Supreme Court rules out preferential damages for unfair dismissal

James Wilders , 15 Dec 2011

James Wilders

The Supreme Court has issued its long awaited judgment in the case of Chesterfield Royal Hospital NHS Foundation Trust v Edwards.

In doing so it has overruled the Court of Appeal, which had held that an employee could recover damages for career long losses if an employer dismissed them without following a contractual disciplinary procedure.

Michael Edwards was a consultant trauma and orthopaedic surgeon at Chesterfield Royal Hospital. He was dismissed in 2006 following a disciplinary hearing for alleged gross professional and personal misconduct.

Under Edwards' employment contract, the Trust was obliged to follow its disciplinary procedure in cases of misconduct. Edwards claimed that the Trust breached those procedures by failing to appoint someone who was legally qualified to chair the disciplinary hearing, failing to include a clinician with the same medical discipline as that of Edwards on the disciplinary panel, and refusing to allow Edwards legal representation at the hearing.

He also claimed that no finding of misconduct would have been made if procedures had been followed properly. Because of the misconduct finding against him, Edwards claimed he was unable to pursue his medical career and was only able to obtain work as a locum, but not as a Consultant. As a result, he claimed damages of the continued loss of earnings until his intended retirement in 2022 at the age of 65, and in May 2010 the Court of Appeal held that he was entitled, in principle, to these.

This morning's decision by the Supreme Court has held that the level of damages an employee is entitled to is limited to the salary they would have received if the employer had terminated their employment lawfully. In other words, damages are restricted to the value of the employee's notice pay together with salary representing the time it would have taken to follow any contractual disciplinary procedure properly.

Whilst it comes as a blow to employees in similar situations, today's judgement does not mean that they are left without remedy. As well as breach of contract damages, compensation claims can be pursued in the Employment Tribunal if an employee feels dismissal is not justified.

James Wilders, employment partner at law firm, Dickinson Dees


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Edwards v Chesterfield

Mark Benney 15 Dec 2011

James, your final paragraph ignores the fact that for higher earners the statutory ceiling on compensation for "ordinary" unfair dismissal makes such a claim inadequate and uneconomic. That is why claims for discrimination and whistleblowing, where the cap does not apply, are on the increase. Many such claims are really all about simple unfairness. The law should reflect that and give employees access to realistic damages in appropriate cases.

Edwards v Chesterfield

James Wilders 15 Dec 2011

Mark – I left out reference to the ceiling on unfair dismissal awards because there’s a risk of including too much detail in a piece like this one which then detracts from the main point of the article. The maximum compensatory award for unfair dismissal is £68,400. An employee can recover this maximum in addition to damages for notice pay and benefits. I wouldn’t agree that it’s uneconomic to pursue a claim for £68,400 in an Employment Tribunal. Whether that figure is inadequate is a matter of opinion – the figure has been set by the Government and increases annually with inflation from 1 February each year. It is right that the ceiling doesn’t apply in discrimination cases. However the number of discrimination claims was generally the same in the year to March 2011 except for age discrimination which increased.

Edwards v Chesterfield

Mark Benney 15 Dec 2011

Thanks James - I perhaps expressed myself a bit bluntly! But I think there is a general consensus amongst employment lawyers that the statutory cap severely undermines the efficacy of ET claims, at least in "ordinary" unfair dismissal claims, when it comes to compensating employees and, incidentally, in remedying "unfairness". I take your point about inflation proofing, but it was not too many years ago that the statutory cap was actually reduced to reflect the absence of inflation. To many that just seems absurd.

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