Johnson v Unisys Limited [2001] IRLR 279
Can you recover damages in a breach of contract claim for the manner of dismissal? This question was answered with a resounding "No" by the House of Lords in this long running case. But "maybe" in unfair dismissal claims.
Mr Johnson started working for Unisys in 1971, was made redundant in 1987, re-employed by them in 1990 and in January 1994 was dismissed for an alleged irregularity. He had spent all his working life in the computer industry. He won his case of unfair dismissal in the Employment Tribunal - the company had not given him the opportunity to defend himself nor complied with its own disciplinary procedure. He was awarded the then maximum compensation, although deducted 25% was on the basis that he had contributed to his own dismissal.
The dismissal had catastrophic effects on Mr Johnson. He suffered a mental breakdown; was depressed; attempted suicide; began to drink heavily and was an in-patient in a mental hospital. He has been unable to find new work and doubts he will ever find paid employment again. He brought a claim in the County Court in both tort and contract, the value of the claim was stated to be £400,000 for his psychiatric injuries and loss of earnings. His claim was struck out on the basis that it disclosed no cause of action at common law. He appealed all the way to the Lords who have again dismissed his claim.
Since 1909 the cases have said that where an employee is wrongfully dismissed in breach of contract from his employment the damages for the 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. More recently, the courts have accepted (Malik v BCCI [1998] AC20), that there is an implied term in a contract of employment that the employer shall not, without reasonable and proper cause, conduct himself in a manner calculated and likely to destroy or seriously damage the relationship of trust and confidence. In principle, employees can claim damages if they can bring their cases within the remit of the Malik decision. However none have so far been successful.
The House of Lords were not prepared to find in Mr Johnson's favour. They considered the statutory right not to be unfairly dismissed. The judges said that at the time of enacting the right in 1971, Parliament could have built on the common law by creating a statutory implied term that the power of dismissal should be exercised fairly or in good faith but instead set up the new statutory right with remedies obtainable in employment tribunals. Consequently, all the matters Mr Johnson complained of were within the jurisdiction of the employment tribunal. The financial loss flowing from the dismissal may form the subject matter of a compensatory award although it is subject to the statutory cap.
In other words, although Johnson could not get damages for the manner of dismissal in a breach of contract claim, it might form part of unfair dismissal compensation. That would not help Mr Johnson, since his compensation hit the statutory limit then applicable, but with the limit now at £50,000 could be helpful in other cases.