Updating authors: Julian Hoskins and Sarah Lamont

On this page:
Summary
Future developments
Practical example
Action point checklist
Key references
Questions and answers
Notice periods
Pay in lieu of notice
Taxation of pay in lieu
Summary dismissal
Dismissal in breach of contract: wrongful dismissal
Resignation in breach of contract
Forum for making a claim

Summary

9.104

• If an employee is dismissed he or she is entitled to be given notice in accordance with the provisions in the Employment Rights Act 1996, section 86 or in accordance with the notice provisions in his or her contract - whichever is the greater. (See 9.106 Notice periods)
• Failure to give notice will be a breach of contract entitling the employee to make a contractual claim for breach of contract. (See 9.110 Dismissal in breach of contract: wrongful dismissal)
• The employer may be entitled to dismiss with no notice, or short notice, if the employee has committed a serious breach of contract, sometimes referred to as gross misconduct. (See 9.109 Summary dismissal)
• If the employer gives the employee pay in lieu of notice this will be a breach of contract unless there is an express provision in the employee's contract allowing it to do this. Such a breach of contract will not, however, permit the employee to recover damages in bringing a claim for breach of contract provided that the payment in lieu compensated the employee fully for the wages and benefits that he or she would have received in the notice period. (See 9.107 Pay in lieu of notice)
• Pay in lieu will not be taxable if it represents damages for breach of contract, ie if the contract does not include a provision permitting the employer to pay in lieu. Pay in lieu will be treated as wages, and therefore taxable, if the contract includes a provision permitting the employer to pay in lieu. (See 9.108 Taxation of pay in lieu)
• If the employer pays in lieu in breach of contract, this may affect the enforceability of any restrictive covenants in the employee's contract of employment. 
• The measure of damages in a claim for wrongful dismissal will be the employee's basic pay together with any other contractual entitlements that would have accrued in the notice period. (See 9.110 Dismissal in breach of contract: wrongful dismissal)
• The employer will be entitled to bring a claim for breach of contract against the employee if the employee resigns without giving due notice and the employer can show that it has suffered financial loss as a result of the breach. 
• Depending on the basis of the claim and its value a claim for breach of contract can be brought in the county court, the High Court or an employment tribunal. (See 9.112 Forum for making a claim)

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Future developments

9.105 There are no future developments.