Employment Law Advocates

There has been a great deal of coverage about the case of Edwards v Chesterfield Royal Hospital, which undoubtedly has the potential to result in larger claims for breaches of contractual disciplinary procedures. However, the impact is not likely to be quite as wide as has been reported in quite a few sources. A close reading of the judgment will show that it will not benefit everybody who is wrongfully dismissed in this way.

The first point to appreciate is that one of the grounds of appeal was not successful. The case of Gunton v Richmond-upon-Thames had established that, where a person is wrongfully dismissed after a breach of a contractual procedure, the loss is restricted to the period of time that it would have taken to complete the procedure plus the contractual notice period, and does not include the loss of a chance that there would have been no dismissal with the result that employment would have continued indefinitely. This principle was challenged on the basis that it was incompatible with the Human Rights Act but the Court of Appeal rejected this submission and considered itself to be bound by the previous decision of the House of Lords.

The appeal that was allowed was less far-reaching and was based on the fact that there was a separate breach of contract preceding the dismissal which gives rise to its own remedy. Although there could be no claim for the additional lost earnings flowing from the dismissal, it would be possible to recover damages for the loss of reputation resulting from a finding of misconduct, where there had been a failure to follow the correct procedure. This could include some loss of earnings but, crucially, this would be the earnings lost because potential future employers are put off by the stigma of the adverse finding, rather than any money that could have been earned with the employer being sued. There will be cases in which this will not make much practical difference to the amount that is claimed, which could still, in principle, amount to a whole lifetime’s worth, but it will be necessary to show that each decision not to appoint flows directly from the stigma and not just from being out of work, which I suspect will often be quite difficult in practice, especially when there is a public sector recruitment freeze which can readily explain a failure to find work.

What is certainly true is that this decision will only be helpful to employees who are dismissed for serious misconduct. A person who is made redundant in breach of a contractual redundancy procedure will still be restricted to damages calculated in accordance with Gunton, even if the practical result is that they are out of work for a long time, because there is unlikely to be stigma attached. This will also apply to those who are unfortunate enough to be dismissed for an entirely capricious reason with no procedure whatsoever. This is an important and dramatic decision but its scope is nevertheless considerably restricted in practice.