The EAT has held that an employee who was unfairly constructively dismissed was entitled to receive pay for her full six-month notice period, without being required to give credit for earnings during that period (Stuart Peters Limited v Bell).

Background  

In this case, Ms Bell had a six-month contractual notice period. She claimed constructively unfair dismissal. During what would have been her notice period, she did some paid temporary work. The tribunal did not deduct these earnings from the compensation she was awarded, applying what is known as the "narrow principle" in the 1973 case of Norton Tool v Tewson, which held that it was "good industrial practice" to allow full compensation for the notice period without bringing into account earnings from elsewhere. The EAT agreed that there was no reason for this principle not to apply equally to constructive unfair dismissal, even if it led to a degree of double recovery.

Impact on employers

For so long as the "narrow" Norton Tool principle exists, employers should be aware that it will be applied in determining compensation for all types of unfair dismissal and even in relation to relatively long periods of notice (in this case, six months). The compensatory award for unfair dismissal is capped at £66,200 so employees whose loss of earnings for the notice period fall within that limit and who have to some degree mitigated their loss, will be more likely to bring claims for unfair dismissal so that they can benefit from a windfall. By way of contrast, if they claimed damages for breach of contract or wrongful dismissal, they would be required to give credit for earnings during the notice period.