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Labour Notes Wrongful Dismissal Notes

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LABOUR: WRONGFUL DISMISSALWRONGFUL DISMISSAL: THE COMMON LAW POSITION
? 1. Wrongful DismissalIt seems that generally at common law an employer is able to get rid of its employees on an indefinite contract at will without having to show a good reason:McClory v Post Office [1992] ICR 758.However, a dismissed employee will have a claim in damages for breach of contract if the employer breached an express or an implied term in the contract causing loss when dismissing the employee. Such claims are known as claims for wrongful dismissal. The terms which are likely to be broken are:Implied and express procedural termsExpress and implied substantive terms
? 2. Paradigm Case: Dismissal without Notice Express or Implied2.0 The Notice RuleThe general rule at common law was that the contract of employment was terminable by either side upon reasonable notice. The length of notice is usually what was agreed either expressly or impliedly. This usually meant either the notice that was customary in that trade or profession, or a period of time derived from the payment period e.g. if wages calculated on a weekly basis it would be assumed that a week's notice was necessary.In the absence of any indication to the contrary the court will infer that the contract is terminable by reasonable notice. This provides either party the opportunity to escape from the labour arrangement at low cost.English law never developed a concept of employment at will during the 19th century like other common law jurisdictions such as the US. However, the use of contractual presumptions in often produces a similar result.
? Allen v Flood [1898] AC 1: Contracts of employment were all terminable on a day's notice by either side.
? Marshall v English Electric Co Ltd [1945] 1 All ER 653: A notice period may be an hour for an hourly paid worker. CA Held: An employer had the implied right under contract to impose a disciplinary suspension on the employee on the basis that 'what is called [a]
suspension is in truth dismissal with an intimation that at the end of so many days, or it may be hours, the man will be re-employed if he chooses to apply for reinstatement.'Today, statute provides regulation of minimum notice periods which take effect as implied terms in the contract:
? Employment Rights Act ("ERA") 1996 ss.86-91 (previously EPCA, ss. 49-52 and Schedule 3):
? Section 86: Provides that the notice required to be given by an employer to terminate the contract of employment of a person who has been continuously employed for one month or more is: Period of continuous employment More than 1 month, less than 2 years 2 years or more but less than 12 years 12 years or more?

Period of notice Not less than 1 week Not less than 1 week for each year of cont. employment Not less than 12 weeks

Section 86(2) an employee who has been continuously employed for one month or more must be given not less than 1 week's notice to terminate his contract of employment. The Act makes no reference to the employee's liability for breach of contract where s/he has not given the requisite period of notice.Failure to comply with these statutory notice provisions will be taken into account when assessing liability for breach of contract (s.91(5)).Damages will be based on the wages due under the minimum notice period. This is advantageous to high earners, such as chief executives, senior managers etc. who may have a lengthy express notice period.The Act does not rule out the parties themselves agreeing to longer minimum periods of notice on either side, nor does it prevent either party from waiving their rights to notice on any occasion, such as for PILON (below).
? Sections 87-91: Governs the rights and liabilities of the parties during the notice period, although these provisions do not apply if the contractual notice to be given by the employer to terminate the contract is at least one week more than the statutory minimum;
? Scotts Company (UK) Ltd v Budd [2003] IRLR 145: Employee's original contractual notice period was three calendar months. A new staff handbook embodied the statutory minimum. Due to his ill health, C later received 13 weeks' notice from his employer. No payment was made in respect of this period of notice. Question whether wages should have been paid during the notice period in accordance with s.88(1) (b) ERA 1996. EAT Held: If the employee had been given 13 weeks' notice, s.87(4) would have the effect of disapplying these provisions, albeit this being a 'curious result'An employee is entitled to receive wages based on his normal working hours even if no work is done by reason of lay-off, incapability, sickness or injury, pregnancy etc. - However, certain payments such as statutory sick pay and holiday pay will go towards discharging this liability (s.88).Pay in lieu in notice (PILON), can be any form of consideration or estoppel (s.86(3)). If an employee voluntarily accepts a wages PILON, this would normally be seen as discharging his contractual rights against the employer.
