LEGAL PRINCIPLE: LABOUR LAW – Wrongful Dismissal – Damages Limited to Salary for Notice Period Where Contract Is Terminable on Notice
PRINCIPLE STATEMENT
In wrongful dismissal claims, damages are prima facie the amount the plaintiff would have earned had employment continued according to contract; however, where the defendant has a right to terminate on prescribed notice before the end of term, damages should be limited to the notice period amount, bearing in mind the plaintiff's duty to minimise damage.
RATIO DECIDENDI (SOURCE)
"In a claim for wrongful dismissal the measurement of damages is prima facie the amount that the plaintiff would have earned had the employment continued according to contract… Where, however, the defendant, on giving the prescribed notice, has a right to terminate the contract before the end of the term, the damages awarded, apart from other entitlements, should be limited to the amount which would have been earned by the plaintiff over the period of notice bearing in mind that it is the duty of the plaintiff to minimise the damage which he sustains by the wrongful dismissal."
EXPLANATION / SCOPE
Wrongful dismissal damages compensate for breach of employment contract. The measure depends on contract terms: for fixed-term contracts without termination clauses, damages cover the remaining term. However, where contracts allow termination on notice (common in indefinite employment), damages are limited to the notice period salary because the employer could have lawfully terminated by giving proper notice. The wrongfulness lies in failing to give notice, not in terminating. The employee’s duty to mitigate requires reasonable efforts to find alternative employment during the notice period, reducing damages by amounts earned or which could reasonably have been earned. “Other entitlements” may include accrued benefits, unused leave, or contractual severance. This principle prevents windfall damages while compensating actual losses from improper termination procedure