“Fired”, “sacked”, “got the boot”, “jumped before he was pushed”, “severance”, “let go”, “proceed on indefinite leave”. These are some of the wonderful tags we have for the miserable situation of being kicked out of a job.  In the world of horse hair wigs and long black gowns however, the two most important words for the sorry state of being sacked have been WRONGFUL DISMISSAL and latterly UNFAIR TERMINATION.  We tend to use these terms interchangeably. There was one occasion in Court when the Judge asked a lawyer not to mix the terms (okay it was me!). What is the distinction between the two terms and does it really matter? After all, whether a person is wrongfully dismissed or unfairly terminated, that person is still in a jobless situation. What is the current situation? I am not just discussing parts and particles of the Labour Act 2003 in this quarter. I am asking for reasoned opinions after you have read the topic under discussion.

To put the subject into perspective, note that we have Common law,(also known as case law or precedent). This is law developed by judges through decisions of courts. We also have Legislative Statutes developed by Parliament. These two run alongside each other and make up our “plural legal system”.

COMMON LAW DISTINCTION BETWEEN DISMISSAL AND TERMINATION

Termination

At common law, an employer and his employee are free and equal parties to the contract of employment. Hence, either party has the right to bring the contract to an end in accordance with its terms (e.g. redundancy, retirement etc.). Of course, this creates a pretty unsatisfactory situation for the employee because of the imbalance of power in the employment relationship.  There is no comparison between the consequences for an employer if an employee terminates the contract of employment and those which will ensue for an employee if he is terminated. In a termination, the employer and employee mutually agree to end the contract prematurely or according to any other provisions relating to termination of the employment contract. A termination does not always mean that an employee leaves the service of that particular employer. For example, an employee could be made redundant in a particular role and offered a position in another. Here, the original contract would be terminated and a new one put in place. The employee remains in the service of the employer.

Dismissal

The common law position with regard to “dismissal” is that an employer may dismiss an employee for many reasons such as misconduct, substantial negligence, dishonesty, etc. These acts may be said to be so serious a breach of the duty by the employee that the employer can be justified in concluding that it is the employee who has repudiated the contract of employment. There is no fixed rule of law defining the degree of misconduct that will justify dismissal. The employer has to prove that the act was a serious breach of duty (show just cause). If a dismissal is without just cause, the employer is deemed to have wrongfully repudiated his contractual obligations to the employee—and the dismissal is said to be wrongful. There is also an unbroken line of authority at common law that an employee cannot lawfully be dismissed (as against terminated) without first telling him what is alleged against him and hearing his defense or explanation. This is because if the dismissal is lawful, the employee loses all his entitlements (except for statutory entitlements such as annual leave), including his right to notice (summary dismissal).

WHAT DOES THIS MEAN?

This means that a lawful termination is ALWAYS according to the terms of the contract and in a lawful dismissal the employer is able to prove that the employee has acted so BADLY that the employer can END THE TERMS OF THE CONTRACT but subject to a laid out PROCEDURE in the contract.

LEGISLATION

The common law and contractual situations have been entrenched into legislation by the Labour Act 2003 which is “An Act to amend and consolidate the laws relating to labour, employers, trade unions and industrial relations….” The Labour Act does not really make any distinction between dismissal and termination. S15 of the Labour Act lays out the grounds for termination of Employment, S62 says what a fair termination is, S63 lays out what an unfair termination and S64 provides remedies for a worker who has been unfairly terminated.

S57 (8)says that an employer should not “dismiss” a worker because she is on maternity leave.  I wonder whether the word  “dismiss”  used here is a typo because S63 (2) (e) states unequivocally that if the only reason for termination is pregnancy or absence of the worker on maternity leave, then it is an unfair termination.   

Ultimately, the law of contract is still the foundation of employment relationships. Just like statutory power, the contractual power of termination (or dismissal) must be exercised within the four corners of the terms of the contract. There are many situations for which the law has not legislated (I frequently discover new ones all over the place). It is then up to the law of contract and common law to fill the gaps and supply us with the answers that we need.  

By Cilinnie Ngo-Pondi, CEO of Employment Relations Center