W2: Dismissals and Wrongful Dismissal Flashcards
What are the types of claim arising from termination of an employment contract?
Wrongful dismissal
Unfair dismissal
Redundancy payment
What are NOT dismissals?
Resignation
Termination by consent
Frustration
What is constructive dismissal?
Occurs when an employee has not been expressly dismissed.
Instead:
1) The employer has committed a repudiatory breach of the employment contract (i.e. a breach which is fundamental to/goes to the heart of the contract)
2) employee accepts the breach AND
3) resigns in response within a reasonable time.
How does the court determine if there’s been a dismissal when the language is unclear?
Reasonable listener test: How would a reasonable listener (objective test) have understood the words in light of the particular circumstances (some subjectivity)?
Auth: Futty v Brekkes
Futty v Brekkes
Facts: Fish filleter working on a dock. E’ee was told “if you don’t like the job, fuck off”. E’ee took this as a dismissal and found other employment.
Significance: Found e’ee had not been dismissed - lack of formal language. Dismissal requires clear language.
Western Excavating EEC v Sharp
Facts: E’ee was suspended without pay for five days, after taking unapproved leave. He requested an advance of holiday pay and a loan, but was refused. He quit in response, to receive his accrued holiday pay, and made a UFD claim. Was found that in this case there was no e’er repudiatory breach, so no constructive dismissal. Reasonableness of e’er’s conduct was irrelevant.
Significance: Whether there’s been a constructive dismissal is determined by contract law, not a test of unreasonableness of e’er’s conduct.
How does the court determine a repudiatory breach has occurred?
If conduct occurred amounting to:
1) A significant breach going to the root of the contract OR
2) Demonstrating that a party no longer intends to be bound by one or more essential terms of the contract
Auth: Western Excavating EEC v Sharp
Is the test for a repudiatory breach subjective or objective?
Objective, intentions are irrelevant.
Auth: Western Excavating v Sharp
What is the “last straw” doctrine?
If the final breach was not sufficiently serious, i.e. not repudiatory in itself but also not innocuous, the cumulative effect of minor breaches can be deemed repudiatory.
Auth: Abbey National v Robinson
Abbey National v Robinson
Facts: E’ee was harrassed and bullied by her manager, and instigated the grievance process. The manager was disciplined but not removed; e’ee continued to work for 1 year after the grievance procedure ended. E’er tried to argue that affirmed the contract and it had been too long to bring her claim. Tribunal found that after the grievance procedure, the e’er continued to fail to deal with the manager satisfactorily, and continually eroded the trust and confidence.
Significance: Constructive dismissal can occur as a result of a cumulative effect of multiple incidents, rather than a single point in time. Deadline for claim will run from the “last straw”.
LB Waltham Forest v Omilaju
Facts: E’ee had made several complaints to tribunal for race discrimination and victimisation. E’er did not pay for e’ee’s time off at tribunal, in accordance with the employment contract. E’ee resigned and claimed constructive dismissal. E’er argued that the final straw was reasonable, as they were acting in accordance with contract. Tribunal ruled that that’s not the test, but did find that e’er’s conduct was not capable of contributing to the breach of trust and confidence.
Significance: The “final straw” in a series of e’er actions which constituted a repudiatory breach of trust and confidence does not need to be blameworthy or unreasonable. Whether an act breached the term is an objective test; however, would be unusual for reasonable and justifiable behaviour to satisfy the test. Final straw does have to be more than trivial.
Example of common express terms giving rise to repudiatory breaches?
Failure to pay/reduction in pay
Major changes to duties or hours of work
Changes to place of work without an express mobility clause
Example of common implied terms giving rise to repudiatory breaches?
Duty of mutual trust and confidence
Minimum Wage
Working Time Regulations
Does the employer’s repudiation automatically terminate the contract?
No - employee must accept breach.
Auth: Soc Gen v Geys
Does the employee’s acceptance of the employer’s repudiatory breach need to be communicated to the employer?
No. The acceptance must be clear and unequivocal but need not be specifically communicated to employer.
Auth: Weathersfield v Sargeant
Soc Gen v Geys
Facts: E’ee had 3 month notice period and PILON clause. Was dismissed with immediate effect and escorted from building. Three weeks later, received a PILON payment. E’ee wrote to e’er to affirm contract; e’er responded re-iterating the termination and pointing to PILON. Court determined date of termination was when the letter confirming termination and PILON was received - money without clear notice did not count.
