Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Which term refers to a dismissal that violates the employment contract?

1. Constructive dismissal

2. Involuntary termination

3. Wrongful dismissal

4. Voluntary resignation

The correct answer is: Wrongful dismissal

The term that refers to a dismissal that violates the employment contract is wrongful dismissal. This situation arises when an employer terminates an employee’s contract without just cause or in a manner that contravenes the terms outlined in the employment agreement. In cases of wrongful dismissal, the employee may have legal grounds to pursue a claim for damages due to the unfair nature of the termination. It is essential to distinguish this from other terms. Constructive dismissal refers to a scenario where an employee feels compelled to resign due to the employer’s actions, making the work environment intolerable, but it does not involve a direct termination by the employer. Involuntary termination generally refers to any termination initiated by the employer, which could encompass several legitimate reasons, including performance issues or company restructuring, and does not necessarily imply a violation of the employment contract. Voluntary resignation is when an employee chooses to leave the organization on their own accord, which is not aligned with the concept of a dismissal at all. Thus, wrongful dismissal specifically addresses a breach of the contractual agreement by the employer.