? Baldwin v. British Coal Corporation [1995] IRLR 139: Employee's contract terminated without him receiving the 12 weeks' notice he was entitled to. This was done in order to enable him to receive a redundancy payment of PS5,000 under a statutory scheme, the terms of which would have been inapplicable if dismissed at a later date. Held: He had thereby waived his right to receive, in addition, net salary for the contractual notice period.Where the relationship is ended consensually on that basis of PILON, this arrangement could be construed as involving a promise by the employer to pay a sum equivalent to the gross salary for the period in question.Because contract is discharged by agreement there is no question of wrongful dismissal; and no presumption that the sum paid should be the same as what would normally be awarded by the court by way of damages.
? Gothard v Mirror Group Newspapers Ltd [1988] ICR 729: CA Held: The most natural construction of an agreement for voluntary early retirement was that the PILON would be made gross.
? Deakin says that this same principle may apply in relation to PILON clausesIf the employer fails to give notice, the PILON may be characterised as a debt; this would depend on the specific construction of the contract.
? Johnson v. Unisys [2001] IRLR 279: Lord Hoffman cited McLachlin J in Wallace v. United Grain Growers Ltd [1997] 152 DLR (4th):"A wrongful dismissal action is not concerned with the wrongness or rightness of the dismissal itself. Far from making dismissal a wrong, the law entitles both employer and employee to terminate the employment relationship without cause. A wrong only arises if the employer breaches the contract by failing to give the dismissed employee reasonable notice of termination. The remedy for this breach of contract is an award of damages based on the period of notice which should have been given."
? Hill v Parsons [1972] Ch 305: Court will not imply a shorter period of notice but may imply a longer oneTermination by the employer on notice is statutory dismissal. Such a dismissal may or may not be fair, depending upon the circumstances in which it was carried out, it may still be unfair.

2.1 Implications of the notice rule and the right to workImplications of the notice rule is that although the employer has a limited right to the future services of the employee, this conversely means that the employee only has limited job security.

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2.2?

Reda v Flag Ltd [2002]: PC Held: Where a contract expressly gives the employer the power to dismiss the employee without cause this power cannot be made subject to any implied qualification, such as the implied term of trust and confidence.
? Although there will be circumstances where this right is expressly or impliedly limited by the existence of disciplinary procedures. Is very rare that a contract will not contain an express or implied notice term. However, there are certain cases in which the implication of a term giving the employer a right to give notice would not be appropriate.
? McClelland v Northern Ireland General Health Services Board [1957] 1 WLR 594: HL Held: The omission of a such a clause from the contract of a senior health service employee in the public sector was deliberate, since it reflected the high level of job security which was part of the contractual package agreed by the parties.The employee's contract incorporated an extensive procedure (September Conditions) which government dismissal for misconduct, inefficiency and unfitness. No express right was mentioned for redundancy. Effect was that the employee had a contractual right to remain in the employment until she reached the retirement age, subject only to the possibility of dismissal for good cause which in the facts was not made out (dismissed for having married). She was granted a declaration to the effect that her contract of employment was still subsisting, in effect nullifying the purported dismissal. However, it is unlikely the court would assume parties intended to create such a stable employment environment in anything other than the public sector: also difficult to think of workers who would fall into this category. Alternatively, contracts of employment sometimes contains clauses specifying that the employer shall have the right to bring the employment to an end 'with immediate effect' in the event of breach of contract of a certain kind
? T&K Home Improvements Ltd v Skilton [2000] IRLR 595: Sales and marketing director of double glazing firm was required to meet quarterly sales targets. Express clause stated he would receive three months' written notice. Another clause said failure to meet sales target could lead to dismissal with "immediate effect". CA Held: Such a clause may be effective in allowing the employer to end the contract without notice. However, on the construction of this particular contract, the 'immediate effect' clause did not override the clause entitling him to three month's written notice of termination. The 'immediate effect' clause merely destroyed the employee's right to continue work and be on the employer's premises; it did not destroy his other contractual rights, in particular the right to have notice of termination. Lord Justice Pill: "I cannot read the expression 'dismissed with immediate effect' as meaning what the employers say. It of course means that the contract terminates as of that moment. It means that the employee is not to have the right to continue to work or to be present at the employer's premises. What it does not mean is that any other rights which exist in other clauses of the contract are eliminated by reason of the fact that the dismissal has immediate effect. In my judgment, the general right which arose from clause 3.2 [three months written notice] and 14.3 [PILON at the discretion of the employer] of the contract remains in existence." It will only be exceptional cases where an employer may be liable for an additional breach in refusing to allow an employee to work, whether this is during the notice period or after the dismissal.
