(1) Contract vs. Statute
The first key difference is that wrongful dismissal involves a breach of contract, whereas unfair dismissal involves a breach of statutory law.
(2) Courts/Tribunal vs. Tribunal
Another key distinction is that you can pursue your claim for wrongful dismissal either in the civil courts or before an employment tribunal. But you can only claim unfair dismissal in front of an employment tribunal.
The rules on remedies are also very different. There are two remedies available for unfair dismissal: re-instatement / re-engagement and compensation. While tribunals rarely order re-instatement or re-engagement for unfair dismissal (since few claimants request it), they never do for wrongful dismissal.
Moreover, unlike wrongful dismissal, compensation for unfair dismissal consists of two elements – the basic award and the compensatory award. The basic award is determined by reference to a fixed statutory formula and limited to a maximum overall payment of (as of 1st February 2010) £11,400. The amount a court/tribunal can order for the compensatory award is also limited, currently to £65,300.
Since wrongful dismissal is founded on contract law, it is subject to standard rules for contractual damages. This means you cannot recover damages that do not arise naturally from the breach. And damages should put you, so far as money can, in the same position as if the contract had been performed.
There is no limit on the amount of damages a civil court can award for wrongful dismissal. But an employment tribunal cannot award more than £25,000.
(4) Time limits
Turning to the time limit for filing a claim with an employment tribunal, this is the same for both unfair dismissal and wrongful dismissal – within three months of your last day of employment.
As stated above, however, you can pursue your claim for wrongful dismissal either in the civil courts or before an employment tribunal, and the time limit for filing in civil court is much longer – you have six years from the date you were dismissed.
(5) Service qualification period
Generally only employees who have a year’s continuity of service at the date of dismissal, or have been dismissed without notice and are within a week of gaining a year’s continuity of service, can claim unfair dismissal. In contrast, there is no service qualification period for wrongful dismissal.
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