What is Wrongful Dismissal?

Wrongful dismissal is essentially a breach of contract claim arising from the termination of employment.

The most common example is where an employer dismisses an employee without giving the notice required by:

• The Employment contract
• The Statutory minimum notice rules

and has no lawful basis for dismissing the employee without notice.

For example, if your contract states that you are entitled to three months' notice but your employer dismisses you immediately without paying the notice entitlement, you may potentially have a wrongful dismissal claim.

Wrongful dismissal is different from Unfair Dismissal.

A wrongful dismissal claim principally asks:

Did the employer breach the employment contract when ending the employment?

An unfair dismissal claim instead considers matters such as:

• The Reason for dismissal
• Whether that reason was potentially fair
• Whether the employer acted reasonably
• Whether a fair procedure was followed

Do I Need a Minimum Length of Service?

No.

There is no ordinary qualifying period of employment for a wrongful dismissal claim.

You could potentially have a claim even if you have worked for your employer for only a short period, provided the employer breached a contractual obligation relating to the termination of your employment.

This differs from ordinary unfair dismissal.

As at 10 September 2026, ordinary unfair dismissal generally requires:

2 years' continuous employment

unless an exception applies.

From 1 January 2027, that qualifying period will reduce to:

6 months.

What is the Most Common Wrongful Dismissal Claim?

The most common wrongful dismissal claim concerns failure to provide the correct notice or notice pay.

For example, assume your contract provides for:

6 months' notice

but your employer dismisses you immediately and does not have a contractual right to terminate by making a Payment in Lieu of Notice.

Unless the employer was entitled to dismiss you without notice, you may potentially claim damages representing the financial position you would have been in if the contract had been properly performed.

For further guidance, see Notice.

What Can I Claim for Wrongful Dismissal?

Damages are generally intended to place you, so far as money can do so, in the financial position you would have been in if your employer had complied with the contract.

The starting point will often be the value of your contractual notice period.

Depending on your contract and circumstances, recoverable losses can potentially include:

• Salary
• Contractual allowances
• Pension contributions
• Private medical insurance
• Company car benefits
• Contractual bonus
• Commission
• Other contractual benefits
• Certain share or option-related losses

The precise value depends on what you would probably have received if the employer had lawfully allowed the employment to continue for the relevant period.

Can I Claim a Bonus During the Notice Period?

Potentially.

If you would have become contractually entitled to a bonus during the notice period, its value can potentially form part of a wrongful dismissal claim.

The position may depend on matters such as:

• Contractual wording
• Bonus scheme rules
• Payment date
• Performance conditions
• Whether you needed to remain employed on the payment date
• Whether the bonus was genuinely discretionary

The fact that a bonus is described as discretionary does not necessarily mean that it has no value for contractual purposes.

However, establishing the amount can be more difficult where the employer retained a genuine discretion over:

• Whether any bonus would be paid
• The Amount of the bonus

For further guidance, see Bonuses.

What About Share Options and Share Awards?

Share-related rights can also be important, particularly for senior employees.

Wrongful early termination can potentially affect:

• Share options
• Restricted Stock Units
• Deferred shares
• Long-term incentive awards
• Other employee share arrangements

Whether any resulting loss is recoverable depends heavily on the wording of:

• The Employment contract
• Share-plan rules
• Award documentation
• Leaver provisions

For example, an employee may argue that if the correct contractual notice had been given, an option would have:

• Vested
• Become exercisable
• Remained capable of exercise for longer

However, many schemes contain detailed provisions governing what happens on termination.

The fact that employment was terminated in breach of contract does not automatically override every share-plan rule.

For further guidance, see Shares and Stock Options.

What if My Employer Says I Committed Gross Misconduct?

An employer can dismiss an employee without notice where the employee has committed sufficiently serious misconduct amounting to a repudiatory breach of the employment contract.

This is commonly referred to as Gross Misconduct.

Examples can potentially include serious:

• Dishonesty
• Theft
• Violence
• Fraud
• Breaches of confidentiality

If the employer establishes that your conduct legally justified summary dismissal, you will not normally be entitled to notice or damages representing that notice period.

However, simply describing conduct as gross misconduct does not make it so.

The seriousness of the conduct and contractual circumstances must justify termination without notice.

Does an Employer Have to Follow a Fair Procedure Before Summary Dismissal?

An employer should normally follow a fair disciplinary procedure before dismissing for gross misconduct.

That is particularly important for an unfair dismissal claim.

However, wrongful dismissal and unfair dismissal involve different legal tests.

For wrongful dismissal, the principal question is usually whether the employee actually committed conduct sufficiently serious to entitle the employer to terminate the contract without notice.