? Herbert Clayton and Jack Waller Ltd v Oliver [1930] AC 209: (actors and others whose work is displayed to the public at large) Employer's failure to permit the employee to perform as contractually agreed had been held to give rise to claims for harm to reputation, which the court was prepared to quantify. Protection of skills and earning capacity is a more clearly defined case for protecting the right to work; e.g. apprenticeships where the contract is not merely for employment, but training and instruction as well.
? Dunk v George Waller & Sons Ltd [1970] 2 QB 163: Held: It was not enough, to justify dismissal, that the apprentice had failed certain examinations. If the apprentice is wrongfully dismissed, he or she is entitled to damages not just for lost wages but also for the loss of training opportunities and the consequent harm done to his or her changes of eventually obtaining a good job. Cases where notice does not need to be given: justified summary dismissal Introduction
? The employer does not need to give either common law or statutory notice when the employee commits a repudiatory breach of contract (s.86(6) ERA) e.g. for gross misconduct such as dishonesty, disobedience etc. This is referred to as justifiable summary dismissal.
? The legal basis for the claim: bilateral theory:
? Photo Production Ltd v. Securicor [1980] AC 827:
? Societe Generale, London Branch v Geys [2012] UKSC 63: If employee commits a fundamental breach, the employer can either accept that breach or reject it. If they accept, this will be summary dismissal.
? The general test of whether the employee's breach of contract is repudiatory i.e. sufficiently serious to justify summary dismissal:
? Laws v. London Chronicle (Indicator Newspapers Ltd) [1959] 2 All ER 285: Lord Evershed p.287: "whether the conduct complained of is such as to show the servant to have disregarded the essential conditions of the contract of service".
? Sinclair v Neightbour [1967]: Sachs LJ: Whether the conduct can be considered to be 'inconsistent with the continuance of confidence' between employer and employee So what constitutes a fundamental / repudiatory breach?
? It may result from a single act or a series of small breaches, the final one being "the last straw".
? Pepper v. Webb [1969] 1 WLR 514:
? However, what constitutes a repudiatory breach has changed with time:
? Wilson v Racher [1974] ICR 428: Head gardener dismissed after heated argument with the employer about his early departure the proceeding Friday. The gardener told him to "get stuffed and go shit yourself". There had been no history of inefficiency or dumb insolence. The test applied by the CA was whether the gardener's conduct was insulting and insubordinate to such a degree as to be incompatible with the continuance of the relationship of master and servant. Held: It was not so serious and the dismissal was wrongful. Edmund Davies LJ said that old cases, dating from the last century, might be wholly out of accord with current conditions: "What would today be regarded as an attitude of tsar-serf, which is to be found in some of the older cases where a dismissed employee failed to recover damages would, I venture to think, be decided differently today".
? Jupiter General Insurance v. Shroff [1937] 3 All ER 67: More lenient view reflected by Privy Council. Manager of life insurance department of an insurance company who recommended the issue of an endowment policy upon a life of someone who had earlier been refused. He was dismissed with one month's pay in lieu of notice. Lord Maugham (PC): Said 'we must apply the standards of men, and not those of angels, and remember that men are apt to show temper when reprimanded'. Emphasised that summary dismissal was a strong measure justified only in the most exceptional circumstances. Account has to be taken of the nature of the business and the position of the employee in that business.
