Supreme Court says NO to damages claims when disciplinary procedures breached.

21 November 2012

The result of the joined cases of Edwards v Chesterfield Royal Hospital NHS Foundation Trust and Botham v Ministry of Defence1, will come as a relief to employers as it confirms that such errors will not give rise to a claim outside of unfair dismissal rights, and thus consequently outside of the unfair dismissal compensation limits. Both cases concerned employees facing contractually incorporated dismissal procedures that it was alleged had been breached. Following their subsequent dismissals, the employees claimed damages based on their employers' failure to comply with the procedures set out in their employment contracts. The employees claimed that had the correct procedure been followed they would not have been found guilty of misconduct and would therefore not have been dismissed. The Supreme Court held, by a majority, that it was not open to an employee to seek contractual damages for the manner of the dismissal even though express terms were relied upon. There was already a specific statutory regime in place, in the form of the unfair dismissal regime. This provides for claims based on employer conduct in dismissal cases and contains tight time limits and a financial cap on damages. Seeing as Parliament had specified the consequences of a failure to adhere to proper disciplinary procedures in this statutory form, Parliament could not have intended that contractual procedures would also give rise to common law claims for breach of contract. To allow such a claim as in this case would conflict with and undermine the regime. Therefore where an alleged breach of contract occurs relating to the manner of a dismissal, an employee will only be permitted to recover damages for loss suffered as a result of that breach if that loss can be said to precede and be independent of the dismissal. This will be a significant relief to employers, particularly those who may have concerns about the risk of such claims arising, as the decision will prevent employees circumventing the financial cap on damages contain in the unfair dismissal regime in order to secure a bigger settlement. For additional information please contact Alexandra Dean of Gepp & Sons on 01245 228141. The above is not legal advice; it is intended to provide information of general interest about current legal issues. 1 [2011] UKSC 58