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Damages for Wrongful Dismissal

07 April 2010

When an employee brings a claim for unfair dismissal to the Employment Tribunal (ET), there is a statutory cap on the amount of compensation payable. However, there is no upper limit to the level of damages that can be awarded when an employee pursues a claim for breach of contract or wrongful dismissal through the courts, even though in most cases the damages awarded are relatively modest, being based on the pay lost by the employee as a result of not having been given the notice to which they are entitled under their contract of employment.

In Edwards v Chesterfield Royal Hospital NHS Foundation Trust, Mr Michael Edwards, a consultant surgeon, was dismissed for gross professional and personal misconduct following a disciplinary hearing regarding allegations made against him by a patient. Mr Edwards’ appeal against the decision to dismiss him was rejected.

Mr Edwards’ contract of employment stated that it could be terminated by either side by giving three months’ notice and it contained a clause to the effect that matters of professional misconduct or incompetence would be dealt with under a procedure negotiated and agreed by the Local Negotiation Committee.

Mr Edwards claimed that his employer had not followed the correct disciplinary procedures and brought a claim of unfair dismissal to the ET. He then changed his mind and withdrew the claim, deciding instead to pursue a claim through the courts for losses arising from a breach of contract.

The County Court awarded Mr Edwards damages for wrongful dismissal in the sum of three months’ salary, to cover his notice period. Mr Edwards appealed to the High Court, claiming more than £4 million for loss of past and future earnings because he claimed his employer’s actions had ruined his career. He contended that the General Medical Council had investigated and dismissed the allegations made against him and had his employer followed the correct disciplinary procedure as laid down in his contract of employment, it too would have exonerated him.

The High Court dismissed most of Mr Edwards’ claim. Whilst an employer’s failure to follow the correct disciplinary procedure is likely to render a dismissal unfair and entitle the employee to an award of compensation by the ET, under common law, damages for wrongful dismissal cannot normally exceed the sum payable to the employee in the event that his contract had been lawfully terminated – i.e. had he been given notice according to the terms of his contract. At common law an employer is entitled to dismiss an employee on contractual notice for any reason.

Mr Edwards was therefore awarded three months’ salary plus what he would have earned during the time it would have taken to complete the correct disciplinary process.

This decision is a clear signal to anyone contemplating using the civil courts in an attempt to secure damages far in excess of the statutory level of compensation payable in a claim of unfair dismissal that such a strategy is unlikely to succeed.

We can advise you on all matters to do with termination of employment.

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