Dunnachie v Kingston Upon Hull City Council [2003] UKEAT 0726_02_2205

" List of Issues 1A. Can compensation for non-pecuniary loss be recovered for unfair dismissal in an Employment Tribunal in respect of – (i) physical injury (ii) psychological injury (iii) stress or depression (iv) mental distress, humiliation, injury to feelings, damage to family life and/or injury to reputation or by way of aggravated damages? Is it material that s3(3) of ETA 1996 and/or Art 3 of S.I. 1994/1023 prevent recovery in an Employment Tribunal of damages for personal injury by way of a breach of contract claim? 1B. Can compensation for pecuniary loss be recovered for unfair dismissal in an Employment Tribunal in respect of loss resulting from: (i) physical injury (ii) psychological injury (iii) stress or depression (iv) mental distress, humiliation, injury to feelings, damage to family life and/or injury to reputation. 2. If recoverable in respect of either or both, is it recoverable: (i) arising out of or resulting from the manner of dismissal and/or (ii) arising out of or resulting from the fact of the dismissal and/or consequent unemployment. How is such distinction, if material and/or to be maintained, to be established and/or does the existence of such distinction and/or the difficulty of establishing it raise issues as to the recoverability of such compensation at all? 3. If to be recoverable, how would it be pursued in an Employment Tribunal? Is medical evidence/a medical report necessary? How is contested evidence to be assessed? 4. Is there any difference in principle or in approach where: (i) liability in respect of unfair dismissal is conceded? and/or (ii) The claim arises out of alleged constructive dismissal: in particular where the non-pecuniary loss is alleged to be sustained following a repudiatory breach but prior to the employee's resignation in response to such breach, such resignation constituting the determination of his or her employment (s91(1)(c) ERA 1996)? 5. How is any such compensation, if recoverable, to be assessed? "

" 111 (1) A complaint may be presented to an [Employment Tribunal] against an employer by any person who is unfairly dismissed by the employer. 112 (1) This section applies where, on a complaint under section 111, an [Employment Tribunal] finds that the grounds of the complaint are well founded. (2) The tribunal shall – (a) explain to the complainant what orders may be made under section 113 [viz: orders for reinstatement in accordance with section 114 or re-engagement in accordance with section 115] and in what circumstances they may be made, and (b) ask him whether he wishes the tribunal to make such an order. (3) If the complainant expresses such a wish, the tribunal may make an order under section 113 (4) If no order is made under section 113, the tribunal shall make an award of compensation for unfair dismissal (calculated in accordance with sections 118 to 127A to be paid by the employer to the employee. 118 (1) … where a tribunal makes an award of compensation for unfair dismissal … the award shall consist of - (a) a basic award … and (b) a compensatory award. 123 (1) Subject to the provisions of this section and s … 124 … 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 insofar as that loss is attributable to action taken by the employer. (2) The loss referred to in subsection (1) shall be taken to include – (a) any expenses reasonably incurred by the complainant in consequence of the dismissal, and (b) subject to subsection (3), loss of any benefit which he might reasonably be expected to have had but for the dismissal. (3) The loss referred to in subsection (1) shall be taken to include in respect of any loss of – (a) any entitlement or potential entitlement to a payment on account of dismissal by reason of redundancy … or (b) any expectation of such a payment, only the loss referable to the amount (if any) by which the amount of that payment would have exceeded the amount of a basic award (apart from any reduction under section 122) in respect of the same dismissal. (4) In ascertaining the loss referred to in subsection (1) the tribunal shall apply the same rule concerning the duty of a person to mitigate his loss as applies to damages recoverable under the common law of England and Wales or (as the case may be) Scotland…. (6) Where the tribunal finds that the dismissal was to any extent caused or contributed to by an action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding. … "

" The amount to be awarded is that which is just and equitable in all the circumstances, having regard to the loss sustained by the complainant. "

" Compensation for unfair dismissal is provided for in Chapter II of the Employment Rights Act 1996. Section 112 provides that compensation should be calculated according to ss118-127A. There is no compensation for injury to feelings or the manner or dismissal, unless that gives rise to financial loss: see Norton Tool v Tewson [1992] IRLR 86. "

" The amount of the compensation awarded shall be such as the tribunal considers just and equitable in all the circumstances having regard to the infringement complained of and [our underlining] to any loss sustained by the complainant which is attributable to the [act or failure] which infringed his right. "