A procedural failure will not necessarily create wrongful dismissal damages unless:

• The Procedure itself was contractually binding
• The Employer otherwise breached the contract

An employee may therefore succeed in an unfair dismissal claim because of an unreasonable disciplinary process while failing in a wrongful dismissal claim if the established misconduct nevertheless justified summary termination.

Can a Contractual Disciplinary Procedure Create a Wrongful Dismissal Claim?

Potentially.

Wrongful dismissal is not limited solely to notice clauses.

If the employment contract contains a contractually binding disciplinary or dismissal procedure, failure to follow that procedure can potentially amount to breach of contract.

Damages will depend on the loss caused by the breach.

This is different from a non-contractual staff policy that expressly states it does not form part of the employment contract.

For further guidance, see Dismissal and Disciplinary Process.

Dismissal With Payment in Lieu of Notice

Employers frequently terminate employment immediately and make a Payment in Lieu of Notice, commonly called PILON.

The legal position depends significantly on the employment contract.

What if My Contract Contains a PILON Clause?

Where the contract gives the employer an express right to terminate employment immediately by making a specified payment in lieu of notice, the employer can generally exercise that contractual right.

If the employer complies fully with the clause, there may be no wrongful dismissal because the contract itself permits that method of termination.

The precise payment will depend on the wording of the PILON provision.

A clause might provide for:

• Basic salary only
• Salary and specified benefits
• Another defined contractual amount

The contract therefore needs to be checked carefully.

What if There is No PILON Clause?

If there is no contractual right to terminate immediately by paying in lieu of notice, an immediate termination can potentially constitute a breach of contract.

The employer may nevertheless make a payment representing notice losses.

That payment can reduce or extinguish the damages actually recoverable because the employee cannot generally receive compensation twice for the same loss.

However, making a payment after breaching the contract does not necessarily mean that the original termination was contractually lawful.

This distinction can matter for certain contractual rights that depend on whether employment continued during the notice period.

What is the Difference Between PILON and Garden Leave?

Under garden leave, the employment contract continues during the notice period.

The employee normally:

• Remains employed
• Continues receiving contractual remuneration
• Remains subject to contractual obligations

but is not required to perform normal duties.

With a PILON termination, employment ends immediately and the employee receives a payment instead of working the notice period.

The distinction can be important for:

• Bonus eligibility
• Share options
• Pension
• Benefits
• Restrictive covenants
• Continuous employment

How Are Wrongful Dismissal Damages Calculated?

The Tribunal or court generally considers what you would have received if the employer had performed the employment contract correctly.

For a notice claim, this usually means assessing your financial position during the notice period.

For example, if you were contractually entitled to three months' notice, the calculation might consider:

• 3 Months' salary
• Employer pension contributions
• Car allowance
• Private medical cover
• Contractual bonus or commission
• Other contractual benefits

Any amounts actually received or saved as a result of the termination may then need to be considered.

Do I Have to Look for Another Job?

Yes.

The ordinary contractual principle of mitigation of loss applies.

You are expected to take reasonable steps to reduce the financial loss caused by the employer's breach.

This will often mean making reasonable efforts to obtain suitable alternative employment.

You are not normally required to:

• Accept any job regardless of suitability
• Take substantially inappropriate employment
• Act unreasonably simply to reduce the employer's liability

However, if you unreasonably fail to look for suitable work, recoverable damages can be reduced.

What if I Find Another Job During My Notice Period?

Income earned from suitable alternative employment during the period for which you are claiming contractual damages will generally need to be taken into account.

You cannot normally recover:

• Full salary from your former employer as damages

while also retaining:

• Replacement earnings for exactly the same period

without the replacement income being considered.

The purpose of damages is compensation for actual contractual loss, not double recovery.

Can I Claim Compensation for Distress or Damage to My Reputation?

Wrongful dismissal damages are generally concerned with financial loss caused by the contractual breach.

An employee cannot ordinarily recover general damages simply because the manner of dismissal caused:

• Distress
• Embarrassment
• Humiliation
• Hurt feelings

Other legal claims may potentially provide different remedies where the facts involve matters such as:

• Discrimination
• Whistleblowing
• Personal injury

but those are separate causes of action.

What is the Difference Between Wrongful and Unfair Dismissal Compensation?

The two claims compensate different legal wrongs.

Wrongful Dismissal

This is a contractual claim.

Damages commonly focus on what you would have received during the contractual notice period or other loss caused by the contractual breach.

Unfair Dismissal

This is a statutory claim.

