Wrongful dismissal is a long-standing concept based on common law principles of contract law. All employment relationships are governed by the law of contract, although the freedom of parties to negotiate terms is now constrained by laws covering things such as the National Minimum Wage, working time, etc.
A wrongful dismissal claim is basically a claim for breach of contract. All employment contracts can be ended by either the employer or the employee giving notice. The period of notice is a matter for agreement between the parties, but is subject to minimum periods prescribed by law. These are:
After one month’s employment, an employee must give at least one week’s notice.
An employer must give one week’s notice to an employee who has been employed between one month and two years.
After two years’ service, an employer must give one week’s notice for each complete year of service of the employee, up to a maximum of 12 weeks’ notice after 12 years’ service.
The period of notice that the employer must give will always be the greater of that prescribed by law or stated in the employee’s contract of employment. Wrongful dismissal claims will generally be for the payment due for the notice period.
Wrongful dismissal claims are most likely to be brought by employees at either the bottom or the top end of the employment spectrum. For example, a claim might be brought by an employee who lacks the relevant length of service to bring an unfair dismissal claim, or by a highly-paid employee with a long notice period (for example, a director with a six month 'rolling contract') for whom the value of such a claim might be far in excess of the maximum claim that could be made under unfair dismissal law.