" It is nothing to the point that an award for injury to feelings cannot be recovered in a wrongful dismissal or unfair dismissal claim. They are different claims, compensated in different ways. We do not accept that a complaint under section 146(1) of the Act of 1992 can simply be categorised as less serious and therefore cannot allow of a head of compensation not provided for in claims of unfair dismissal or wrongful dismissal. Apart from the different wording of the section, the intention behind it is clear; an employee who is unfairly dismissed would normally suffer pecuniary loss, and that, Parliament has decided, will adequately compensate him for the wrong. In a case of action short of dismissal it may very well be that he can point to no pecuniary loss; nevertheless, Parliament has decided that he should be able to recover financial compensation "having regard to the infringement complained of"

"The amount of the compensation awarded shall be such as the Tribunal considers just and equitable in all the circumstances having regard to – (a) the infringement to which the complaint relates, and (b) any loss which is attributable to the act, or failure to act, which infringed the complainant's right. "

" (2) Subject to subsection (3), this section applies to – (a) a claim for damages for breach of a contract of employment or other contract connected with employment. (b) a claim for a sum due under such a contract, and (c) a claim for the recovery of a sum in pursuance of any enactment relating to the terms or performance of such a contract, if the claim is such that a court in England and Wales or Scotland would under the law for the time being in force have jurisdiction to hear and determine an action in respect of the claim. (3) This section does not apply in respect of a claim for damages, or for a sum due, in respect of personal injuries. "

" For the purposes of this Act (a) 'Gain' and 'loss' are to be construed as extending only to gain or loss in money or other property, but as extending to any such gain or loss whether temporary or permanent; and – (i) 'Gain' includes a gain by keeping what one has, as well as a gain by getting what one has not; (ii) 'Loss' includes a loss by not getting what one might get, as well as a loss by parting with what one has. "

" (2) On making an order for reinstatement the tribunal shall specify – (a) any amount payable by the employer in respect of any benefit which the complainant might reasonably be expected to have had but for the dismissal (including arrears of pay) for the period between the date of termination of employment and the date of reinstatement … (3) If the complainant would have benefited from an improvement in his terms and conditions of employment had he not been dismissed, an order for reinstatement shall require him to be treated as if he had benefited from that improvement from the date in which he would have done so but for being dismissed. (4) In calculating for the purposes of subsection (2)(a) any amount payable by the employer, the tribunal shall take into account, so as to reduce the employer's liability, any sum received by the complainant in respect of the period between the date of termination of employment and the date of reinstatement by way of – (a) wages in lieu of notice or ex gratia payments paid by the employer, or (b) remuneration paid in respect of employment with another employer, and such other benefits as the tribunal thinks appropriate in the circumstances. "

" The labour tribunal should normally be concerned to compensate the employee for the damage he has suffered in the loss of his employment and legitimate expectation for the future in that employment, in injured feelings and reputation and in the prejudicing of further employment opportunities. " (ii) Mr Bowers QC for his part refers to certain passages of Hansard relating to the debate on the Committee and Report stages of the Industrial Relations Bill which was eventually introduced by the Conservative Government of 1970-1974 and enacted as the 1971 Act. He refers to a speech by the then Lord Chancellor Lord Hailsham on 3 May 1971 at Vol 318 column 122 in relation to the Committee stage consideration of clause 4, looking forward to later discussion of clause 111, when the Lord Chancellor said: "

" The interpretation placed by the tribunals and courts, including this court, on the provisions of the 1978 Act in the cases of Iceland Foods and Burchell has not led Parliament to amend the relevant provisions, even though Parliament has from time to time made other amendments to the law of unfair dismissal, since those authoritative rulings on interpretation were first made. So those rulings, which have been followed almost every day in almost every Employment Tribunal and on appeals for nearly 20 years, remain binding. "

" (1) Where the Tribunal or the Court determines that an employee has a personal grievance, it may, in settling the grievance, provide for any one or more of the following remedies … (c) the payment to the employee of compensation by the employee's employer, including compensation for (i) humiliation, loss of dignity and injury to the feelings of the employee. "

" 4. Where an adjudicator decides … that a person has been unjustly dismissed the adjudicator may, by order, require the employer who dismissed the person to: (a) pay the person compensation not exceeding the amount of money that is equivalent to the remuneration that would, but for the dismissal, have been paid by the employer to the person. "

" Where a servant is wrongfully dismissed from his employment the damages for dismissal cannot include compensation for the manner of the dismissal, for his injured feelings, or for the loss he may sustain from the fact that the dismissal of itself makes it more difficult for him to obtain fresh employment. "

" A contract-breaker is not in general liable for any distress, frustration, anxiety, displeasure, vexation, tension or aggravation which his breach of contract may cause to the innocent party. This rule is not, I think, founded on the assumption that such reactions are not foreseeable, which they clearly are or may be, but on considerations of policy. "

