UK: Hurt Feelings – When Is A Dismissal Not A Dismissal?

Employment Tribunals have been grappling with the practical problems thrown up by the decision of the House of Lords in Johnson v Unisys, which we discussed in detail in our Summer 2001 issue.

In a nutshell, that case decided that for reasons of public policy, dismissed employees could not bring claims for damages for breach of contract in the High Court or County Court which relied on breaches of the implied term of trust and confidence in employment contracts if the breach in question was connected with the way in which their employment was terminated. They were limited to their right (if any) to sue in the Employment Tribunal for unfair dismissal.

Mr Johnson’s circumstances illustrate how important this decision can be. He alleged that the effect of his unfair dismissal was to destroy his health and having won his unfair dismissal case in the Tribunal and recovered the statutory maximum award he brought a High Court action for a further £400,000 as damages for breach of the implied term of trust and confidence. The House of Lords refused to allow this claim to proceed.

But since the Johnson principle only prohibits such claims which are made in connection with the way the relationship is terminated, where is the Court to draw the line? A dismissal is usually the culmination of a series of events: for example the discovery of misconduct, a suspension, an investigation, then a disciplinary hearing – are all of these events connected with the dismissal, or only some of them?

In the Court of Appeal decision in Gogay v Hertfordshire County Council, (decided shortly before the House of Lords decision) an employee suffered a nervous breakdown caused by her employer’s wrongful act in suspending her pending investigation of a very serious disciplinary offence of which she was later exonerated. She recovered over £100,000 in damages for breach of the implied term in the High Court. If she had not been exonerated but had been wrongfully and unfairly dismissed it now appears that she would not have been allowed to bring her High Court action. The employer would have done better by going on to dismiss her.

In the recent Scottish case of King v University of St Andrews, the Court of Session found that the Johnson principle only applied to actions taken by the employer after its decision to dismiss had been taken, and so the employee could bring a claim for breaches of the implied term up to and including the point in time at which the decision had been taken – including those breaches which occurred during the investigation and the disciplinary hearings which culminated in the dismissal.

If this were correct it would seriously reduce the impact of the Johnson decision, since in practice many of the employee’s complaints will arise out of the way in which the decision was reached – was there sufficient investigation? Was the procedure fair? In effect, employees who do not qualify for unfair dismissal protection would have a new and potentially lucrative claim. Employers would be faced with even more uncertainty then at present.

However, the Court of Appeal in Eastwood v Magnox took a very different view. It found that the whole of a disciplinary investigation and procedure spanning five months before a decision to dismiss was connected with the dismissal and that no action for breach of the implied term could arise out of any part of it. This decision is more likely to be followed than the decision in King.

There will, however, always be scope for argument about where the line is to be drawn in a particular case. This means that when dealing with any employee – even those without the one year’s qualifying service required to bring an unfair dismissal claim – employers must be cautious and follow a fair procedure, especially when there is reason to suspect that the employee’s mental or emotional state is fragile.