What Remedies Are Available for Wrongful Dismissal Claims?

Wrongful dismissal is a breach of contract claim that arises when an employer ends an employment relationship without complying with the terms of the contract. This most commonly occurs where an employee is dismissed without the correct notice period or without receiving payment in lieu of notice (PILON) where required.

The legal question in wrongful dismissal cases is not whether the dismissal was fair, but whether it was lawful under the contract. Remedies are therefore focused on financial compensation rather than reinstatement or broader workplace justice.

In England and Wales, wrongful dismissal claims may be brought in an employment tribunal or the civil courts, and the available remedies depend on the forum and the value of the claim.

Legal Basis for Remedies in Wrongful Dismissal

Wrongful dismissal is grounded in contract law, not statutory unfair dismissal law. The primary remedy is damages designed to place the employee in the position they would have been in had the contract been properly performed.

Tribunals and courts typically assess:

• Whether the employer breached the employment contract
• Whether proper notice was given or paid
• Whether any contractual procedures were followed
• Whether the employee suffered financial loss as a result of the breach

The general principle is compensatory rather than punitive.

Core Remedy: Damages for Notice Pay

Unpaid Notice Period

The most common remedy is payment for the contractual notice period. This includes:

• Basic salary for the notice period
• Regular contractual benefits (for example pension contributions or private healthcare where applicable)
• Commission or bonuses that are contractually guaranteed during notice

If an employer dismisses an employee without notice (and without justification for summary dismissal), the employee is generally entitled to the income they would have received during that notice period.

Payment in Lieu of Notice (PILON)

Where a contract allows PILON, the employer may terminate employment immediately by making a payment equivalent to notice pay. If the payment is not made correctly or is underpaid, a wrongful dismissal claim may arise.

Damages for Breach of Contractual Terms

In addition to notice pay, compensation may include other contractual losses, such as:

• Accrued but unpaid salary
• Unpaid holiday entitlement
• Contractual bonus payments that would have been earned during notice
• Loss of contractual benefits (e.g., company car, pension contributions)

These losses must be directly linked to the breach of contract.

Fixed-Term Contracts and Early Termination

Where an employee is employed under a fixed-term contract and the employer ends it early without a contractual break clause, damages may extend beyond a standard notice period.

In such cases, compensation may reflect:

• The remaining balance of the fixed term
• Contractual benefits for the remaining period
• Any guaranteed payments under the contract

This can significantly increase the value of a claim compared with standard notice-based dismissal.

Tribunal and Civil Court Differences in Remedies

Employment Tribunal Remedies

Employment tribunals can award damages for wrongful dismissal but with limitations:

• A statutory cap generally applies (commonly £25,000 for breach of contract claims within tribunal jurisdiction)
• The remedy is limited to financial compensation only
• No reinstatement or re-engagement is available for wrongful dismissal claims

Tribunals focus strictly on contractual losses, usually confined to notice pay and related benefits.

Civil Court Remedies

In civil courts (County Court or High Court), remedies are broader:

• No upper cap on damages
• Full recovery of contractual losses
• Ability to claim for longer-term or high-value notice periods
• Potential for additional remedies such as declarations or injunctions in specific contractual disputes

Civil court claims are more suitable for higher earners or employees with long contractual notice periods.

Interest on Compensation

In some cases, tribunals and courts may award interest on damages. This is designed to compensate for the time between dismissal and payment of compensation.

Interest is generally calculated from the date of breach to the date of judgment or settlement.

Mitigation of Loss

A key principle in wrongful dismissal remedies is mitigation.

The employee must take reasonable steps to reduce their financial loss, typically by:

• Seeking alternative employment
• Accepting suitable job offers where appropriate

Any earnings received during the notice period are deducted from the final compensation award.

Failure to mitigate can reduce the damages awarded.

Employer Defences Affecting Remedies

The most common defence affecting remedies is gross misconduct.

If an employer successfully proves gross misconduct:

• No notice pay is owed
• No damages for the notice period will be awarded

Other defences may include:

• Contractual exclusion or limitation clauses (where valid)
• Payment already made covering notice obligations
• Set-off for earnings during the notice period

Time Limits and Procedural Limits

The available remedy is also influenced by procedural rules:

• Employment tribunal wrongful dismissal claims are typically subject to a 3 months less one day time limit from termination
• Civil court breach of contract claims generally have a 6-year limitation period
• ACAS early conciliation is usually required before tribunal proceedings

Failure to comply with time limits can prevent any remedy being awarded.

Relationship with Unfair Dismissal Compensation

Wrongful dismissal remedies are distinct from unfair dismissal compensation:

• Wrongful dismissal: contractual notice pay and financial loss only
• Unfair dismissal: broader compensation including loss of earnings, statutory awards, and loss of employment rights

In some cases, both claims are brought together, but compensation is not duplicated for the same loss.

Key Takeaways

Remedies for wrongful dismissal claims are primarily financial and based on breach of contract principles. The main remedy is damages equivalent to notice pay, including salary and contractual benefits that would have been received during the notice period. Additional compensation may cover accrued entitlements, fixed-term contract losses, and other direct financial losses.

Employment tribunals apply a financial cap and provide a limited remedy structure, while civil courts allow for uncapped damages and broader contractual recovery. In all cases, the employee must mitigate losses, and employer defences such as gross misconduct can eliminate entitlement to compensation.