Significance: Repudiation of the contract does not automatically terminate the contract. Contract is terminated when the other party accepts the repudiation.
Weathersfield v Sargeant
Facts: Receptionist employed by van rental company was told not to rent to people from ethnic backgrounds. Receptionist left after two days without giving a reason; sent an explanation a few days later. Could she have been constructively dismissed if she didn’t communicate her resignation?
Significance: Found that an employee doesn’t necessarily have to communicate at point of resignation - it turns on the facts. In this case, there was no other apparent reason for her resignation so tribunal could find constructive dismissal.
For constructive dismissal, does the repudiatory breach need to be the only reason for resignation?
No. The breach must be a factor but does not need to be the principal reason.
Auth: Abbycars v Ford
Abbycars v Ford
Facts: E’ee resigned, alleging 8 breaches of contract. Tribunal rejected six of them, but uphold that failing to pay phone allowance and reclaiming his pool car while he was ill were breaches capable of giving rise to constructive dismissal. E’er argued that these incidents weren’t the reason for resignation. Found there was no repudiatory breach on the facts, but considered the resignation question in obiter.
Significance: For constructive dismissal, e’er’s breach must be a factor in e’ee’s resignation but need not be only reason. Does not need to be sole cause or a significant cause.
What counts as a “reasonable time” within which to resign after a repudiatory breach?
No set time, it is a question of facts on the circumstances. The risk of delay is 1) time limits to bring a claim and 2) risk of affirming.
If an employee delays their resignation, will this affirm the contract?
Not necessarily - the delay is not equivalent to affirmation but is a factor when determining affirmation. Better to work under protest.
Auth: Kaur v Leeds NHS Trust
Kaur v Leeds NHS Trust
Facts: E’ee was given a final written warning as a result of a messy disciplinary process, during which her request for appeal was denied. She resigned and claimed constructive unfair dismissal. Found that the grievance process had been carried out correctly and thus the written warning could not be a “last straw” as did not contribute to repudiatory breach.
Significance: Delay in resigning (absent express/implied affirmation) not itself constitute affirmation but is factor when determining whether contract affirmed. When last straw doctrine applies, the final act can “revive” the e’ee’s right to terminate their employment based on the totality of conduct. Court must ask: what was the most recent act causing the resignation? Had the e’ee since affirmed? If not, was the act alone a repudiatory breach? If not, was it part of a course of conduct amounting to a repudiatory breach, and did the e’ee resign in response to that breach?
Is constructive dismissal in itself an employment claim?
No
What is the continuous employment requirement to be eligible for a Wrongful Dismissal claim?
There isn’t one.
What is wrongful dismissal?
A common law claim arising from a dismissal (actual or constructive) in breach of contract.
How does wrongful dismissal arise in an indefinite contract?
Where the dismissal is done without notice or with insufficient notice (contract or statutory minimum, which is higher).
How does wrongful dismissal arise in a fixed term contract without a break clause?
Where the dismissal arises before the end of the fixed term.
How does a wrongful dismissal arise in a fixed term contract with a break clause?
Where the dismissal arises in breach of the break clause re: notice.
What type of dismissal arises when the employee commits a repudiatory breach?
Summary dismissal. Not a claim.
True or false: A “reasonable” period of notice is implied into all indefinite contracts.
True.
Auth: Clark v Fahrenheit 451
Clark v Fahrenheit 451
Facts: A director’s contract was silent on notice period. Original tribunal found 1 month was adequate. Director appealed, saying her position and the risk in the venture made 6 months appropriate. EAT gave her 3 months.
Significance: Employee’s seniority, length of service, and size/scale of business are relevant factors when determining what is reasonable implied notice. Employer’s financial position and risk of venture not factors.
How is a reasonable implied notice period determined?
Employee’s seniority, length of service, size/scale of business
s86 Employment Rights Act 1996
Express and implied notice period must be at least equal to statutory minimum notice period
What are the statutory minimum notice periods?
Up to 2 years continuous employment = 1 week
2 years to 12 years continuous employment = 1 week per year
Over 12 years continuous employment = 12 weeks notice
When does a notice period for actual dismissal start?
Implied term: begins on the date employee receives written notice of dismissal and has had the opportunity to read it.
An express term can override.