? Neary v. Dean of Westminster [1999] IRLR 288: Organist and secretary of Westminster Abbey were summarily dismissed on the grounds of gross misconduct because they had taken fixing fees for concerts and had retained surpluses in respect of events that they had organised on behalf of the Abbey. Special Commissioner Lord Jauncy: The conduct of the claimants amounted to gross misconduct justifying their summary dismissal. Their conduct so undermined the trust and confidence which is inherent in the particular contract of employment that the employer was no longer be required to retain the employee in his employment. Whether particular misconduct justifies summary dismissal is a question of fact. The character of the institutional employer, the role played by the employee in that institution and the degree of trust required of the employee vis-a-vis the employer must all be considered in determining the extent of the duty of trust and the seriousness of any breach thereof. It could not be accepted that when financial wrongdoing is alleged, nothing short of deliberate dishonesty or deceit will constitute gross misconduct. On the facts, contrary to the spirit of openness which it was accepted was required, they failed entirely to inform the Abbey authorities of what they were doing, even though they had ample opportunities to do so and no good reason for not doing so. That conduct was such as to fatally undermine the relationship of trust and confidence which should have subsisted between them and the Abbey, and the Dean and Chapter were therefore justified in summarily dismissing them.

?This is all highly fact specific:
? Smith v. Michelin Tyre PLC ETS/100726/07: Tribunal upheld a dismissal for gross misconduct where the misconduct was the result of a one off breach of a no smoking policy. Employee worked in factory which used highly flammable materials. Even though he had been there for 12 years, this had to be weighed against the importance of the no smoking policy in preserving its business, property and the lives of its staff.
? Preece v. JD Wetherspoons plc ET/2104806/10: Moral tale in the day and age of social media. Pub manager summarily dismissed for gross misconduct when she made inappropriate comments on Facebook about two of her customers. It didn't matter that she thought her privacy settings had meant that only her close friends could see it.
? R (Shoesmith) v. Ofsted [2011] IRLR 679: Head of social services department which was responsible for Baby P. She was summarily dismissed by Ed Balls himself after an Ofsted report into the Baby P case. CA Held: She was not guilty of gross misconduct. Yes she was accountable as head of department, but accountability doesn't equate with "heads will roll". This was not a case of gross misconduct by Shoesmith, it was a capability dismissal (unfair). There was no need for the council to move with such speed against a previously respected employee.
? At common law the right to summary dismissal applies even though at the time of the dismissal, the employer was not aware of the breach in question or of its seriousness.
? Boston Deep Sea Fishing and Ice Co v Ansell (1888) 29 Ch D 339: Manager dismissed for reasons which were found to be groundless. However, after dismissal had taken place the employer discovered that the claimant had, several years earlier, accepted a secret commission which should have been directed to the business. This misconduct would have justified summary dismissal, had the employer been aware of it. CA Held: The dismissal had not been wrongful, 'even though [the employer] did not discover the fraud until after [it] had actually pronounced the sentence of dismissal.'In effect, the employee did not lose anything of value by virtue of his dismissal: by virtue of his earlier fraud, he had no right to continuing employment. Different outcome if the employer, knowing of the breach, expressly waives the right to terminate the contract in response to it; or if no action is taken within a reasonable period of time this may be a waiver of the right to dismissal.
? Finally, even if the dismissal is justifiable at common law it is not necessarily fair under statute: it is possible for the employee to succeed in a complaint for unfair dismissal where s/he might lose a claim for wrongful dismissal. Therefore, the rules on summary dismissal must now be read in the light of the requirement of procedural fairness in respect of unfair dismissal

3. Does breach of other express or implied terms give rise to a claim for wrongful dismissal?Procedural terms operate to: (i) impose a procedure that the employer must observe when exercising a disciplinary power; and, (ii) impliedly or expressly restrict the right of the employer to circumvent this procedure by dismissing an employee for no reason by simply invoking the right to termination with notice.First, we ask whether the term has been effectively incorporated into the contract of employment. Generally there should be no difficulty, such terms usually regulate the individual relationship, not the collective one.
? Alexander v Standard Telephone and Cables Ltd (No 2) [1991] IRLR 286: Hobhouse J: A clause in a collective agreement laying down a 'last-in, first-out' procedure was not intended to give rise to individual rights and was not incorporated at the level of individual contract.
? This was an exceptional outcome and goes against other cases which incorporated job security clauses.Employers may argue that the term was never intended to have normative effect; however, it is the courts that are the final arbiters of what clauses were intended to be incorporated.