" There is clear authority for the proposition that general damages cannot be awarded for frustration, mental distress or injured feelings arising from an employer's breach of the implied term of confidence and trust: see Bliss v South East Thames Regional Health Authority [1985] IRLR 308 CA … There is, however, a clear distinction between frustration, mental illness and injured feelings, on the one hand, and a recognised psychiatric illness on the other. In Page v Smith [1996] AC 155 , the House of Lords held (by a majority) that once it was established that the defendant was under a duty of care to avoid causing personal injury to the claimant, it mattered not whether the injury sustained was physical, psychiatric or both …The duty in this case is owed purely in contract, rather than in tort, but there can be no more reason to distinguish between physical and psychiatric injury in this case than there is in the case of other breaches of an employer's duties … There is all the difference in the world between hurt, upset and injury to feelings, for which in general the law does not provide compensation whether in contract or (with certain well-defined exceptions) in tort, and a recognised psychiatric illness. "

" … the headnote of the decision of the House of Lords in Addis …purports to state the ratio decidendi of that case as follows: where a servant is wrongfully dismissed from his employment the damages for the dismissal cannot include compensation for the manner of his dismissal, for his injured feelings, or for the loss he may sustain from the fact that the dismissal of itself makes it more difficult for him to obtain fresh employment. This statement of the law was based on an observation in the speech of Lord Loreburn LC. A majority of the Law Lords expressed agreement with this speech. On the other hand, only Lord Loreburn LC specifically referred to the unavailability of special damages for loss of employment prospects. The other Law Lords concentrated on the non-pecuniary aspects of the case. The headnote is arguably wrong insofar as it states that the House decided that a wrongfully dismissed employee can never sue for special damages for loss of employment prospects arising from the harsh and humiliating manner of the dismissal. "

" The case before us can be distinguished from Johnson [1999] IRLR 90 [CA]. The complaint here relates to a suspension, which manifestly contemplates the continuation of the employment relationship. The clear import of [ Malik/Mahmud ] is that the ambit of Addis should be confined. There are in this case two differences from Addis : first, this was not a dismissal, and, secondly, this was psychiatric illness rather than hurt feelings. In my judgment therefore, the judge was right to award damages for both the financial loss and the non-pecuniary damage resulting from the claimant's illness. … I recognise that this produces the strange result, that according to Johnson … [CA] the defendant authority would have done better had they dismissed rather than suspended the claimant. That simply reinforces my view that the sooner these matters are comprehensively resolved by a higher authority or by Parliament, the better. "

" It is, in my judgment, plain that in Johnson the majority in the House of Lords held that unfairness in the manner of dismissal of an employee does not give rise to a common law action, whether it be founded in contract or in tort, but must be the subject of Employment Tribunal proceedings. The implied term of trust and confidence cannot be used in connection with the way the employer/employee relationship is terminated. There may be cases where the particular manner in which an employee is dismissed or the circumstances attending dismissal is or are confined to events occurring at the same time or immediately before the dismissal. In other cases that manner and those circumstances may include a pattern of events stretching back over a period. It is a question of fact for the trial judge to determine in each case. "

" Once the claim is amended, as I agree it should be, it is a case in which two arguably distinct things have happened. The claimant has been traumatised by being suspended on a minor and unproven but very distressing accusation; and, much later, he has been dismissed by reason of the same accusation. [ Johnson ] without question decides that he cannot bring an action in relation to the latter. It also, I accept, decides that he cannot bring an action in relation to the former if it was simply part of the process of dismissal. But it does not decide that every breach of contract which precedes a dismissal is part of the dismissal … Accordingly, it seems to me, it remains to be decided in the present case whether the act of suspension was (a) wrongful and (b) causative of trauma; and then, if it was both these things (c) whether it formed part of the process of dismissal or was – as the claimant asserts it was – a discrete event which would have rested where it was but for his own election to appeal against the warning which followed it. "

" In my opinion, all the matters of which Mr Johnson complains in these proceedings were within the jurisdiction of the industrial tribunal. His most substantial complaint is of financial loss flowing from his psychiatric injury which he says was a consequence of the unfair manner of his dismissal. Such loss is a consequence of the dismissal which may form the subject matter of a compensatory award. The only doubtful question is whether it would have been open to the tribunal to include a sum by way of compensation for his distress, damage to family life and similar matters. As the award, even reduced by 25%, exceeded the statutory maximum and had to be reduced to £11,000, the point would have been academic. But perhaps I may be allowed a comment all the same. I know that in the early days of the National Industrial Relations Court it was laid down that only financial loss could be compensated: see Norton Tool … Wellman Alloys …It was said that the word 'loss' can only mean financial loss. But I think that is too narrow a construction. The emphasis is upon the tribunal awarding such compensation as it thinks just and equitable. So I see 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. "