Auth: Newcastle NHS v Haywood
Newcastle NHS v Haywood
Facts: E’ee made redundant and informed via post. E’ee was on annual leave, letter was returned to sorting office, later collected by e’ee’s father-in-law. E’ee read the letter when back from holiday. Exact date important as notice period might push her into a better pension position. Court found that notice was effective when she read it.
Significance: Implied term that notice begins from date employee receives written notice of dismissal and has had reasonable opportunity to read it. Implied term can be ousted by express contractual term
What happens if an employer dismisses an employee with insufficient notice but pays them the difference AND there is an express PILON term in the contract?
If their contract has an express PILON term, then there is no breach and thus no WD claim. Even if the employer fails to pay out, it results in a debt action rather than WD.
What does PILON stand for?
Pay in lieu of notice
What happens if an employer dismisses an employee with insufficient notice but pays them the difference AND there is NO express PILON term in the contract?
If their contract is silent on PILON, then there is a WD claim unless notice is waived. Unlikely to be worth making the claim though. The breach also nullifies any restrictive covenants in their contract.
What is an employer’s defence to a wrongful dismissal claim?
Employer is entitled to dismiss without notice if the employee committed a repudiatory breach of contract, i.e. gross misconduct
True or false: The employer has a defence of summary dismissal/gross misconduct even if the employee’s repudiatory breach was discovered after the alleged wrongful dismissal.
True.
Auth: Boston Deep Sea Fishing v Ansell
Boston Deep Sea Fishing v Ansell
Facts: Director took a secret commission from a supplier. Months later, was dismissed for other allegations.
Significance: Shareholders were entitled to dismiss him even though his misconduct was discovered after the dismissal.
Is any unilateral change to the contract terms by employer a repudiatory breach?
Only if the change is fundamental to the contract
Does a flexibility clause in a contract prevent unilateral changes from giving rise to a repudiatory breach?
No - may still breach duty of trust and confidence
What are the requirements of a flexibility clause?
The clause should be clear and unambiguous.
If change could produce an unreasonable result, court should seek to avoid that outcome.
Auth: Wandsworth LBC D’Silva
Wandsworth LBC v D’Silva
Facts: Unilateral variation clause in employment contracts. Employer changed a long term sick policy, employees didn’t agree as conflicted with terms agreed by trade union. Argued trade union materials formed part of contract by reference.
Significance: Wording of flexibility clause in employment contracts - must be clear and unambiguous. If exercise of the right to vary could produce unreasonable result, court should seek to avoid such an outcome.
What can an employee do in response to a unilateral variation of their contract
1) Accept it (expressly or continue to work without protest)
2) Resign and claim constructive dismissal for WD or UFD claims, but no certainty of success and economic risk
3) Continue working under protest and claim damages for breach of contract in civil court (Rigby v Ferodo)
Rigby v Ferodo
Facts: E’er unilaterally lowered salaries. E’ee continued to work but claimed damages. E’er tried to argue damages were limited to 12 week notice period. Court said the repudiatory breach did not automatically terminate the contract, so e’ee had right to accept the breach or work under protest.
Significance: Can work under protest and still claim damages if not feasible to resign.
By how much can a court adjust an award for failure to follow the ACAS Code of Practice?
0.25
Where can a WD claim be brought?
County Court or Employment Tribunal
What are the factors for deciding where to bring a WD claim?
County Court has a longer limitation period, no compensation cap, and doesn’t care about ACAS
However if bringing any other employment claim alongside, must go to Tribunal
Tribunal is cheaper and more approachable for litigants in person
If your claim is unsuccessful in one venue (ET or CC), can you re-issue in the other?
No. Auth: LB Enfield v Sivanandan
How are remedies for WD calculated?
Contract law remedies of all damages flowing naturally from the breach/put C in position had contract been correctly performed.
Standard Hadley v Baxendale principles re: remoteness/causation apply.
Boyo v Lambeth LBC
Facts: Contract had 1 month notice period, unless gross misconduct subject to disciplinary procedure. E’ee was suspended after being arrasted for conspiracy to defraud e’er. E’er claimed the bail conditions, preventing contact with any other e’ee’s, frustrated the employment contract. Criminal charges were dropped, e’ee brought a WD claim. Question was whether he was entitled to 1 month of damages, or more. In this case, e’ee did not accept repudiatory breach so contract was not automatically terminated. E’ee was entitled to damages for wrongful exclusion through to when a disciplinary procedure could reasonably have been carried out, plus notice period (6 months total).