? Deakin states that if the clause possesses the necessary attributes of a binding contract term, the court should arguably be reluctant to rubber-stamp a bare statement by the employer to the effect that the clause is binding in honour only.3.1 Breach of implied procedural term to follow a fair procedure before dismissal?Historically there was no general principle of "good faith termination" in English Labour Law.
? Malloch v. Aberdeen Corporation [1971] 1 WLR 1578: Lord Reid: "At common law a master is not bound to hear his servant before he dismisses him. He can act unreasonably or capriciously if he so chooses but the dismissal is valid."Effect of the implied term of mutual trust and confidence?
? Johnson v. Unisys [2001] ICR 480: "the Johnson exclusion zone": J dismissed unfairly and got PS11,000 in compensation (at that stage the statutory maximum). He claimed he'd actually suffered PS400,000 worth of damages as a result of the loss he had suffered due to the breach of the implied term of trust and confidence relating to the manner in which he was dismissed. The bad manner in which he was dismissed meant he had no hearing or disciplinary procedure (contained in the handbook). He argued as a consequence he had had a nervous breakdown. Majority HL Held: Dismissed claim because no cause of action at common law.
? Lord Nicholls:Took the view that a common law right which embraced the manner of dismissal of an employee could not satisfactorily exist with the statutory right not to be unfairly dismissed.
? Lord Hoffman:Did not think it appropriate to extend the duty of mutual trust and confidence to apply to the way in which the employment relationship is terminated. This is because the term is concerned with preserving the continuing relationship which should subsist between employer and employee.He believed that a more elegant solution may be to imply a separate term that the power of dismissal will be exercised fairly and in good faith. However, just because it would be "jurisprudentially possible to imply a term which gave a remedy in this case, I do not think that... it would be necessarily wise to do so."He expressed concerns about causation, particularly distinguishing between damages caused by the manner of the dismissal and damage caused by the fact of dismissal. This was in addition to the open-ended nature of liability and the possible deterring effects this may have on employers.Parliament has set up a system for dealing with unfair dismissals. Parliament did not choose to build upon the common law by creating a statutory implied term that the power of dismissal should be exercised fairly or in good faith, with a remedy in general contractual damages. Instead they set up an entirely new system outside of the courts, which applied new statutory concepts and offered statutory remedies. Many of the new rules on exclusion of certain classes and limits on the amount of compensatory award were based on principles not open to the court to apply.Expressed the view that damages for manner of dismissal would be recoverable within the tribunal's jurisdiction. Norton Tool (which limited damages to pecuniary loss only) was "too narrow a construction" of "just and equitable": therefore, he saw "no reason why in an appropriate case it should not include compensation for distress, humiliation, damage to reputation in the community or to family life."Did not think it was appropriate to create a parallel remedy at common law: this would be to "go contrary to the evident intention of Parliament that there should be such a remedy but that it should be limited in application and extent."He did not think that an express term providing a disciplinary procedure would be independently actionable. Grievance procedures must be construed against their historic background and context.Disciplinary procedures were relevant to the ACAS code of practice and the unfair dismissal procedure: "given this background to the disciplinary procedures, I find it impossible to believe that Parliament, when it provided in section 3(1) of the 1996 Act that the statement of particulars of employment was to contain a note of any applicable disciplinary rules,

?or the parties themselves, intended that the inclusion of those rules should give rise to a common law action in damages which would create the means of circumventing the restrictions and limits which Parliament had imposed on compensation for unfair dismissal."