Compensation can include:

• A Basic award
• A Compensatory award

and focuses on financial losses caused by the unfair dismissal.

For further information, see Unfair Dismissal.

Is Wrongful Dismissal Better for Highly Paid Employees?

It depends on the circumstances.

Historically, wrongful dismissal could be particularly significant for senior employees with:

• High salaries
• Long contractual notice periods
• Valuable benefits
• Bonuses
• Share incentives

because contractual damages were not subject to the ordinary unfair dismissal compensatory award cap.

As at 10 September 2026, the ordinary unfair dismissal compensatory award is currently capped at the lower of:

£123,543

or

52 weeks' gross pay

where the statutory cap applies.

However, this comparison is changing.

From 1 January 2027, the existing compensatory award cap for unfair dismissal will be removed.

This means it should no longer be assumed that wrongful dismissal will necessarily provide a higher potential remedy simply because an employee earns a high salary.

The two claims will still remain legally distinct and can compensate different losses.

Can I Claim Both Wrongful Dismissal and Unfair Dismissal?

Potentially, yes.

The same termination can give rise to both claims.

For example, an employer might:

• Dismiss you without contractual notice
• Handle the dismissal unfairly

You could potentially pursue both:

• Wrongful dismissal
• Unfair dismissal

However, you cannot recover twice for the same financial loss.

Any compensation already received under one claim can therefore affect what remains recoverable under the other.

Where Can I Bring a Wrongful Dismissal Claim?

A qualifying wrongful dismissal claim can potentially be brought in:

• The Employment Tribunal
• The Civil courts

The correct forum can depend on:

• Whether employment has ended
• Value of the claim
• Applicable limitation period
• Complexity of the dispute

Employment Tribunal Claims

An Employment Tribunal can generally hear qualifying breach-of-contract claims where employment has ended.

There is no minimum qualifying-service requirement.

However, the Employment Tribunal can award a maximum of:

£25,000

for a breach-of-contract claim.

If the contractual damages exceed £25,000, the civil courts may therefore be a more appropriate route.

For further guidance, see Tribunal Proceedings.

What is the Current Employment Tribunal Time Limit?

As at 10 September 2026, a qualifying breach-of-contract claim in the Employment Tribunal generally needs to be started within:

3 months minus 1 day

from termination of employment.

You must normally notify Acas and complete the required Early Conciliation process before presenting the Tribunal claim.

Acas Early Conciliation can affect the final limitation deadline.

Is the Deadline Changing?

Yes.

For breach-of-employment-contract claims in England and Wales, the Employment Tribunal limitation period increases to:

6 months minus 1 day

where the relevant termination occurs on or after:

1 October 2026

For equivalent Employment Tribunal contractual claims in Scotland, the change takes effect from:

9 November 2026

For further guidance, see Time Limits.

What is the Civil Court Time Limit?

The civil court limitation period is much longer than the Employment Tribunal deadline.

In England and Wales, a simple contractual claim will generally need to be brought within:

6 years

from the date the cause of action accrued.

In Scotland, contractual claims are generally subject to a:

5-year prescriptive period

subject to the detailed Scottish prescription rules.

The appropriate Scottish forum may include the Sheriff Court or, depending on the circumstances, the Court of Session.

Civil litigation also has different rules concerning:

• Court fees
• Costs
• Procedure
• Evidence

The longer limitation period does not necessarily mean that delaying a claim is advisable.

Should I Bring the Claim in the Tribunal or Civil Court?

The appropriate forum depends on the individual case.

Relevant factors can include:

• Amount claimed
• Whether you also have statutory employment claims
• Limitation period
• Legal costs
• Complexity
• Whether the Employment Tribunal has jurisdiction

For example, an employee seeking contractual damages of £75,000 could not recover the whole amount through the Employment Tribunal's breach-of-contract jurisdiction because of the £25,000 cap.

A civil court claim may therefore need to be considered.

What Should I Check if I Think I Have Been Wrongfully Dismissed?

It is useful to review the documents governing your employment, including:

• Employment contract
• Written statement
• Notice provisions
• PILON clause
• Bonus scheme
• Commission scheme
• Pension terms
• Benefits
• Share-plan documents
• Disciplinary procedure

You should then establish:

• What notice you were entitled to
• Whether the employer had a contractual PILON right
• Whether summary dismissal was legally justified
• What remuneration and benefits would have continued
• What alternative earnings you have received
• Which forum and limitation period apply

A wrongful dismissal claim can appear straightforward where notice has not been paid, but the calculation can become significantly more complex where the remuneration package includes bonuses, shares, long notice periods or valuable contractual benefits.