In Edwards v Chesterfield Royal Hospital, the Court of Appeal has held that, in principle, an employee may recover damages for future loss of income where an employer has breached an express contractual disciplinary procedure in the build up to a later dismissal.

Dr Edwards, a consultant, was dismissed for misconduct and has pursued a breach of contract claim seeking damages, not just for his notice period but also for substantial future losses until retirement. Dr Edwards argues that his NHS Trust employer’s disciplinary procedure was an express clause of his contract of employment and that the procedure was breached at the investigation stage. He argues that, had it not been breached, the finding of misconduct against him would not have been made and that he would not have been subsequently dismissed.

In preliminary proceedings, the employer NHS Trust applied to have the claim struck out as far as any claim over and above damages for the three-month notice period was concerned. The employer was successful on that application at first instance. On appeal to the High Court, the position remained largely the same, the High Court finding that Dr Edwards could as a matter of principle claim losses only in respect of the notice period plus the period of time it would have taken the employer to comply with the disciplinary procedure.

However, on further appeal, the Court of Appeal has found that Dr Edwards may, in principle, seek to recover breach of contract damages for losses that extend beyond the notice period and the period of time for procedure compliance. Whether Dr Edwards should succeed on his arguments that the disciplinary procedure was breached, whether compliance with the disciplinary procedure would have avoided his dismissal, and, if so, whether he can succeed in showing that he would have remained employed by his former employer until retirement and is unable to work elsewhere, are all matters for consideration on their merits at a future trial. However, the Court of Appeal found that Dr Edwards was not, as a matter of legal principle, prevented from pursuing the claim.

The case may be further appealed to the Supreme Court but, at this stage, the case is a stark warning to clients who operate disciplinary procedures that are expressed to be terms of employees’ contracts of employment, particularly where senior and/or highly specialised employees are concerned.