Significance: WD damages are calculated as the amount the e’ee would be entitled to receive if dismissed in accordance with contractual terms.
LB Enfield v Sivanandan
Facts: Claimant brought several subsequent claims and appeals in both tribunal and High Court, including after claims had been struck out in one arena. Found to be an abuse of process.
Significance: Can’t withdraw a claim from one track to re-submit the same claim to another court.
Are an employees contractual benefits included in their WD remedies?
Yes, unless contract expressly says they are discretionary, e.g. bonuses
Clark v Nomura
Facts: Equity trader sought damages for breach of contract for failing to pay him a bonus on termination. Bonus was discretionary based on performance - trader had made £22M for the company. E’ee said individual performance was solely profitability, whereas e’er said other factors included needs of the business and desire to retain e’ee. Court found in favour of e’ee, awarded damages of £1.35M, finding that individual performance is performance of contract. Business needs and e’ee retention not a factor. E’er has a duty not to act irrationally or perversely.
Significance: breach of contract for employer to exercise discretionary powers in irrational or perverse manner.
Horkulak v Cantor Fitzgerald
Facts: Appeal on the quantum of a WD case. Employer alleged the judge misinterpreted the bonus clause and calculated the bonus in a way unfairly favourable to e’ee. Found that on construction, the bonus was a contractual benefit and not merely a declaration of e’er’s right to pay a bonus if they wished. To assess quantum, court had to put itself in the shoes of the ultimate decision maker, had the e’ee stayed at the company (the President, in this case). Clause implied the President would pay due regard to interest of both e’er and e’ee, rather than paying out the minimum possible. Court is entitled to take into account range of salary and bonuses paid to equivalent e’ees. Also found that there was not sufficient evidence that e’ee’s relapse was caused by e’er’s treatment, so damages were reduced by 2 months (initially awarded as the relapse prevented e’ee from finding other work).
Significance: If an employer fails to exercise discretion rationally and in good faith in awarding a contractual benefit, the employee is entitled to compensation. On quantum, court will look at construction of clause, who exercises the discretion, and bonuses awarded to other e’ees.
Addis v Gramophone
Facts: Claimant had six months notice. E’er dismissed him but while working his notice, employed his successor and took steps to prevent claimant from doing his job (e.g. told the bank not to deal with him). Not a WD but different breach of contract. Argument over how the damages were calculated - salary + commission, or compensation for injured feelings (damages decided by jury - case was 1909)? Court found no right to damages for injured feelings/damaged employability. Note that many of judge’s comments were about the poor framing of the case and pettiness of the arguments. Re: damaged employability, judges considered that a separate action in tort for slander. Lord Collins dissented, citing cases where juries were empowered to award vindicitve damages in breach of contract cases.
Significance: WD damages paid for pecuniary loss only - no injury to feelings or loss sustained from being harder to employ. Contract law damages seek to compensate, not penalise.
Malik v BCCI
Facts: Very unethical bank, eventually collapsed after fraud. The ethical employees sued what was left of the bank for loss of reputation - Malik couldn’t get a job because he had worked for BCCI. Court ruled employment contracts have an implied term of trust and confidence which was in breach. Employees entitled to stigma damages, where employer’s misconduct affects future prospects. Claim was based on breach during employment, not on the dismissal itself.
Signficance: Additional damages related to WD - very fact dependent, often don’t arise from dismissal itself.
Can an employee claim for injury to feelings/mental distress as part of WD?
No. Auth: Johnson v Unisys
Johnson v Unisys
Facts: Claimant had succeeded on UFD claim and been awarded statutory maximum compensation. Later tried to get compensation for a mental breakdown he alleged was caused by the manner of dismissal, which breached trust and confidence. Court found it was doubtful that trust and confidence, which is an ongoing duty, extends to how the relationship is terminated. Also noted causation issues. Also found that claimant was trying to invoke common law to circumvent the statutory cap on compensation.
Significance: Employees cannot claim damages for mental illness arising from dismissal. Trust and confidence duty may not extend to terminating the relationship (consider UFD instead). Court frowns on trying to “play the system” to get around compensation caps.
