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Claims for breach of contract and disciplinary procedure

Posted on 29th July 2010
Case law

The Court of Appeal has decided that an employee is entitled to compensation for damages arising from a dismissal conducted in breach of contract. Compensation is not limited to the cap on compensation in cases of unfair dismissal.

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Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2010]

Background

Mr Edwards was employed by an NHS Trust under a contract of employment providing for three months' notice of termination and incorporating a disciplinary procedure to be followed for allegations of personal misconduct and a different procedure for allegations of professional misconduct. Mr Edwards was dismissed for gross personal and professional misconduct. The Trust followed the procedure covering personal misconduct but not that for professional misconduct. Mr Edwards argued had the correct contractual procedure been followed no finding of misconduct would have been made.

The decision

The Court of Appeal concluded that Mr Edwards is in principle entitled to compensation arising from the failure by the Trust to follow the applicable contractual disciplinary procedure. It dismissed the Trusts' arguments that Mr Edwards compensation should be limited either to the period of time that it would have taken the Trust to follow the correct procedure and / or to the statutory cap on compensation for unfair dismissal (currently £65,300).

Comment

It is commonly understood, following the House of Lords' decision in Johnson v Unisys Limited, that compensation for damage caused to an employee's reputation by the manner of their dismissal is not normally recoverable. However, this case highlights an exception to that general rule but is quite case specific. Mr Edwards was relying on an actual breach of contract (the failure to follow the correct contractual procedure) rather attempting to argue the failure to follow the correct procedure was a breach of the implied term of trust and confidence.

The right to appeal the Court of Appeal's decision to the Supreme Court has been applied for and given Mr Edwards' claim for future losses of a little less than £4.3 million this is likely to rumble on.

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