? Lord Steyn:Was of the view that the ratio of Addis did not preclude the recovery of special damages flowing from the manner of a wrongful dismissal.Described the modern contract of employment as a "relational contract", as such, it was not appropriate to treat it as a commercial contract. For example, greater duties have been imposed on the employer to take care of the employee's physical, financial and even psychological welfare.If he was wrong as to Addis, he would have departed from it.As to the argument that a term of mutual trust and confidence could not apply to dismissals, Steyn pointed out that the Malik term had slowly developed in response to constructive dismissal cases. "It cannot therefore be confined to breaches during the subsistence of the contract.Steyn reiterated, obiter, what both he and Lord Nicholls had said in Mahmud; that "[d]amages for wrongful dismissal are governed not by a special rule applicable to employment contracts but by ordinary principles of contract law." Therefore, pecuniary loss resulting from a breach of contract should be recoverable (cf. Lord Loreburn in Addis).Steyn rejected counsel's argument that the implied obligation of trust and confidence was in conflict with the express notice clause. The implied obligation of mutual trust and confidence is a "legal incidence" of the contract of employment; it can be compared with the relationship between duties of good faith and fair dealing with the express terms of notice in a contract. "They can live together."As to the argument by counsel that a claim to follow disciplinary procedures was really a claim in unfair dismissal: "[t]his is a misprediction of the claim." The claim is not for unfair dismissal "but one based on allegations of breach of the obligation of mutual trust and confidence."Steyn accepted that provision would have to be made to avoid double recovery: "[b]ut such adjustments in common law damages can be and are often made."In response to counsel's argument that the implied obligation of trust and confidence is restricted to unacceptable conduct during the relationship, this is "a legalistic point." It ignores the purpose of the obligation which is to ensure fair dealing between employer and employee. This is important in respect of disciplinary proceedings, suspension of an employee, and dismissal at any other stage of the employment relationship.Steyn did not accept the "flood gates" argument: dismissal alone is not enough to base a claim for loss due to the manner of the dismissal. If the employer acts in a "harsh and oppressive manner that inflicts unnecessary and substantial damage on the employee there is no principle reason why an employee should not put forward a claim for such loss."Steyn accepted there might be causation difficulties, but this was not enough to strike out the claim. However, the remoteness of the claim justified striking it out.Deakin argues Hoffman's last statement is capable of being read in a number of ways: all which would be a highly novel approach to protective employment legislation; common for statute to provide a floor of rights. Hoffmann's analysis would create a 'ceiling' of rights: Options for interpretation:
? (i) The existence of Part X of 1996 Act must be interpreted as preventing courts giving effect to contractual disciplinary procedures which provide rights over and above those supplied by statute.
? (ii) There is merely a strong presumption against giving contractual effect to disciplinary procedures adopted by employers in order to comply with their statutory obligations.Collins and Freedland (2001) 30 ILJ 305: Addis v. Gramaphone Co Ltd [1909] AC 488: Held no damages for (1) Manner of dismissal: confirmed in Johnson (and see Edwards re express term). (2) Injury to feelings. (3) Stigma of dismissal (cf. Malik) Eastwood v. Magnox and McCabe v. Cornwall County Council [2004] ICR 1064: Concerned employees who, having succeeded in unfair dismissal claims before an employment tribunal, subsequently began court proceedings claiming damages for psychiatric injury brought about by the manner of their dismissal. Eastwood and Williams were long serving employees at a power station. They were suspended and eventually dismissed on the basis of what they alleged to be trumped up charges of serious misconduct. By the time of their dismissals, they were both suffering from stress. An employment tribunal found they had been unfairly dismissed. They began proceedings in the County Court for breach of the implied contractual term of trust and confidence with damages for psychiatric injury. McCabe was unfairly dismissed for inappropriate relations with female students because a procedural requirement was not complied with. He brought proceedings in the High Court for breach of contract, negligence and breach of statutory duty. HL Held: C had an ordinary common law action which could be brought before the courts because their action vested in the predismissal period. Johnson v Unisys Ltd established a line of demarcation between events leading up to dismissal and the dismissal itself, to which the implied contractual obligation to act fairly does not apply. Although not typical, exceptionally, financial loss may flow directly from the employer's failure to act fairly in the steps leading to dismissal e.g. suspension, psychiatric or other illness. In such cases the employee has a common law cause of action which precedes, and is independent of, his subsequent dismissal, which he may bring in the ordinary courts. However if an employee brings proceedings both in court and before an employment tribunal, he cannot recover any overlapping heads of loss twice over. Repeated the Johnson reasoning: Parliament had 'occupied the field' relating to unfair dismissal and it was not for the courts to extend further a common law implied term when this would depart significantly from the balance set by the legislature. To treat the statutory code as prescribing a floor and not a ceiling would do just that.
