Contracts of Employment

Remedies for breach of contract; common law remedies

The [decision] makes the point that the normal measure of damages for a wrongfully dismissed employee is wages up to the date when the employment would have been lawfully terminated by notice plus 'the value of any fringe benefits which the employee would have received during the same period'. This case shows that this may also apply to benefits for which the employee would have qualified during that period.

The employee, of 38 years standing, was summarily dismissed for redundancy shortly before his 55th birthday. The contract did not provide for wages in lieu, but these were paid (in respect of his entitlement to 12 weeks notice) along with a redundancy payment and accrued holiday pay. However, the employee claimed damages for breach of contract (before a tribunal) on the basis that 12 weeks notice would have taken him past his 55th birthday, thereby increasing his accrued pension rights by £5,800; this had not been paid to him. The tribunal and the EAT turned him down, the latter on the basis that (under Dixon v Stenor Ltd [1973] IRLR 28, NIRC) the employee was no longer in employment, once wages in lieu have been paid.

The Court of Appeal allowed the employee's appeal. They held that there is no difference in principle between loss of pay and loss of pension rights, in relation to the notice period. Had the employment actually lasted a further 12 weeks, he would have qualified for the extra pension rights. Moreover, the EAT had misapplied Dixon v Stenor Ltd. That case may well decide that 'employment' does not continue after a payment in lieu (accepted by the employee) but it does not say anything about assessing damages - the employee remains entitled to what he would have received (or qualified for) had he not been dismissed in breach of contract. As the pension rights were not too remote, the employee had a good claim. Although the case is not cited, this decision can be seen as in line with Raspin v United News Shops Ltd [1999] IRLR 9 EAT, where an employee was allowed to claim common law damages for being wrongfully dismissed in such a manner that he was not able to claim unfair dismissal, as he would have been had he continued to be employed for his notice period.

"Harvey on Industrial Relations and Employment Law" November 2001