Eastwood v Magnox
Facts: Claims for UFD were settled at employment tribunal. Claimants then tried to bring claims in country court for negligence and breach of implied term of trust and confidence, claiming damages for personal injury (psychiatric injury) caused by deliberate misconduct in the disciplinary process. Held that can’t bring common law claim for UFD based on breach of trust and confidence, since the statutory process for UFD was the appropriate avenue. However, if basis of claim was breach prior to the dismissal, that claim is unaffected by the UFD claim. Although, consider damages: how did the claimant suffer a financial loss (apart from dismissal)? Can happen where financial loss is suffered through suspension, or caused by psychiatric illness caused by pre-dismissal unfair treatment.
Significance: Important to distinguish between cases where breach of trust and confidence occurs prior to dismissal (WD claim arises) vs where the dismissal itself breaches trust and confidence (UFD considered instead). But can bring both if there is both a breach prior to dismissal, and an unfair dismissal. Can’t recover overlapping heads of loss.
What is the cap for WD remedies at ET?
£25k
What are the reducing factors for an award from WD?
Failure to mitigate losses - e.g. refusal to accept reasonable offer of re-employment
Money received in lieu of notice
State benefits
Failure to comply with ACAS
Accelerated receipt - where a long FTC and damages paid early, 5% discount normally applied
Are ET remedies taxable?
Tax-free up to £30k; excess over £30k is taxable
If this applies, the damages are grossed up to compensate C for the taxes (so tax burden is passed to employer)
Due to WD cap, can only apply if multi-claim
What remedies are available to employers at ET?
Damages in very rare circumstances
Injunction e.g. to enforce restrictive covenant
Action for account of profits where employee made wrongful profit
Are WD damages calculated on net or gross salary?
Net
Facts: Fish filleter working on a dock. E’ee was told “if you don’t like the job, fuck off”. E’ee took this as a dismissal and found other employment.
Significance: Found e’ee had not been dismissed - lack of formal language. Dismissal requires clear language.
Futty v Brekkes
Facts: E’ee was suspended without pay for five days, after taking unapproved leave. He requested an advance of holiday pay and a loan, but was refused. He quit in response, to receive his accrued holiday pay, and made a UFD claim. Was found that in this case there was no e’er repudiatory breach, so no constructive dismissal. Reasonableness of e’er’s conduct was irrelevant.
Significance: Whether there’s been a constructive dismissal is determined by contract law, not a test of unreasonableness of e’er’s conduct.
Western Excavating EEC v Sharp
Facts: E’ee was harrassed and bullied by her manager, and instigated the grievance process. The manager was disciplined but not removed; e’ee continued to work for 1 year after the grievance procedure ended. E’er tried to argue that affirmed the contract and it had been too long to bring her claim. Tribunal found that after the grievance procedure, the e’er continued to fail to deal with the manager satisfactorily, and continually eroded the trust and confidence.
Significance: Constructive dismissal can occur as a result of a cumulative effect of multiple incidents, rather than a single point in time. Deadline for claim will run from the “last straw”.
Abbey National v Robinson
Facts: E’ee had made several complaints to tribunal for race discrimination and victimisation. E’er did not pay for e’ee’s time off at tribunal, in accordance with the employment contract. E’ee resigned and claimed constructive dismissal. E’er argued that the final straw was reasonable, as they were acting in accordance with contract. Tribunal ruled that that’s not the test, but did find that e’er’s conduct was not capable of contributing to the breach of trust and confidence.
Significance: The “final straw” in a series of e’er actions which constituted a repudiatory breach of trust and confidence does not need to be blameworthy or unreasonable. Whether an act breached the term is an objective test; however, would be unusual for reasonable and justifiable behaviour to satisfy the test. Final straw does have to be more than trivial.
LB Waltham Forest v Omilaju
Facts: E’ee had 3 month notice period and PILON clause. Was dismissed with immediate effect and escorted from building. Three weeks later, received a PILON payment. E’ee wrote to e’er to affirm contract; e’er responded re-iterating the termination and pointing to PILON. Court determined date of termination was when the letter confirming termination and PILON was received - money without clear notice did not count.
Significance: Repudiation of the contract does not automatically terminate the contract. Contract is terminated when the other party accepts the repudiation.
Soc Gen v Geys
Facts: Receptionist employed by van rental company was told not to rent to people from ethnic backgrounds. Receptionist left after two days without giving a reason; sent an explanation a few days later. Could she have been constructively dismissed if she didn’t communicate her resignation?
Significance: Found that an employee doesn’t necessarily have to communicate at point of resignation - it turns on the facts. In this case, there was no other apparent reason for her resignation so tribunal could find constructive dismissal.