" 44. It was not argued in the Court of Appeal that a claim made to an [Employment] Tribunal pursuant to statute precluded a claim in common law. Nothing in the Employment Rights Act 1996 restricts or modifies a remedy at common law. But how do the two remedies inter-relate? There is no reason why there should not be concurrent liability. There are many such overlaps and causes of action (e.g. contract and tort). The rule against double recovery prevents damages being awarded twice for the same loss (see Wellman Alloys …) … It is submitted that it can neither have been Parliament's intention nor the intention of the Courts in developing the term of trust and confidence, to confine an employee's rights to one sphere at the expense of the other. 45. In a claim for unfair dismissal, damages can be awarded for the manner of the dismissal if as a result the applicant has suffered financial loss ( Norton Tool … Vaughan v Weighpack … "

" It is important to note that the claim is solely for the recovery of special damages for financial loss. " [We interpose that this, as is clear from our reference to the reamended particulars of claim is not entirely accurate, but does indicate the nature of the argument before their Lordships, namely that there was no separate consideration of any claim for general damages.] "

" If the courts had taken the step themselves, they could have awarded common law damages for unfair dismissal consistently with [ Addis ] … because such damages would be awarded for the breach of an implied but independently actionable term (as in Malik/Mahmud v BCCI …) and not for wrongful dismissal. But the courts would have been faced with the difficult task of distinguishing between the mental distress and other non-pecuniary injury consequent upon the unfairness of the dismissal (for which the employer would be liable) and the similar injury consequent upon the dismissal itself (for which he would not). "

" In the great majority of cases the new common law right would merely replicate the statutory right; and it is obviously unnecessary to imply a term into a contract to give one of the contracting parties a remedy which he already has without it. In other cases, where the common law would be giving a remedy in excess of the statutory limit or to excluded categories of employees, it would be inconsistent with the declared policy of Parliament. In all cases it would allow claims to be entertained by the ordinary courts when it was the policy of Parliament that they should be heard by specialist tribunals with members drawn from both sides of industry. And, even more importantly, the co-existence of two systems, overlapping but varying in matters of detail and heard by different tribunals, would be a recipe for chaos. All coherence in our employment laws would be lost. "

" The applicant has claimed £10,000. We think that that is a reasonable sum to order the respondent to pay under this head. For the applicant has, as a result of the respondent's actions, suffered some loss of professional status. He was humiliated and distressed by the manner of his dismissal. That process lasted over several months. The consequences have clearly affected his family life, as we have described earlier. If anything, the applicant's claim is modest in this regard. "

" The appellant claimed an award in the region of £34,000 (being £14,000 for personal injury and £20,000 for injury to feelings) compensation under Johnson … He claimed for injury to feelings, personal injury, damage to family life and reputation (including aggravated damages). "

" We have found that the Applicant's medical condition pre-dates the difficulties at work of which she complains, that her medical condition caused her to be extremely sensitive to issues that arose at work and that, until the time of her dismissal, those issues were not attributable to any culpable conduct on the part of the Respondent. However, the narrower issue for us to determine is the loss sustained in consequence of the dismissal. In this connection we have already found that on the balance of probabilities the Applicant's medical condition would have prevented her continuing in the respondent's employment beyond December 2001, even if she had not been unfairly dismissed. We similarly find that the aggravation of the Applicant's medical condition caused by her unfair dismissal is limited to this same period, as it is probable that other events in the intervening period would have had a similar triggering effect. We also take into account the fact that any objective observer would regard the Applicant's successful internal appeal as having exonerated her, thereby removing any humiliation that she had suffered by having been dismissed. The Applicant's distress at her dismissal was not removed by her successful appeal, but we find that it is appropriate for us to have regard to the appeal in our consideration of what is just and equitable. In deciding upon the compensation under this head, we have done our best on the available medical evidence to separate out the loss consequent upon the dismissal insofar as that loss is attributable to action taken by the Respondents. In all the circumstances we consider the amount which it is just and equitable to award under this head is £5,000. "

" It seems to us that Tribunals should not be concerned to ascertain whether the illness which is the reason was caused or contributed to by the employer. The question in issue is whether, in the light of the employee's medical condition and the inquiries and procedures the employer made and used before deciding to dismiss, the dismissal was fair. To introduce questions of responsibility for illness or injury would take a Tribunal down a path which could lead to endless disputes on matters upon which they would have no special expertise. We do not consider that the employer has disabled himself from fairly dismissing an employee whom he has injured. If the injury was caused by a breach of the employer's duty to the employee then the employee will be entitled and able to recover appropriate compensation. "

