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The Employment Appeal Tribunal under HH Judge Peter Clark (EAT) upheld an Employment Tribunal decision that Mrs Triggs had been constructively unfairly dismissed by her former employer Robins Limited. Compensation was awarded by the employment tribunal (ET)after taing account of the loss resulting from the employer's conduct prior to the dismissal. The employer appealed to the Court of Appeal against the EAT's decision to uphold the ET's compensation award.

The employer argued that the ET when assessing Mrs Triggs's entitlement to compensation for her loss resulting from the dismissal should not have taken account of employer's pre-dismissal conduct or financial loss prior to the dismissal, that compensation should be limited to the loss sustained by the dismissal itself. Compensation should be limited to that for an employee who was ill and on sick pay and whose rights were almost exhausted when she left work.

The employer cited section 123 of the Employment Rights Act 1996(ERA) which in S 1 states that:
" the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer."

The claimant rejected the employer's argument that she would have been dismissed anyway after she had exhausted her statutory sick pay entitlement. The ET found that there was an 80% likelihood that she "would have either never been off sick or would have returned to work if the respondent had handled the matter better." The ET said that "If concerns about her treatment at work had been properly investigated from the outset.... the grievance may have been resolved in a way she would either not have become ill or if she had become ill been able to recover and carry on working. … Why should a Claimant not be able to recover compensation for her loss of income post dismissal where her loss of income pre and post dismissal in [sic] attributable to the Respondents conduct. The compensation is not for the illness it is for the loss post dismissal which is attributable to the Respondents conduct."

Lord Rimer had 'instinctive sympathy' for this approach to assessing Mrs Triggs's loss. “The employer's breach of duty towards her in the long run-up to the dismissal had caused her to become ill and to diminish her earning capacity; and that the loss she had suffered following her dismissal ought therefore to include loss suffered in consequence of that reduced income-earning capacity when it had been caused by the employer in circumstances resulting in that dismissal.”

Lord Rimer's sympathy was however trumped by the established law.

The House of Lords decisions in Eastwood and another v Magnox Electric plc and McCabe v Cornwall County Council and ors [2004] showed that loss flowed by the earlier breaches of the implied term of trust and confidence rather than from the dismissal. An employment tribunal in an unfair dismissal claim could not award compensation for the breaches under the terms s 123 ERA.

The House of Lords case of Johnson v. Unisys Ltd [2001] where the claimant was summarily dismissed by Unisys was cited. Johnson won his employment tribunal case for unfair dismissal and received compensation. He later brought a claim in the county court for breach of contract, for breach of the implied term of trust and confidence where because of the manner of his dismissal, of not receiving a fair hearing or proper disciplinary procedures Johnson had a mental breakdown that ruined his ability to find work.

The claim was struck out with Lord Hoffmann in the House of Lords (HoL) explaining that the common law allows an employer to dismiss an employee without any hearing or justification whatsoever. An employee only has a remedy in common law if the dismissal is in breach of contract. An action in common law action for wrongful dismissal can only compensate for salary owed from the contractual period of notice ( Lord Reid - Malloch v. Aberdeen Corporation [1971] 1 WLR 1578).

The decision of the House of Lords in Addis v. Gramophone Co Ltd [1909] was quoted whereby an employee cannot recover damages for injured feelings, mental stress or damage to his reputation arising out of the manner of his dismissal.

Lord Hoffmann argued that Johnson was unable to claim for damages in the courts based on the manner of his dismissal because the remedy for this was by way of statutory unfair dismissal (Industrial Relations Act 1971, later ERA). Johnson excluded recourse to common law recovery of damages where an employment tribunal has jurisdiction for unfair dismissal.

In Eastwood the House of Lords decided the boundary line regarding claimants who had been dismissed and been unsuccessful in their unfair dismissal claims. They brought common law damages claims in the civil courts for for breaches of the implied term of trust and confidence committed in the period before the dismissals.

Lord Nicholls there explained that "An employee's remedy for unfair dismissal, whether actual or constructive, is the remedy provided by statute. If before his dismissal, whether actual or constructive, an employee has acquired a cause of action at law, for breach of contract or otherwise, that cause of action remains unimpaired by his subsequent unfair dismissal and the statutory rights flowing therefrom. By definition, in law such a cause of action exists independently of the dismissal”

Apart from suspension financial loss is not incurred prior to dismissal;“In such cases the employee has a common law cause of action which precedes, and is independent of, his subsequent dismissal.”

Because of the boundary imposed by the dismissal, that of common law remedy beforehand and a statutory one in the employment tribunal after the dismissal, a worker whose loss is partly prior to the dismissal as with Johnson and Triggs, will have to fight in two jurisdictions, those of the courts and the tribunals.

The CA ruled in this case for the respondent that the loss that resulted from breaches of contract committed before the dismissal was recoverable through the courts in a common law claim. That the claimant's illness lessened her ability to earn was not recoverable under ERA s 123 as a "consequence of the dismissal". Both past and future loss related to acts prior to the dismissal could not be remedied in a tribunal.

Judge Clark of the EAT believed that as a result of the dismissal being constructive the claimant would be able to claim even under the ERA. The judge said that under section 95 of the ERA constructive unfair dismissal has two elements 1)repudiatory conduct by the employer and 2) acceptance of it by the employee.

The employer committed his breach that caused the claimant's illness in September 2004 and she accepted the breach in February 2005. She thereby fell within the Johnson exclusion area and could claim for loss of earnings in unfair dismissal proceedings under Section 123(1)."

The CA disagreed in that although the employer's repudiatory conduct is essential to constructive dismissal the conduct is not important in the dismissal but the employee accepting the breach of the contract.
For the conduct the claimant already had a cause of action and had not suffered from the dismissal.

A simple way to correct this artificial boundary between common law remedy through the courts pre-dismissal and the statutory compensation for unfair dismissal afterwards would be simply to ammend the ERA to include pre and post dismissal loss. Only then will the problem be addressed of a claimant needing to put his case before two jurisdictions with all the wasted effort, time and money involved (unions need to add this issue to their legislatory wish lists).

The point of the employment tribunal system was to afford a (relatively)quick and efficient justice that frees up court time. This is compromised yet again by the existence of the Johnson exclusion and common law boundaries.

Notes:-
(1)This is a case of constructive unfair dismissal. There was no dismissal in fact, but as the worker had to leave because of the employer's behaviour, her leaving is treated as an unfair dismissal.

The transcript of this case can be found  Here
The WorkRep report regarding the now overturned EAT decision in this case can be found  Here