Wrongful dismissal (also wrongful termination or wrongful discharge) is an idiom and legal phrase, describing a situation in which an employee's contract of employment has been terminated by the employer in circumstances where the termination breaches one or more terms of the contract of employment, or a statute provision in employment law. It follows that the scope for Wrongful Dismissal varies according to the terms of the employment contract, and varies from jurisdiction to jurisdiction. Note that the absence of a formal contract of employment does not preclude Wrongful Dismissal in jurisdictions in which a de facto contract is taken to exist by virtue of the employment relationship. Terms of such a contract may include obligations and rights outlined in an Employee handbook.
Examples of wrongful dismissal might include:
- dismissal without going through a contractually mandated dismissal process, which might involve an escalating series of warning letters, &c, where grounds for dismissal are not such as to meet the test for summary dismissal.
- dismissal for a wrongful cause, for instance in a circumstance in which a dismissible action is falsely attributed to an employee.
- illegal discrimination (including cases where another "sham" cause is stated).
Wrongful dismissal will tend to arise first as a claim by the employee so dismissed. Many jurisdictions provide tribunals or courts which will hear actions for wrongful dismissal. A proven wrongful dismissal will tend to lead to two main remedies: reinstatement of the dismissed employee, and/or monetary compensation for the wrongfully dismissed.
A related situation is constructive dismissal, in which an employee feels no choice but to resign from employment for reasons imposed by the employer.
One way to avoid potential liability for wrongful dismissal is to institute an employment probation period after which a new employee is automatically terminated unless there is sufficient justification NOT to do so. The dismissed employee may still assert a claim, but proof will be more difficult, as the employer may have broad discretion with retaining such a temporary employee.