" The issue in that case was not whether the Industrial Tribunal had power to award compensation for personal injury; but I see the force of Morison J's observation. Nevertheless the consideration cannot in my view override the statutory language. "

" Whether in a case of constructive dismissal, the employment tribunal may take account of matters in the period leading up to the resignation of the appellant and/or the expiry of his notice to terminate to determine the appropriate award in respect of "the loss sustained … in consequence of the dismissal" (s123(1) ERA 1996). "

" A joint letter of instruction is to be sent to the appointed medical adviser including the following questions: (i) What was the nature of the applicant's medical condition, if any, arising in October/November 1999? (ii) To what extent was the applicant's medical condition caused by or aggravated by the dismissal and the circumstances thereof? In this connection the medical adviser is to be provided with a copy of the decision and extended reasons of the Tribunal. (iii) If the medical condition was to any extent caused, or aggravated, by the dismissal, for how long did the dismissal remain a factor in the continuation of his condition? (iv) How long did the applicant remain unfit for work due to his medical condition (howsoever caused)? "

" (a) The Tribunal notes that the applicant was vulnerable after the first episode of depression in 1997 to a further episode. (b) The first episode had nothing to do with the applicant's dismissal, nor was it established the respondent was guilty of victimisation or sex discrimination in respect of that period. That might have been a subject of a personal injury claim, if it could be established that the respondent was negligent and the illness was caused thereby. That is not a matter for a Tribunal and it is noted that the applicant has not sought to bring P.I. proceedings in the courts. (c) There were other stressors at work in 1999 which Dr Vincenti identified and separated from the suspension and the dismissal. Those included the assault on 24 August 1999. (d) It is noteworthy that when the applicant first attended his GP with a complaint identifiable as depression on 4 October 1999 he did not even mention to the doctor his suspension. The doctor's notes record the following "violent incident at work, works in an offender centre, not coping, support from partner but not mother, edgy, poor concentration, dyspepsia and poor appetite, med 3 for two weeks, urgent counselling. It is also noteworthy that in 1997 the applicant also did not identify complaints about his treatment by management at work. (e) Most significantly the applicant went off sick on 4 October 1999 two weeks after his suspension but seven weeks before the hearing leading to his dismissal. (f) The Tribunal noted that the two "non-dismissal" factors in the aetiology of his depression amounted to 60%. "

" (iii) The Tribunal concludes that even disregarding the suspension and dismissal, the applicant would have been off sick and probably for a substantial period of time, noting that his previous episode had resulted in six months off. (iv) Accordingly in assessing the loss flowing from the dismissal, the Tribunal considered it just and equitable to award what would have happened if the applicant had not been suspended or dismissed. In our view, on the balance of probabilities, the applicant would have remained on the sick. He would have received sick pay for a maximum of one year of which six months would have been on full pay and six months on half. The Tribunal did not consider that the respondent would have been fairly dismissed at any time during that period, not least because his illness was work-related, and would probably have satisfied the test of disability in Schedule I of the Disability Discrimination Act 1995. (v) The [medical] report in particular at paragraph 12.7 quoted above led the Tribunal to conclude that it was not satisfied on the balance of probabilities that if the [dismissal] had not occurred, the applicant would have been fit to have returned to work earlier, and for this reason the Tribunal did not consider it just and equitable to award him loss of earnings beyond the twelve-month period. However, this factor the Tribunal did take into account into considering his suspension and dismissal did have an adverse effect upon his depressive illness, which the Tribunal took into account into a accepting whether an award should be made for injury to health [this is their non-economic loss award]. (vi) Insofar as it is relevant, the Tribunal rejected the respondent's contentions that the applicant acted unreasonably in returning to work at the end of the period of depression in a lower paid employment avoiding what may be described as the caring professions. The Tribunal thought his decision entirely reasonable on medical grounds. The Tribunal considered however that the applicant could not ascribe any future reduction in his earnings beyond a few months to his dismissal. The applicant has substantially recovered, and we do not see any current reason why he should not seek more demanding and higher paid employment. 6. Upon the basis of the above conclusions, the Tribunal awarded compensation for loss of sick pay for the period from 4 October 1999 until 5 October 2000, deducting the pay that the applicant in fact received up to the date of dismissal on 23 November 1999. If the suspension and dismissal had not occurred that is what the applicant would have been paid by the respondents and was thus his loss flowing from the dismissal. "