Weathersfield v Sargeant
Facts: E’ee resigned, alleging 8 breaches of contract. Tribunal rejected six of them, but uphold that failing to pay phone allowance and reclaiming his pool car while he was ill were breaches capable of giving rise to constructive dismissal. E’er argued that these incidents weren’t the reason for resignation. Found there was no repudiatory breach on the facts, but considered the resignation question in obiter.
Significance: For constructive dismissal, e’er’s breach must be a factor in e’ee’s resignation but need not be only reason. Does not need to be sole cause or a significant cause.
Abbycars v Ford
Facts: E’ee was given a final written warning as a result of a messy disciplinary process, during which her request for appeal was denied. She resigned and claimed constructive unfair dismissal. Found that the grievance process had been carried out correctly and thus the written warning could not be a “last straw” as did not contribute to repudiatory breach.
Significance: Delay in resigning (absent express/implied affirmation) not itself constitute affirmation but is factor when determining whether contract affirmed. When last straw doctrine applies, the final act can “revive” the e’ee’s right to terminate their employment based on the totality of conduct. Court must ask: what was the most recent act causing the resignation? Had the e’ee since affirmed? If not, was the act alone a repudiatory breach? If not, was it part of a course of conduct amounting to a repudiatory breach, and did the e’ee resign in response to that breach?
Kaur v Leeds NHS Trust
Facts: A director’s contract was silent on notice period. Original tribunal found 1 month was adequate. Director appealed, saying her position and the risk in the venture made 6 months appropriate. EAT gave her 3 months.
Significance: Employee’s seniority, length of service, and size/scale of business are relevant factors when determining what is reasonable implied notice. Employer’s financial position and risk of venture not factors.
Clark v Fahrenheit 451
Express and implied notice period must be at least equal to statutory minimum notice period
s86 Employment Rights Act 1996
Facts: E’ee made redundant and informed via post. E’ee was on annual leave, letter was returned to sorting office, later collected by e’ee’s father-in-law. E’ee read the letter when back from holiday. Exact date important as notice period might push her into a better pension position. Court found that notice was effective when she read it.
Significance: Implied term that notice begins from date employee receives written notice of dismissal and has had reasonable opportunity to read it. Implied term can be ousted by express contractual term
Newcastle NHS v Haywood
Facts: Director took a secret commission from a supplier. Months later, was dismissed for other allegations.
Significance: Shareholders were entitled to dismiss him even though his misconduct was discovered after the dismissal.
Boston Deep Sea Fishing v Ansell
Facts: Unilateral variation clause in employment contracts. Employer changed a long term sick policy, employees didn’t agree as conflicted with terms agreed by trade union. Argued trade union materials formed part of contract by reference.
Significance: Wording of flexibility clause in employment contracts - must be clear and unambiguous. If exercise of the right to vary could produce unreasonable result, court should seek to avoid such an outcome.
Wandsworth LBC v D’Silva
Facts: E’er unilaterally lowered salaries. E’ee continued to work but claimed damages. E’er tried to argue damages were limited to 12 week notice period. Court said the repudiatory breach did not automatically terminate the contract, so e’ee had right to accept the breach or work under protest.
Significance: Can work under protest and still claim damages if not feasible to resign.
Rigby v Ferodo
Facts: Contract had 1 month notice period, unless gross misconduct subject to disciplinary procedure. E’ee was suspended after being arrasted for conspiracy to defraud e’er. E’er claimed the bail conditions, preventing contact with any other e’ee’s, frustrated the employment contract. Criminal charges were dropped, e’ee brought a WD claim. Question was whether he was entitled to 1 month of damages, or more. In this case, e’ee did not accept repudiatory breach so contract was not automatically terminated. E’ee was entitled to damages for wrongful exclusion through to when a disciplinary procedure could reasonably have been carried out, plus notice period (6 months total).
Significance: WD damages are calculated as the amount the e’ee would be entitled to receive if dismissed in accordance with contractual terms.
Boyo v Lambeth LBC
Facts: Claimant brought several subsequent claims and appeals in both tribunal and High Court, including after claims had been struck out in one arena. Found to be an abuse of process.
Significance: Can’t withdraw a claim from one track to re-submit the same claim to another court.
