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Breach of Contractual Disciplinary Procedure
The Supreme Court has recently handed down its judgment regarding the appeals in the two cases of Edwards v Chesterfield Royal Hospital Foundation Trust and Botham v Ministry of Defence . It has previously been established that an employee cannot recover damages for losses suffered as a result of a breach of the implied duty of trust and confidence (which duty exists in all employment relationships) for the manner of their dismissal as this would duplicate an employee’s statutory right to claim compensation for unfair dismissal.
The Supreme Court in this case considered whether an employee can recover damages for losses arising from the unfair manner of their dismissal in breach of an express term of their employment contract.
Mr Edwards’ Case
Mr Edwards was a Consultant Trauma and Orthopaedic Surgeon at the Chesterfield Royal Hospital Foundation Trust (“the Trust”). He was summarily dismissed for gross personal and professional misconduct in 2006. He brought a claim in the High Court against the Trust where he claimed damages for breach of his employment contract and wrongful dismissal. He alleged that the Trust had breached the contractual disciplinary procedure for a number of reasons, including the disciplinary panel being inappropriately constituted, and argued that if the panel had been properly constituted, namely by including a clinician of the same discipline as himself, it would not have made incorrect findings and he would not have been dismissed. Mr Edwards argued that even if his employment had continued after the disciplinary process had been concluded, he would still have had difficulty in obtaining (a) private work, (b) expert witness work, and (c) employment in a different NHS hospital. Mr Edwards claimed losses in excess of £3.8 million. The Trust however argued that he could not recover damages in excess of his three months’ notice period.
Mr Botham’s Case
Mr Botham was a youth community worker for the Ministry of Defence (“the MOD”). He was summarily dismissed for gross misconduct for allegedly behaving inappropriately in relation to two teenage girls. As a result he was placed on the list of persons deemed unsuitable to work with children kept by the Department of Education and Skills. He brought claims in the Employment Tribunal for unfair dismissal and wrongful dismissal and was successful in respect of both claims. The Tribunal found that the MOD had failed to adhere to several provisions of its contractual disciplinary procedure. Mr Botham then issued proceedings in the High Court seeking damages for breach of the express terms of his contract of employment in relation to the MOD’s disciplinary procedure.
The Supreme Court determined that neither of the employees could bring claims for damages for breach of contract flowing from the manner of their dismissal for their employers’ failure to follow the contractual disciplinary procedures. It did not matter whether the claim was for breach of an express or implied term. It was impossible to divorce the reasons for the dismissal from the dismissal itself in both cases. The majority determined that to allow the employees to bring such claims would contravene the limitations which had been set down by Parliament in relation to bringing a claim for unfair dismissal such as the claims having to be brought within three months from the effective date of termination (whereas the limitation period for breach of contract claims is six years), the statutory cap on the compensatory award and claims only being able to be brought in the Employment Tribunal (not any other Court).
The findings of the Supreme Court mean that an employee will only be able to seek an injunction to stop a breach of contract and/or a declaration and will not be able to recover damages for the breach of contract as to the manner of their dismissal. An employee will still be able to bring a claim for damages for breach of contract provided the breach precedes and is truly independent of the dismissal. This will only occur in rare cases such as where an employee has suffered loss as a result of a suspension or from psychiatric injury caused by unfair treatment before their dismissal.
For further information on any of the points raised in this article, please contact a member of our employment team.