? Lord Nicholls:Nicholls saw the attraction in extending the implied term of mutual trust and confidence to cover dismissals. This was due to the fact that the implied term implies to the 'lesser' step of suspension.However, this development faces one overriding difficulty. Parliament has fixed limits on the amount of compensation is available to qualifying claimants. It has done so according to their view as to how the interests of employers and employees, and the social and economic interest of the country as a whole, are best balanced in cases of unfair dismissal.As such, the court must treat the statutory code as prescribing a ceiling, not a floor.Nicholls explicitly recognized that by establishing a statutory code for unfair dismissal, Parliament did not evince an intention to circumscribe an employee's rights in respect of unfair dismissal. Nonetheless, Parliament has occupied the field.It is not for the courts to now expand the common law principle into the same field and produce an inconsistent outcome.However, if an employee has acquired a cause of action before the dismissal process has begun, then this cause of action remains unimpaired by subsequent unfair dismissal and the statutory rights flowing therefrom. "By definition, in law such a cause of action exists independently of the dismissal."Recognized that the practical consequences of this distinction may prove difficult: [1] A duplication in proceedings before the court and ET with a waste of resources and costs; [2] The distinction artificially separates the loss leading to problems of causation; [3] An employer may be better off dismissing an employee than suspending him.Stated that these difficulties arise "principally because of the cap on the amount of compensatory awards for unfair dismissal." This situation merits urgent attention by the Government and legislature.

Lord Steyn:Steyn pointed to the same difficulties identified above. "This policy aspect of the consequences of the reasoning of the majority in Johnson was not considered by the House in that case.""[T]he way in which a rule or principle operates in the real world is one of the surest tests of its soundness."Johnson will encourage precipitate and unfair decisions by employers to dismiss employees. Identified that the suspension/dismissal distinction and said that: "[a]n employee confronted with a repudiatory breach of contract by an employer who elects to treat the contract as continuing may still have a claim for breach of contract. But in practice an employee may often not have much choice but to accept the repudiation. If the employee accepts the repudiation, the claim becomes one of unfair dismissal and the Johnson exclusion zone comes into play.""In constructive dismissal cases the employee's response to the employer's breach will dictate whether there can be common law liability. The more outrageous the breach the less likely it is that the employee can affirm the contract."Points out Hoffmann's incorrect assumption that distress damages can be recovered as part of "just and equitable" compensation. This is not the case: "there are cogent grounds for thinking that in Johnson the majority proceeded on a fundamentally wrong assumption." The unfair dismissal scheme is less comprehensive than it was thought to be. "The symmetry between the statutory regime and the proposed common law development visualized by the majority probably did not exist. If this is the case, the core reasoning of the majority is flawed."Steyn was of the view that the decision of the majority in Johsnon could be justified if, and only if, it could be shown that the coexistence of the statutory scheme and the development of a common law remedy would be unworkable.If the common law developed the way the employee proposed, no claimant would be allowed to make double recovery. "In practice this will pose no more serious problems than in other areas where possible double recovery problems occur and are dealt with by judges on the facts of each case."Deakin: Emphasises that the courts should be willing, in the appropriate cases, to use the enactment of protective legislation as a basis for extending, rather than limiting, recognition of the legitimate common law interests of the employee.
? Gogay v Herts CC [2000] IRLR 703: Eastwood in fact confirmed this case. Residential care worker in a children's home. A child with learning and communication difficulties who had suffered severe sexual abuse in the family home developed an obsession with Gogay. Steps were taken to protect G from the child. Her boss wrote to her praising her as to the professional way she was handling the child. Subsequently in therapy sessions the child suggested that G had interfered with her in a sexual way and G was suspended. In the course of litigation it was found that there was no evidence of sexual abuse. G didn't return to work because of the clinical depression she had suffered as a result of her suspension. CA Held: Suspending an employee pending an investigation was clearly calculated to destroy the relationship between employer and employee. The suspension was a knee jerk reaction and no consideration had been given to alternatives. The breach thus occurred in the period prior to the period leading up to dismissal, and thus G could bring a claim for breach of contract in the ordinary courts.
