House Of Lords Rejects Non-Economic Awards For Unfair Dismissal

by Robin Pilgrim, LawAndTax-News.com, London

11 August 2004

The UK's House of Lords (the supreme UK court) has over-ruled the Court of Appeal in Dunnachie v Kingston-upon-Hull City Council, deciding that compensation for unfair dismissal cannot take non-economic loss into account, restoring the position as it was prior to its own decision in Johnson v Unisys in 2003.

Section 123 of the Employment Rights Act 1996 states that the amount of the compensatory award for unfair dismissal 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 insofar as that loss is attributable to action taken by the employer”, repeating almost exactly wording from the Industrial Relations Act 1971.

The National Industrial Relations Court decided in 1972 that compensation for unfair dismissal should only be payable in respect of identifiable financial loss, and this ruling has been followed ever since apart from the hiatus from 2003 to 2004.

Mr Dunnachie worked as an Environmental Health Officer for Kingston upon Hull City Council from 1986 until 2001, and after his resignation an Employment Tribunal found that he had been constructively dismissed, as a result of bullying, and awarded him GBP 10,000 for injury to his feelings in addition to compensation for economic loss. The Employment Appeals Tribunal reversed this award, but the Court of Appeal restored it.

The problem had arisen because of comments made by Lord Hoffman in Johnson v Unisys, which opened a window for non-economic awards. But it has now been firmly slammed shut again, no doubt to the immense relief of employers. Wounded employees are left to enjoy the expensive delights of the civil law.

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