Unfair dismissal rights were introduced more than 30 years ago. Since then, it has generally been assumed that employees could only claim compensation in respect of the financial loss they suffered. Nice and clear, you would have thought. Recently, however, attempts have been made to claim additional damages for injury to feelings in cases where the manner of the dismissal causes the employee upset. Dunnachie v Kingston upon Hull City Council has been the test case in this area.
Mr Dunnachie was bullied and harassed by a colleague over a prolonged period. His employer failed to take any action. Dunnachie finally resigned and claimed constructive unfair dismissal. The Employment Tribunal found for Dunnachie and, in assessing compensation, relied upon an observation in an earlier 2001 House of Lords decision which suggested that employees might receive extra damages for non-financial loss (such as injury to feelings) arising from the manner of their dismissal. The tribunal concluded in this case that Dunnachie had been reduced to a ‘state of overt despair’ and therefore awarded him an extra £10,000 for injury to feelings (the overall compensatory payment Dunnachie received, including the injury to feelings element, was still subject to the statutory unfair dismissal cap of £55,000).
The case was then appealed all the way to the House of Lords, and different appeal bodies came to opposing conclusions. The Employment Appeal Tribunal held that damages for non-financial loss were not recoverable, but the Court of Appeal said such damages were recoverable. The Court of Appeal’s rationale was that the statute said compensation should be given for ‘loss’ – the law did not say just ‘financial loss’.
However, the House of Lords has overturned the Court of Appeal’s decision, finding that ‘loss’ does mean only financial loss. Damages for injury to feelings are not therefore recoverable.
Q What is ‘non financial loss’?
A Non-financial loss could include injury to feelings, distress, humiliation, and damage to reputation.
Q Does the Dunnachie decision mean that non-financial loss will never be recoverable in future unfair dismissal claims?
A Yes. The House of Lords said that ‘loss’ means just financial loss arising from the dismissal, so employees can never receive additional compensation for injury to feelings (or other non financial loss) in unfair dismissal claims. This is in contrast to the situation in discrimination claims, where you can receive compensation for injury to feelings.
Q What exactly can you get in an unfair dismissal compensatory award?
A The unfair dismissal compensatory award can be such sum as the tribunal finds ‘just and equitable’ (subject to the statutory cap of £55,000), taking into account any financial loss suffered by the employee as a consequence of the dismissal. Aside from loss of earnings arising from the dismissal, this can include expenses which the employee has incurred and loss of pension rights.
Q Is this the last word on the matter?
A Yes. The House of Lords’ decision is likely to be welcomed by employers, given the potential increase in unfair dismissal liability that might otherwise have occurred if employees had been able to claim injury to feelings.
Q Can you relax if you have bullying/harassment in your workforce?
A Absolutely not. Employers should not become complacent about workplace bullying or harassment. Aside from the employment relations issues, employers have a variety of legal obligations towards their employees, including the implied duty of trust and confidence, the duty to provide a safe workplace and provisions of the discrimination laws. Employees who claim they have suffered bullying or harassment may be able to bring a number of claims in addition to unfair dismissal.
Q Is there anything in the pipeline you should also bear in mind?
A Yes. The new statutory dispute resolution arrangements coming into effect from 1 October 2004 will require employers to follow certain minimum procedures before dismissing, disciplining or hearing a grievance
In the case of dismissals, failure to follow these new procedures can make the dismissal automatically unfair and can result in an increased unfair dismissal compensation award of up to 50 per cent. Similarly, compensation for most common statutory claims such as discrimination can also be uplifted by up to 50 per cent.
The new dispute resolution arrangements specifically provide that where the employee has been subjected to harassment and reasonably believes that they will receive more of the same by going through the new statutory procedures, the employer will be deemed to have breached its obligations to follow the procedures, with the resultant penalties mentioned above.