How Is The Law Pertaining To Wrongful Dismissal Flawed?

By definition in US law:

wrongful dismissal, also called wrongful termination is when an employee's contract of employment has been terminated by the employer where the termination breaches one or more terms of the contract of employment or a statutory provision or rule in employment law. Laws governing wrongful dismissal vary according to the terms of the employment contract, as well as under the laws and public policies of the jurisdiction.” Wikipedia

Here is the fallacy of this law:

  1. Most companies are no longer willing to offer “employment contracts” as employment is predominantly “at will”. In some states, the absence of a formal contract of employment does not preclude wrongful dismissal. Some states have what we call a de facto contract that exists by virtue of the employment relationship. Terms of such a contract may include obligations and rights outlined in an employee handbook. These employee handbooks are often out of date and filled with disclaimers of being incomplete and modifiable at any time. The lack of employee protection under contract law makes most lawful dismissal lawsuits a “we said/the corporation versus she said/the employee.

  2. When companies want to get rid of employees for performance issues, or simply political reasons like whistleblowers, they will choose RIF (Reduction in Force). Under this umbrella of protection, all the company needs to do is make sure that they “lay-off” a diverse group of people. As companies will lay off people with a mix of age, gender, race, and tenure, anyone dismissed is unlikely to be able to sue for wrongful dismissal

  3. It is hard for employees to find witnesses if they want to sue the employer. Existing employees want to protect their jobs and will not be willing to say anything against the company. Moreover, Companies have unlimited resources to support their decisions while employees are vulnerable and have financial concerns.

  4. The “severance package” comes with reams of protections for the company. Employees give up all their legal rights for their severance package, payment of their vacation, COBRA (Health insurance). These short-term needs mitigate any long-term action or justice.

  5. Suing a company is bad for your future prospects and job search. There is a real stigma about “being a troublemaker”. Companies don’t want the risk of hiring people who: are independent thinkers, point out illegal activities like discrimination, wage disparity, and harassment.

As mentioned above, employees are in a vulnerable situation when it comes to taking any legal action against employers. They have limited resources because of their financial concerns and lack of knowledge about employment contracts.

Author: MK Marsden

MK Marsden is a management consultant, serial entrepreneur and board member. She consults to companies and helps them operationalize their business strategies and accelerate their growth.