SE12970 - Termination payments and benefits: payments made under the Employment Rights Act 1996: wrongful dismissal

Complaints of wrongful dismissal resulting from the employer's termination of the employment without adequate notice are common. Wrongful dismissal involves a breach of contractual terms rather than an infringement of statutory rules. But Employment Tribunals still deal with these because employees have statutory rights to notice under Sections 86 and 87 Employment Rights Act 1996 (ERA) quite apart from any such rights contained in a contract of employment.

If the tribunal finds that the employer has wrongfully dismissed the employee without notice, it may require the employer to make a payment instead under Sections 88 and 89 ERA. Such a payment is to be taxed only under Section 148 ICTA 1988 in the same way as damages which an employer pays for breach of an employee's contractual notice rights (see SE12978).

As regards other payments made under the Employment Rights Act 1996, a list of those assessable under Section 19 ICTA 1988 will be found at SE02550.

Employment Income Technical can advise on an award made under Sections of the Act not covered in instructions.