Unfair dismissal and wrongful termination are commonly used interchangeably. However, in the United States, wrongful termination is more often used to describe a termination in violation of the law. In some cases, workers may use the phrase unfair dismissal to describe termination that it is unethical, but not necessarily illegal. As a business owner, the important thing is to understand your rights under "employment at-will" and your legal responsibilities as an employer.
Employment At-Will
Employment at-will essentially means that employers and employees engage in an employment relation of their own volition, which either party can break at any point. An employee can quit a job at any point and you can terminate an employee at any point as long as you don't break the law in doing so. Every U.S. state has some version of employment at-will.
Unfair Dismissal Basics
Unfair dismissal is more commonly used in Britain to describe illegal termination. While this term is also used in the U.S. to describe unlawful or illegal termination, an employee may generally claim "unfair dismissal" when fired for reasons that seem unfair to the employee, but don't necessarily violate any laws. Fair reasons for termination generally include ongoing poor performance or termination for cause, such as when an employee steals or commits a violent act. Firing an employee because you don't like his personality isn't necessarily fair or right, but it typically isn't illegal either.
Wrongful Termination Basics
Wrongful termination is the common legal phrase in the U.S. meaning an employee was fired in violation of employment laws. Any time you fire someone based on discrimination for age, race, gender, ethnicity, religion or disability, as outlined in Title VII, the Age Discrimination Act or the Americans with Disabilities Act, you have wrongfully terminated. Firing someone for voting, serving jury duty or exercising basic free speech rights is typically wrongful termination as well. Whistleblower laws make it illegal to fire someone in retaliation from bringing illegal or unethical company actions to public light. You also can't terminate legally in violation of your own company policies as stated in manuals, codes or contracts.
Complexity
Wrongful termination is a complex issue. As an employer, you face potential unemployment insurance claims and civil lawsuit if found guilty of violating an employee's legal rights. Court decisions can sometimes be confusing in wrongful termination cases. The Iowa Supreme Court ruled in December 2012 that a male dentist didn't violate discrimination laws when a fired a female employee because he was attracted to her and wanted to protect his marriage. While the termination was seemingly unfair, it wasn't deemed illegal. As an employer, your safest approach is to keep documents and records of performances, appraisals and evaluations, and try to terminate for valid reasons.