This means the employer of a senior employee privy to company secrets should be careful not to unjustifiably summarily dismiss him, or put him on garden leave or pay him in lieu of notice without a contractual provision allowing it, or even miscalculate his notice period making it a day short.
If an employer wants an exiting employee out of the way and does not have the contractual right to put him on garden leave, or pay him in lieu of notice, then the only options are to encourage the use of holiday and offer a compromise agreement to waive his right to sue, in return for the intentional breach of contract.
Sometimes the breach turns the termination payment into compensation rather than wages, making it tax-free, so the employee may be only too happy to go along with the ruse.
To avoid arguments about whether these would have been earned, it may make sense to compromise by paying the usual sort of overtime or bonus the employee would have gotten if working.
[20] The deductions that can be made from compensation are: Because it is a contract claim, the employee has a duty to mitigate his loss by seeking employment, as soon as possible, for as high a wage as possible;so the tribunal or court would deduct earnings from a new job, during the correct notice period from compensation due, but if the employer attempts to do this unilaterally, it may simply trigger a claim that would not otherwise have happened, had it turned a blind eye to the employee making a couple of weeks' wages out of the situation.
[26] It is possible for a contract to be worded so as to make the pay in lieu of notice a debt, to which the employee is entitled even if he gets a new job the next day.
[27] Wrongful dismissal is the lesser type of unlawful dismissal, costing only what it would have done to keep the employee during the notice period, but it can be slightly dangerous for the employer, due to the potential loss of restrictive covenants and due to the employee being able to start alleging all sorts of breaches of contract, to try to use up the £25,000 breach of contract allowance in a tribunal, and if he takes the employer to court instead there is no limit and it could end with significantly high costs.
The burden of proving double recovery is on the employer and tribunal awards for unfair dismissal can be vague as to what and when they are for.
As only economic loss can be claimed for breach of contract, the main loss will be earnings due to the lost notice period, as opposed to any disgruntlement about the manner or reason for dismissal, so the constructive nature of the dismissal tends to disappear into the claim for lost notice period.