Employees will have the right to claim compensation for the stress and harassment caused when they are dismissed unfairly, after a Court of Appeal decision.
Lawyers said the ruling would allow numerous employees, bringing unfair dismissal claims, to seek more extensive damages. Unions claimed it would put pressure on employers to supervise workplace conditions more carefully.
“This new ruling means that, if an [unfair dismissal] claimant has suffered additional stress or humiliation, they will be entitled to compensation for personal damage, It is a real step forward, and it should make employers think very carefully about tackling workplace bullying or pay the price” said Dave Prentis, general secretary of Unison, the public service union.
The decision came in the case of Christopher Dunnachie, an environmental health officer, who worked for Hull city council for 15 years. He resigned in March 2001 after a “prolonged campaign of harassment” by a colleague who was his sometime line manager. It had made him ill. Mr Dunnachie hung on until he could find another job – which was less well-paid, further away, and of lower status – but then claimed unfair dismissal. The courts recognised it was “a bad case of workplace bullying, compounded by an equally serious refusal by management to deal with it”.
An employment tribunal awarded him £10,000 for the non-pecuniary damage – with an additional amount for loss of earnings and the travel costs of the new job. But the employment appeal tribunal struck out the £10,000 award, on the grounds that a case dating back to the 1970s had established that compensation in unfair dismissal cases embraced only “quantified pecuniary losses”.
By a two-to-one majority, the Court of Appeal overruled that decision – although it gave permission for a further appeal to the House of Lords.
Lord Justice Sedley said he believed that the statutory formula now embraced non-pecuniary losses caused by an unfair dismissal. To the extent that the earlier case held otherwise, “I consider it to have been wrongly decided”.
Mr Justice Evans-Lombe agreed, although Lord Justice Brooke gave a forceful dissenting judgment, pointing out that the earlier case had gone unchallenged for three decades.
The judges warned employment tribunals to “manage, list and decide” pending cases on the basis that “the last word has not been said” until the law lords heard the issue.
Even so, lawyers said they now expected many employees bringing unfair dismissal claims to include demands for damages covering the strains and stresses resulting from the way in which they were dismissed.
Dan Lavender, partner in the employment unit at Macfarlanes, said many employees would add this element to their claims. But he questioned whether it would open the floodgates, given that, even in a case of extreme bullying, the compensation awarded was £10,000.
Mr Justice Evans-Lombe, in his decision, also said he believed there was no reason for the floodgates to open “provided that the employment tribunals are firm in requiring proof that an applicant has been occasioned any such loss.
“Financial Times”: 12 February 2004