The law is stated as at 19 December 2007
Why are wrongful dismissal claims sometimes brought in a court and sometimes in an employment tribunal and what are the relevant time limits?
Before 1994 wrongful dismissal cases were dealt with exclusively by the courts. However since 1994, employment tribunals have had jurisdiction to deal with all wrongful dismissal cases as long as they do not award more than £25,000. (In unfair dismissal cases tribunals can award greater amounts).
In practice, an employee who has been wrongfully dismissed whose net salary and benefits for their notice period would amount to less than £25,000 or who is prepared to limit their damages to that level, can choose between an employment tribunal and the civil courts.
If a wrongful claim is likely to be worth more than £25,000 and the employee wishes to pursue the full amount then the employee should choose the courts rather than the employment tribunal. A wrongful dismissal claim cannot be broken into two actions ie one for damages up to £25,000 in the tribunal, and another for the balance in the courts. If an employee does wish to claim more than £25,000 in the courts, then they must withdraw any claim in the tribunal before a judgment is given. An attempt by an employee to reserve the right to pursue the claim for the excess amount in the courts will not be effective once the tribunal has made a judgment. (See Fraser v HLMAD Ltd [2006] EWCA Civ 738. CA)
Other factors to take into account include the fact that the time limit for a wrongful claim in the civil courts is six years from the dismissal, whereas the time limit in an employment tribunal is three months from the effective date of termination of the contract (subject to any power to extend that time limit). An employee who is late bringing a wrongful claim may therefore choose the civil courts for that reason.
A final point to emphasise is that recovery of legal costs by a successful party remains an elusive concept in the employment tribunal but is far more likely in the civil courts, so an employee with a strong wrongful case may prefer the civil courts as they can reinforce the threat of proceedings with an additional threat of recoverability of their costs.
Public funding (legal aid or community legal service funding) is not available in tribunal matters so an eligible employee with a wrongful dismissal claim may still choose to pursue the matter in a court rather than a tribunal.
While every care has been taken in compiling these notes, the CIPD cannot be held responsible for any errors or omissions; the notes are not intended to be a substitute for specific legal advice.