Thankfully not, says the majority of the Supreme Court. On 14 December 2011 the Supreme Court gave its decision in the joined appeals of Edwards v. Chesterfield Royal Hospital NHS Foundation Trust and Botham (FC) v. Ministry of Defence.
The decision upholds that given 10 years ago in Johnson v. Unisys Limited. Mr Johnson claimed the manner of his dismissal was in breach of the implied term of trust and confidence. He alleged that, because of the manner in which he was dismissed, he had suffered a mental breakdown and was unable to work. He claimed under common law for damages for loss arising from the manner of his dismissal. The House of Lords did not award Mr Johnson damages. This became known as the “Johnson exclusion area”. Cases decided seven years ago however (Eastwood and another v. Magnox Electric plc and McCabe v. Cornwall County Council and another) distinguished claims that arose out of matters preceding and independent of the dismissal.
The Supreme Court had two key questions to answer. First, whether the reasoning in Johnson applied to preclude recovery of damages for loss arising from the unfair manner of a dismissal in breach of an express term of an employment contract. Secondly, if so, whether the claims made by Mr Edwards or Mr Botham fell within the Johnson exclusion area.
Mr Edwards was a surgeon. Disciplinary proceedings were started against him in 2005 arising from allegations that he had undertaken an inappropriate internal examination of a female patient. Following a disciplinary hearing Mr Edwards was summarily dismissed, and this decision was upheld on appeal.
In 2008 he issued High Court proceedings against the Trust claiming damages for breach of his employment contract and the wrongful termination (i.e. termination without notice) of his employment contract. The breach he relied on was that the disciplinary panel was not formed as per the terms of his contract of employment and, had it been, he would not have been dismissed and suffered damage to his reputation. He claimed loss of earnings from the date of his dismissal to his retirement in 2022 amounting to over £3.8 million.
The Court of Appeal held it was possible for Mr Edwards to recover whatever damages he could prove he had suffered because of the breach. This was not limited to his contractual notice period and the period it would have taken to follow a proper disciplinary procedure. The Trust appealed to the Supreme Court.
Mr Botham was a youth community worker. He was summarily dismissed in 2003 after a disciplinary process by the Ministry of Defence (MOD). He was found guilty of the gross misconduct offence of behaving inappropriately with two teenage girls. Mr Botham brought a claim for unfair dismissal and wrongful dismissal. He succeeded in his claim as the employment tribunal found the MOD had not followed express terms of its Discipline Code. The tribunal awarded him in total £62,489.
In 2009 Mr Botham issued proceedings in the High Court for damages for breach of the express terms of his contract of employment. He relied on several breaches of the Discipline Code. He said the MOD had failed to find out the relevant facts before proceeding with disciplinary action. He said it had failed sufficiently or at all to define the charge, to set out the facts to support the charge and to provide and list any documentary evidence. He said it had recommended dismissal without a proper investigation of the facts. Finally, he claimed the MOD had caused or allowed the deciding officer to make reference to other unsubstantiated allegations or suspicions of other offences. He claimed those breaches led to him losing his employment, his reputation being damaged, him being placed on the register of persons deemed unsuitable to work with children and him being precluded from further employment in his chosen field. He claimed for loss of future earnings. The case made its way to the Supreme Court on appeal by the MOD.
The Supreme Court decision
The Court turned to question one – whether the reasoning in Johnson applied to preclude recovery of damages for loss arising from the unfair manner of a dismissal in breach of an express term of an employment contract.
The Supreme Court considered the background to unfair dismissal legislation and found that Parliament had been clear in fixing the limits, including compensation, for unfair dismissal. In the Johnson case, the House of Lords made it clear that it would not create a new common law right covering the same ground as the statutory right not to be unfairly dismissed. It would “fly in the face” of the limits set by Parliament. Further, Parliament had intended that such claims be decided not by the ordinary courts of law but by specialist tribunals.
The Supreme Court agreed with the House of Lords. It held the unfair dismissal legislation “precludes a claim for damages for breach of contract in relation to the manner of dismissal, whether the claim is formulated as a claim for breach of an implied term or as a claim for breach of an express term which regulates disciplinary procedures leading to dismissal”.
The Supreme Court then turned to look at the second question – whether the claims made by Mr Edwards or Mr Botham fell within the Johnson exclusion area.
Mr Edwards claimed that the damages he sought for loss of reputation consequent on the findings of misconduct made by the disciplinary panel were outside of the Johnson exclusion area. It was suggested on his behalf that the findings of misconduct were made because the disciplinary panel was not formed properly (in breach of the contractual disciplinary procedures) and had acted in a manner which was procedurally unfair. The breach was claimed to be independent of dismissal.
The Supreme Court held that it was impossible to separate the findings that were supposed to form the bases of Mr Edwards’ claim for damages for loss of reputation from the dismissal. The findings were the reason for dismissal. The case fell within the Johnson exclusion area.
In Mr Botham’s case, the Supreme Court turned to the statement of facts and issues agreed for the purposes of the court case. It noted the statement set out that Mr Botham was placed on the register of persons deemed unsuitable to work with children “as a consequence of the dismissal for gross misconduct”. Further, Mr Botham pleaded that the damages he claimed for loss of reputation were caused by the dismissal itself. Mr Botham’s case was held to fall squarely within the Johnson exclusion area.
The leading judge in the Supreme Court made it clear that the cases of Edwards and Botham were decided on their specific facts. Not all judges hearing the case (seven in total) were in agreement. Nevertheless, the Supreme Court’s decision demonstrates the difficulty that employees will encounter in seeking to pursue such claims and thereby circumvent the normal statutory ceiling on unfair dismissal compensation. However, the significance of the issue for similarly placed employees means that it may not be the last we have heard