Employment Law Advocates

The Court of Appeal has given its judgment in the highly topical case of Gibb v Maidstone & Tunbridge Wells NHS Trust, concerning a rather large termination payment to a senior civil servant, in circumstances in which it was alleged that poor management had contributed to the outbreak of a hospital superbug. Although the Trust had authorised the payment and a binding compromise agreement had been signed by both parties, the Secretary of State for Health had overruled the decision. This resulted in a rather strange situation where the Trust sought to avoid payment by claiming that its own previous decision had been unreasonable.

It is rather difficult to completely seperate the legal and the political issues in this case but I will endeavour to do so. Starting with the law, the Trust’s argument was that the settlement reached was vastly in excess of the amount that could have been awarded in the event of a successful claim for wrongful or unfair dismissal. While this line of reasoning does appear to have some plausibility, it is actually very problematic in light of the fact that this feature of the arrangement is far from atypical. If it is really is the case that such golden handshakes are outside the discretion of public bodies, this would inevitably result in a fundamental shift of practice towards a different approach to government, and enforcing this would amount to political interference by the courts. Therefore, it is not surprising that the Court of Appeal held that the payment was not unreasonable and overturned the decision of the High Court.

In my opinion, there was a certain amount of bad faith in the position taken by the Trust. I doubt that it ever really intended to dispense with golden handshakes. Rather, it wanted to escape from its obligations in order to avoid the damaging publicity that could result if the amount of this settlement had been leaked to the media, particularly given the events that led to the termination. There is a clear parallel here to public statements made by Harriet Harman about the government being justified by the Court of Public Opinion in its attempt to escape from the contractual pension of Sir Fred Goodwin. There are some strong political arguments for not agreeing to these arrangements in the first place but the legal arguments for trying to back out of these decisions are incredibly weak. This is particularly the case in a context in which there remains a culture of public money being spent on such payments.

The solution is a political one. A whole new approach is needed in which inflated termination packages cease to be the norm in the public sector. This change can only be made by a democratically-elected government and not by the courts but it is even more pressing in the current economic climate. However, I would also make this point. The state, and particularly the NHS, also spends an enormous amount of money on litigation and these decisions are rarely made on a commercial basis. This case is one that ought never have been allowed to arise in the first place. It is not only golden handshakes that are a waste of public money.