Compensation for unfair dismissal is only intended to cover actual loss. The exception to this rule is the old case of Norton Tool Ltd v Tewson which decided that, where an employee who has been unfairly dismissed has found a new job during his notice period, he or she does not have to give credit for earnings from that new job received during that period when compensation for unfair dismissal is being calculated.
In Langley v Burlo, the Court of Appeal has upheld the EAT decision that an employee could not claim eight weeks’ full pay as part of her compensatory award for unfair dismissal to cover her notice period, as she was only entitled, under her contract, to SSP, being unable to work during her notice period due to ill-health. As such, the Court restricted Norton Tool to its facts and declined to extend its application.
The decision reflects the guidance given by the House of Lords in the case of Dunnachie v Kingston upon Hull City Council that compensation for unfair dismissal should reflect only actual financial loss. In Dunnachie it had been suggested that it might also include compensation for injury to feelings. In Langley it was suggested, following Norton Tool, that compensation should reflect ‘good employment practice’ of paying an employee in full over their notice period.
Point to note –
• Employees do have a right to be paid in full during their notice period but only where the statutory minimum notice period applies (ss 86-88 Employment Rights Act 1996) These sections of the ERA do not apply where (as happened in Langley) the contractual notice to be given by the employer is at least one week more than the statutory minimum.