statutory rights in limited circumstances.

The compensatory award is usually capped at the lower of one year's gross pay or a statutory cap (currently £118,223 from April 2025), although exceptions exist for some automatically unfair dismissals or discrimination cases where caps may not apply.

Tribunals can increase compensation by up to 25% if an employer unreasonably fails to follow the Acas Code of Practice on Disciplinary and Grievance Procedures.

Civil Court Remedies

While Employment Tribunals handle most wrongful dismissal claims, employees may instead pursue a civil court claim for breach of contract. The remedies in civil proceedings can differ from tribunal outcomes.

Damages in Civil Courts

Civil court claims for wrongful dismissal can offer:

• Uncapped damages for contractual losses. Unlike tribunals, civil courts have no statutory ceiling on awards for breach of contract.
• Compensation for the full contractual period that would have applied, including the unexpired term of fixed‑term contracts or notice period.
• Injunctions or declarations confirming rights or prohibiting certain conduct by the employer.

These broader remedies may be appropriate in complex contractual disputes where significant loss is anticipated, but civil court claims carry longer limitation periods (six years) and may involve higher procedural costs.

Alternative Remedies and Negotiated Outcomes

Settlement Agreements

Parties may resolve wrongful termination disputes through settlement agreements. These negotiated settlements often involve financial payments and agreed terms that avoid litigation. Settlement agreements can provide certainty, preserve reputation, and expedite financial resolution, but must meet statutory conditions, including independent legal advice for the employee.

Early Conciliation and Mediation

Before a tribunal claim, employees must normally engage in Acas early conciliation, which can lead to a settlement without formal litigation. Mediation or arbitration through Acas or private providers can also resolve disputes. Such alternative dispute resolution (ADR) can be less adversarial and lead to bespoke remedies agreed by both sides.

Time Limits and Practical Considerations

Time Limits

For Employment Tribunal claims, employees must usually lodge claims within three months less one day from the effective date of termination. Failure to comply typically bars the claim unless exceptional circumstances apply. Civil court claims for breach of contract have a longer six‑year limitation period.

Mitigation of Losses

Employees have a duty to mitigate their loss by taking reasonable steps to find alternative employment. Compensation awards may be reduced if the claimant does not actively seek new work.

Common Questions

Can I claim compensation for distress or injury to feelings in wrongful termination?
In a contract breach claim, compensation is generally limited to financial losses and contractual entitlements; damages for emotional distress are not typical. Emotional loss awards are generally limited to discrimination claims or specific statutory breaches.

Can I get my job back?
In wrongful dismissal claims, tribunals do not order reinstatement or re‑engagement. Those remedies apply only in statutory unfair dismissal proceedings and are rare.

Is arbitration binding?
Arbitration can be binding if both parties agree to refer their dispute to an arbitrator and accept the outcome. Binding arbitration can offer a final resolution without a tribunal or court.

Key Takeaways

Remedies after wrongful termination in England and Wales focus on compensating employees for financial losses arising from breaches of contractual or statutory rights. In wrongful dismissal claims, the primary remedy is damages for notice and related contractual loss, usually capped in tribunals but uncapped in civil courts. In unfair dismissal claims, tribunals may order reinstatement, re‑engagement, and compensation comprising basic and compensatory awards. Alternative resolution through settlement agreements and early conciliation can also provide practical outcomes. Understanding available remedies and associated limits helps claimants pursue appropriate action after termination.

James William Steven Parker

James is the founder of UKLegalGuides.com and a former agent at the Ministry of Justice (UK). With a background in processing legal claims, he launched this platform to make the laws of England and Wales accessible to everyone.