LB Enfield v Sivanandan
Facts: Equity trader sought damages for breach of contract for failing to pay him a bonus on termination. Bonus was discretionary based on performance - trader had made £22M for the company. E’ee said individual performance was solely profitability, whereas e’er said other factors included needs of the business and desire to retain e’ee. Court found in favour of e’ee, awarded damages of £1.35M, finding that individual performance is performance of contract. Business needs and e’ee retention not a factor. E’er has a duty not to act irrationally or perversely.
Significance: breach of contract for employer to exercise discretionary powers in irrational or perverse manner.
Clark v Nomura
Facts: Appeal on the quantum of a WD case. Employer alleged the judge misinterpreted the bonus clause and calculated the bonus in a way unfairly favourable to e’ee. Found that on construction, the bonus was a contractual benefit and not merely a declaration of e’er’s right to pay a bonus if they wished. To assess quantum, court had to put itself in the shoes of the ultimate decision maker, had the e’ee stayed at the company (the President, in this case). Clause implied the President would pay due regard to interest of both e’er and e’ee, rather than paying out the minimum possible. Court is entitled to take into account range of salary and bonuses paid to equivalent e’ees. Also found that there was not sufficient evidence that e’ee’s relapse was caused by e’er’s treatment, so damages were reduced by 2 months (initially awarded as the relapse prevented e’ee from finding other work).
Significance: If an employer fails to exercise discretion rationally and in good faith in awarding a contractual benefit, the employee is entitled to compensation. On quantum, court will look at construction of clause, who exercises the discretion, and bonuses awarded to other e’ees.
Horkulak v Cantor Fitzgerald
Facts: Claimant had six months notice. E’er dismissed him but while working his notice, employed his successor and took steps to prevent claimant from doing his job (e.g. told the bank not to deal with him). Not a WD but different breach of contract. Argument over how the damages were calculated - salary + commission, or compensation for injured feelings (damages decided by jury - case was 1909)? Court found no right to damages for injured feelings/damaged employability. Note that many of judge’s comments were about the poor framing of the case and pettiness of the arguments. Re: damaged employability, judges considered that a separate action in tort for slander. Lord Collins dissented, citing cases where juries were empowered to award vindicitve damages in breach of contract cases.
Significance: WD damages paid for pecuniary loss only - no injury to feelings or loss sustained from being harder to employ. Contract law damages seek to compensate, not penalise.
Addis v Gramophone
Facts: Very unethical bank, eventually collapsed after fraud. The ethical employees sued what was left of the bank for loss of reputation - Malik couldn’t get a job because he had worked for BCCI. Court ruled employment contracts have an implied term of trust and confidence which was in breach. Employees entitled to stigma damages, where employer’s misconduct affects future prospects. Claim was based on breach during employment, not on the dismissal itself.
Signficance: Additional damages related to WD - very fact dependent, often don’t arise from dismissal itself.
Malik v BCCI
Facts: Claimant had succeeded on UFD claim and been awarded statutory maximum compensation. Later tried to get compensation for a mental breakdown he alleged was caused by the manner of dismissal, which breached trust and confidence. Court found it was doubtful that trust and confidence, which is an ongoing duty, extends to how the relationship is terminated. Also noted causation issues. Also found that claimant was trying to invoke common law to circumvent the statutory cap on compensation.
Significance: Employees cannot claim damages for mental illness arising from dismissal. Trust and confidence duty may not extend to terminating the relationship (consider UFD instead). Court frowns on trying to “play the system” to get around compensation caps.
Johnson v Unisys
Facts: Claims for UFD were settled at employment tribunal. Claimants then tried to bring claims in country court for negligence and breach of implied term of trust and confidence, claiming damages for personal injury (psychiatric injury) caused by deliberate misconduct in the disciplinary process. Held that can’t bring common law claim for UFD based on breach of trust and confidence, since the statutory process for UFD was the appropriate avenue. However, if basis of claim was breach prior to the dismissal, that claim is unaffected by the UFD claim. Although, consider damages: how did the claimant suffer a financial loss (apart from dismissal)? Can happen where financial loss is suffered through suspension, or caused by psychiatric illness caused by pre-dismissal unfair treatment.
Significance: Important to distinguish between cases where breach of trust and confidence occurs prior to dismissal (WD claim arises) vs where the dismissal itself breaches trust and confidence (UFD considered instead). But can bring both if there is both a breach prior to dismissal, and an unfair dismissal. Can’t recover overlapping heads of loss.
Eastwood v Magnox
