Employment Alert No. 66 - The Right to Claim Damages for Non-Economic Loss in Unfair Dismissal Cases
June 19, 2003
Increasingly, Applicants and Applicants’ lawyers in unfair dismissal cases have relied upon the comments made by Lord Hoffman in Johnson v Unisys to claim that Applicants are entitled to an award for compensation to reflect the manner in which they were dismissed. In Johnson, Lord Hoffman commented that, in his view, Tribunals could, in an appropriate case, award damages to reflect distress, humiliation, damage to the individual’s reputation in the community or family life following a dismissal in unfair dismissal cases.
In a number of cases Applicants’ representatives have been successful in relying on these comments and Tribunals have made awards on this basis ranging from £250 to £10,000.
In the recent case Dunnachie v Kingston Upon Hull City Council, the EAT decided that recovery of such non-economic loss in claims for unfair dismissal, was not permissible. In this case, the company appealed against the decision by an Employment Tribunal to award an individual £10,000 in respect of injury to feelings arising out of the manner of the dismissal. The EAT concluded that Lord Hoffman’s remarks in Johnsonwere simply obiter comments (i.e. an expression of opinion) and did not, in fact, make any changes to the legal position. It concluded that, notwithstanding these comments, individuals could not recover damages for non-economic loss. The matters for which compensation can be recovered in unfair dismissal cases remains unchanged by Johnson and the law as drafted clearly does not envisage recovery of such non-economic damages.
|
What does this mean for employers? |
This case is clearly helpful to employers and restricts the ability of Applicants’ representatives to claim damages for non-economic losses in unfair dismissal cases. Employers now have legal authority which can be used to challenge the inclusion of any such figures in claims for compensation or in settlement discussions.
Employers should:
- resist arguments by Applicants’ representatives that compensation should be increased in settlement discussions to reflect non-economic loss.
- note that it is likely this decision will be further appealed and be examined again at the Court of Appeal.
- note that whilst the decision restricts the abilities of individuals to claim damages related to the manner of dismissal, individuals may still be able to claim damages in relation to events during employment.
- note that the decision will not prevent Applicants claiming losses on the basis, that for example, that they were suffering from stress and were too ill to obtain another job and that the stress was because of bullying at work.
- ensure that any allegations of bullying or other detrimental treatment are dealt with and investigated thoroughly.
- ensure where disciplinary matters are being considered, that fair and reasonable procedure is followed and that the employee is given the opportunity to defend themselves against all allegations which are being raised.
