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03/02/2012 - Employment Law Case Update

Contractual disciplinary procedures and compensation
The Supreme Court decisions in Chesterfield Royal Hospital NHS Foundation Trust v Edwards and MOD v Botham [2011] have held that an employee could not be awarded common law damages for loss of reputation, following a breach of an express term to their contract in relation to disciplinary procedures.

Mr Edwards was a consultant who was dismissed for gross professional and personal misconduct. He submitted that the correct disciplinary procedure (as per his contract of employment) was not correctly followed. Mr Edwards submitted that had it been, the panel which dismissed him would not have made the same findings. Therefore, Mr Edwards argued, he would not have been dismissed or suffered damage to his reputation.

Mr Botham was employed by the MOD as a youth worker and following a disciplinary procedure was dismissed. He was placed on a register preventing him from working with children and therefore pursuing his chosen career. Mr Botham brought a claim for breach of contract and argued that as a result of breaches in the disciplinary procedure, he had suffered a loss of reputation and was entitled to damages for future loss of earnings.

In both cases, a majority held that the employees were not entitled to common law damages for any loss of reputation following from a breach of disciplinary procedure. The claims of the employees fell within the ‘Johnson exclusion area' and therefore could not be claimed.

The ‘Johnson exclusion area' followed the cases of Johnson v Unissys Ltd [2001] and McCabe [2004] which confirmed that an employee could not bring a claim for breach of the implied term of trust and confidence for the way in which they were actually (or constructively) dismissed as this would duplicate the employee's statutory right to claim unfair dismissal. However, where an employee has a common law action against their employer before they are dismissed, the action exists independently and remains, regardless of whether a dismissal is then made and whether the dismissal is unfair.

Mr Edwards and Mr Botham were claiming damages for what was part of the dismissal process and therefore could not be permitted under the ‘Johnson exclusion area.' The court did not accept Mr Edward's view that the breach of the disciplinary procedure occurred independently and therefore outside of the ‘Johnson exclusion area.' In addition, the breach which Mr Botham was seeking to rely on was the dismissal itself and clearly fell within the exclusion.

The Supreme Court appears not to want to ‘tread on Parliament's toes' or to artificially extend the rights of employees by allowing such claims. However, this position appears to be somewhat inconsistent, and the remedy available to employees may depend on what stage the breach arose and whether the employee was dismissed (either actually or constructively). The judgment suggests that the reasoning behind this decision relates to the intentions of Parliament and the limits/scope of the unfair dismissal regime. However, this decision has perhaps ‘muddied the waters' somewhat, leaving employers and employees alike unsure of their position.

Authored by:

Catharine Geddes (show profile)

Published by:

Allison Grant (show profile)

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