Method of dismissal can affect damages

The Court of Appeal has recently clarified the issue of the level of damages
that can be claimed in cases of wrongful dismissal

Traditionally, the measure of damages for a wrongful dismissal claim is
salary lost between the date of dismissal and the earliest date when the
employee could lawfully have been dismissed.

The Court of Appeal has recently considered whether damages should be
limited in this way, in the light of developments in the law relating to the
duty of mutual trust and confidence. The case was Boardman v Copeland Borough
Council, unreported, 13 June 2001.

Boardman was employed by the council as an assistant revenues manager. He
irritated his superiors by referring a matter to the District Auditor and then
to the council’s finance sub-committee. The response was a disciplinary process
for making unsubstantiated allegations and for ignoring instructions not to
ventilate the matter further. He was summarily dismissed.

As the limit for unfair dismissal compensation stood at £12,000, Boardman
claimed wrongful dismissal. He wanted to recover more than the traditional
measure of damages. He sought compensation for his inability to get employment
since his dismissal, and damage to his health and his reputation.

The obstacle he faced was a decision of the House of Lords in Addis v
Gramophone Company, 1909, AC 488.

However, cases since Addis have explored the concept of mutual obligation of
trust and confidence, for example Malik v BCCI, 1997, IRLR 462, where the
employee recovered damages when handicapped in the labour market because of the
stigma of his former employment.

The Boardman decision

When the Court of Appeal considered his case, Boardman also faced the hurdle
of the House of Lords’ judgment in Johnson v Unysis, 2001, UK BL 13. Johnson’s
complaint was financial loss flowing from psychiatric injury consequent on the
manner of his dismissal. A majority of the House of Lords held that the implied
term of trust and confidence was confined to matters arising during the
subsistence of the employment relationship.

The unanimous view of the Court of Appeal was that Johnson put paid to
Boardman’s hopes of improving on the standard measure of damages.

His claims for inability to get employment since dismissal, damage to health
and reputation arising from the manner of dismissal all failed.

The consequences

A key aspect of the House of Lords’ decision in Johnson was their view that
the implied term of trust and confidence was confined to matters arising during
the employment relationship. Therefore, previous cases which hold true to this
principle remain valid.

For instance, the Court of Appeal’s decision in Gogay v Hertfordshire County
Council, 2000, IRLR 703 involved an employee who claimed damages for
psychiatric injury, caused by her suspension, which was held to be in breach of
the implied obligation of trust and confidence. Because she had been suspended,
rather than dismissed, the claim was successful.

It is important to appreciate that for the statutory claim of unfair
dismissal the position is different. Here, the manner of dismissal and its
implications for future employment can be reflected in assessing future loss.

Key points

– The Boardman decision clarifies that damages for the manner of dismissal
may not be recovered in a breach of contract/ wrongful dismissal claim

– The implied term of trust and confidence does not apply at dismissal,
although it applies during employment, importantly to any decision to suspend
an employee

– Damages in an unfair dismissal claim may reflect the manner of dismissal.

Nicholas Moore is head of employment at Osborne Clarke

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