Issue 75 (December 2002)

Contents

Help for the aged
Case of Kells illuminates scope of law
Tribunal compensation limits go up
Manner of dismissal compensation
Court of Appeal sets out remedies
On the horizon: Employment Act 2002
Industrial inaction  

Manner of dismissal compensation

McCabe v Cornwall County Council and the Governing Body of Mounts Bay School [2002] EWCA Civ 1887

When the Court of Appeal describes an area of law as 'developing', you know two things - firstly that they do not much like the existing case law, and secondly that the current state is a mess. A perfect description of the state of the law on the interplay between unfair dismissal and the common law of breach of contract and general civil duties - tort - such as the duty not to be negligent and take reasonable care for others' health and safety when linked or connected to dismissal. There is no issue with a workplace accident and a subsequent capability dismissal - the dismissed, injured employee has the complete right to claim damages for personal injury in the County or High Court for the accident and unfair dismissal in the Tribunal. But what about when the employer's treatment during the disciplinary or dismissals process causes the injury, psychiatric damage for example?

In the very recent case of McCabe - a case of a teacher accused of inappropriate sexual conduct towards some female pupils - the Court of Appeal have made a valiant attempt to clarify and 'develop' the law in this area. Mr McCabe won maximum compensation from the Employment Tribunal for unfair dismissal and the issue was whether he could also bring a civil claim in the County Court for alleged breach of the contractual duty of trust and confidence and claim of tort for breach of the duty to provide a safe system of work over the way he was suspended and treated during the disciplinary process.

The following principles emerge from the case and the distillation of recent authorities:

The Court of Appeal accepted that loss caused by the unfair manner of dismissal is a consequence of dismissal and so can be provided for in the unfair dismissal compensatory award. It is part of the principle that tribunals compensate on a just and equitable basis for losses in consequence of the dismissal. McCabe therefore articulates fully what was hinted at in the House of Lords in Johnson v Unisys and expressly disapproves the previous case law which said that manner of dismissal compensation was not available. This type of damages should now be routinely claimed in Employment Tribunal cases for unfair dismissal.
Compensation for the manner of dismissal cannot additionally be claimed in the County or High Court. A breach of contract that forms part of the process of dismissal cannot found a common law claim for breach of contract or tort but only in unfair dismissal cases.
If however the breach of contract or tort precedes a dismissal, but is not part of the dismissal process, it can be litigated in the civil court thereby opening the way to the uncapped compensation available. For example a capricious suspension which does not form part of a dismissal process, that causes post traumatic stress disorder.

The approach of the Court of Appeal in McCabe is to minimise overlap between statutory rights to unfair dismissal and common law rights. They felt bound to do this by the House of Lords authority, but we consider it a false distinction.
There will inevitably be overlap and the law of contract should be allowed to devlop to take account of modern views of the employment relationship and the duties owed by employers to their staff.

On the Court's reasoning, employers can deliberately dismiss employees in order to limit their liability. Nor does the Court of Appeal help the situation where the employee feels forced to resign in a constructive dismissal situation. In both these circumstances unfair dismissal, with its compensatory award limit of £53,500 may be an inadequate remedy. In the High Court damages are assessed to put the empoyer in the position they would have been in had the contract been properly performed.

Nonetheless, this case is a welcome clarification of the current position and a hint that creative judicial interpretation could be deployed in an appropriate case to extend protection to employees in this area.