Brown v Baxter and another t/a Careham Hall
The claimant, Emma Brown, worked as an assistant care manager at a residential care home for the elderly run by the respondents, Mr and Mrs Baxter. She gave one month’s notice in May 2008 to terminate her employment.
During her notice period, a resident made a complaint about her carers, which included the claimant. The following day, Mr Baxter called her to a meeting and raised the allegation of the previous day and further allegations relating to previous alleged incidents.
He summarily dismissed her for gross misconduct and subsequently gave her new employer an unfavourable reference and made a report under the Protection of Vulnerable Adults scheme to the Commission for Social Care Inspection. This led to her losing her new employment.
She brought a tribunal claim for unfair dismissal.
The tribunal found the claims of automatic unfair dismissal and breach of contract to be well founded. It held that the respondents had failed to follow the statutory dismissal procedure, which applied in this case. The tribunal further found that, as no adequate investigation was carried out, it was not possible to say whether or not the claimant was guilty of gross misconduct. As a result, her breach of contract claim succeeded.
The tribunal made an award of compensation with an uplift of 30% in regard to the respondents’ failure to follow the statutory dismissal procedure. However, the tribunal declined to make an award of “stigma” damages in respect of the loss of the claimant’s new employment, which she alleged was as the result of an inaccurate and unfavourable reference. Ms Brown appealed against this decision and against the 30% uplift.
The Employment Appeal Tribunal (EAT) held that the tribunal could not be said to have erred in the exercise of its discretion to award the uplift. Although a significant and serious breach of the statutory procedure would merit an uplift in the top half of the 10% to 50% range, it is a matter of fact for the tribunal where in that range the employer’s conduct falls. The tribunal properly considered all the circumstances and there was nothing to suggest that it regarded the respondents’ conduct as wilful or blatant.
On the second ground of appeal, Ms Brown contended that an award for unfair dismissal can include damages to compensate not only for stigma arising from the process of litigation, but for the damage to reputation caused by the dismissal itself. However, the EAT dismissed the appeal, holding that it was open to the tribunal to conclude that it was unable to award damages under this head of loss.
The unfavourable reference was not in consequence of the dismissal, as Brown was dismissed for failing to disclose that she was under investigation by her former employer. There was evidence that the respondents would have given Brown an unfavourable reference regardless of the unfair dismissal and would have been under a statutory duty to report her.
In the recent case of Chagger v Abbey National plc, the Court of Appeal held that, in the case of a discriminatory dismissal, the dismissing employer may be liable for stigma loss resulting from the unwillingness of prospective employers to employ someone who has brought a tribunal claim against his or her former employer. Following Chagger, it seems that employers are more likely to face claims for stigma damages.
However, in this case the EAT held that Chagger did not assist the claimant as this was not a case about stigma damages. It was a case concerning loss that flowed from reports and referrals that the employer was required to make and that it would have made even if the claimant had not been dismissed.
This case illustrates that tribunals should carefully consider the cause of the employee’s loss and whether or not it in fact flowed from the dismissal or was due to some other cause. Stigma damages will be awarded only where the employee’s difficulty in finding new employment is attributable to the dismissal.
However, the case does not rule out the possibility that stigma damages may be awarded in a non-discriminatory unfair dismissal case.
Nick Jew, partner, DLA Piper
Practical guidance from XpertHR on compensation in tribunal cases and references