In Edwards v Chesterfield Royal Hospital and Botham (FC) v Ministry of Defence the Supreme Court revisited the question of whether, over and above any right to compensation for unfair dismissal, employees can recover damages for the way in which they have been dismissed and specifically in the situation where the employer has failed to follow a contractual disciplinary procedure.The cases of Mr Edwards and Mr Botham concerned the same issues of law and were therefore considered together.
It has been long been clear that there is no scope for damages for injury to feelings being awarded in a claim for breach of contract (as opposed to a discrimination claim, where compensation for injury to feelings is established by statute). Numerous attempts have been made, however, to try and establish the possibility that a separate claim might succeed where an express term had been broken, rather than the implied term of mutual trust and confidence. The Supreme Court, by a majority, has now excluded that possibility, rejecting the suggestion that breach of a disciplinary procedure followed as part of the dismissal process can somehow be seen as independent of the dismissal itself. To do so might take it outside the rule excluding separate damages for the manner of dismissal – something the Supreme Court considered Parliament had intended should be fully encompassed within the statutory protection against unfair dismissal.
Broadly, an employee will only recover loss of earnings in such cases, and the only compensation unrelated to monetary losses will be the basic unfair dismissal award.
The appeal hearing took place on 22 and 23 June 2011 and the judgment of the seven Supreme Court judges was handed down on 14 December. In many cases the decision reached by appeal judges is unanimous, but not so in this case and the judgment provides an interesting example of how a judgment, and the principles set out above, emerge from a number of divergent views.
The leading judgment was provided by Lord Dyson (with whom Lord Walker agreed). He summarised his analysis of the relevant legislation and case law as follows:
The unfair dismissal legislation precludes a claim for damages for breach of contract in relation to the manner of a dismissal, whether the claim is formulated as a claim for breach of an implied term or as a claim for breach of an express term which regulates disciplinary procedures leading to a dismissal. Parliament has made certain policy choices as to the circumstances in which and the conditions subject to which an employee may be compensated for unfair dismissal. A dismissal may be unfair because it is substantively unfair to dismiss the employee in the circumstances of the case and/or because the manner in which the dismissal was effected was unfair. The manner may be unfair because it was done in a humiliating manner or because the procedure adopted was unfair inter alia because the agreed disciplinary procedure which led to the dismissal was not followed. It may be unfair because defamatory findings were made which damage the employee’s reputation and which, following a dismissal, make it difficult for the employee to find further employment. Any such complaint was intended by Parliament to be adjudicated on by the specialist employment tribunal subject to the various constraints to which I have referred [limited compensation comprising primarily the basic and compensatory awards]. Parliament did not intend that an employee could choose to pursue his complaint of unfair dismissal in the ordinary courts, free from the limitations carefully crafted by Parliament for the exercise of this statutory jurisdiction.
Lord Phillips broadly agreed with Lord Dyson and added some observations about whether “stigma damages” should be recoverable in breach of contract wrongful dismissal claims and/or unfair dismissal claims based on the relevant legislation. Lord Mance also agreed with Lord Dyson and added his observations concerning the other judgments. Lady Hale disagreed, essentially on the basis that there exist free-standing common law rights, independent from unfair dismissal rights,which should not therefore be curtailed merely as a result of the existence of unfair dismissal rights.
Finally Lord Kerr (with whom Lord Wilson agreed) found in favour of the employee in one of the cases and the employer in the other.
Those who are interested to see how almost impenetrably complicated employment law issues can be are recommended to read the judgment. As I have commented on many occasions the issues which arise in the field of employment are often some of the most complicated in our legal system, as demonstrated by the divergent views of our most senior judges in this judgment.