? Lakshmi v. Mid Cheshire Hospitals NHS Trust [2008] IRLR 956: Consultant physician responsible for statutory cremation certificates failed to observe correct procedure. This constituted a criminal offence as well as professional misconduct. She was subject to an internal disciplinary investigation and a police investigation. On legal advice, she maintained her silence in police and internal interviews and was summarily dismissed following a hearing in breach of the contract of employment, which should have been delayed until the CPS reached a conclusion. No criminal charges were brought. She claimed for wrongful dismissal and breach of contract. High Court: Awarded damages for breach but refused injunctive relief:
? (1) There was a term of the contract that the defendant would comply with the disciplinary policy unless it could establish good reason not to. In the alternative, the defendant only complied with its obligation to act in good faith if it complied with the policy, unless there was a good reason not to do so. In addition, the implied term to act in good faith applied irrespective of the existence of the disciplinary procedure. If there was a disciplinary hearing and a request was made on apparently reasonable grounds for it to be adjourned, then it would be a breach of the implied term to decline to adjourn it in the absence of good reason not to do so.
? (2) An employer is only able to rely upon antecedent misconduct of which it was not aware at the time of dismissal as a reason to justify the original dismissal where there is no disciplinary process in existence. In all other cases it must dismiss only consequent to its disciplinary process.
? (3) Where the contract of employment provides an entitlement to two hearings, and where there is a contractual right that the hearing should be fair and should comply with the implied term that the employer will maintain trust and confidence, it would be wrong to allow the employer to disregard that contractual right and permit the employee only one fair hearing.
? (4) According to Johnson and Eastwood, if an employee before his dismissal had acquired a cause of action: that action remains unimpaired by his subsequent unfair dismissal and the statutory right flowing from it. However, an employer's failure to act in the steps leading to dismissal did not of itself cause the employee financial loss. The loss arose when the employee was dismissed, and it arose by reason of the dismissal. Such loss would not be recoverable in common law before the High Court. The loss must flow from the antecedent breach rather than from the dismissal. On the facts, the hearing (and thus the dismissal) should have been delayed by four weeks and C was entitled to damages to reflect her loss of salary for that period. She was not entitled to any additional loss.
? (5) The only basis upon which a court can or should grant a declaration or injunction that has the effect of preserving the relationship of employer and employee is where the court can find that a basis of mutual trust and confidence has survived between the employer and employee. Thus, the implied term of mutual trust and confidence does not apply during the Johnson exclusion zone. Breach of express procedural terms: contractual disciplinary procedures Contract of employment may contain express terms concerning disciplinary and dismissal procedures which set higher standards than unfair dismissal legislation requires. They restrict the employer's power to dismiss. What happens if the employee is dismissed without the employer following the disciplinary procedure?
? Gunton v. Richmond-upon-Thames LBC [1980] ICR 755: the "Gunton extension": Employee summarily dismissed in breach of a procedure clause by letter. He was RuT's Director of Education and was dismissed because his conduct was wholly inconsistent with the terms of his contract. Question whether he could recover damages. CA Held: (1) The employer's letter served as a repudiation of the contract and was wrongful dismissal as the contractual disciplinary procedure had not been followed. The general doctrine that a repudiation by one party does not terminate the contract applies to contracts of employment as it applies to the generality of contracts. See Buckley LJ's funky reasoning below. (2) A wrongfully dismissed employee cannot sue for his salary since the right to receive remuneration and the obligation to render services are mutually interdependent. Nor can he obtain an order for specific performance since the court cannot compel performance of a contract of service against an unwilling employer. The employee's remedy is in damages. He is entitled, subject to mitigation, to damages equivalent to the wages he would have earned under the contract from the date of dismissal to the end of the contract so as to put him in the same position as if the wrong had not been done. On the facts, that was a reasonable period from the date of dismissal for properly carrying out the disciplinary procedures plus the notice to which he was entitled. (3) The adoption of the disciplinary procedure was not inconsistent with the continued power of the employers to dismiss the plaintiff on a month's notice upon grounds other than disciplinary grounds.
? Deakin: Decision is odd in two ways:(1) if you got damages for non-compliance with disciplinary procedure, shouldn't this include loss of chance for the chance you may have not been found to be in breach at the disciplinary hearing??3.2?

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