Virgin Net v Harper EAT [2003] IRLR 824

The fallout from the decision of the House of Lords in Johnson v Unisys Limited [2001] IRLR 279 continues. In Virgin Net the EAT has decided that an employee who was summarily dismissed cannot bring a claim for damages for the loss of the opportunity to claim unfair dismissal where, if she had been given the proper amount of contractual notice, she would have been able to bring a claim of unfair dismissal. This decision overrules to an extent the decision of the EAT in Raspin v United News Shops Limited [1999] IRLR 9 that had allowed an employee to recover damages in a claim for wrongful dismissal reflecting the loss of the chance to recover compensation for unfair dismissal.

Raspin was a case where an employee was dismissed both without notice and in breach of a contractual disciplinary procedure. The employee was therefore prevented from being employed on the date when she would have qualified for the right to bring an unfair dismissal claim.

Similarly Virgin Net was a case in which if the employee had been given the correct amount of contractual notice, she would have qualified to bring an unfair dismissal claim. Sally Harper was employed by Virgin Net from 4 April 2000. On 1 November she entered into a permanent contract. Under the terms of the contract there was a three months notice provision on both sides. There was also a term which allowed the contract to be terminated summarily in the event of serious misconduct.

On 22 January 2001 there was an incident involving Ms Harper and a junior manager. There was a disciplinary hearing and Ms Harper was given a formal written warning for misconduct. She appealed. Meanwhile her manager had second thoughts about the original penalty and summarily dismissed her on 2 March. Ms Harper did not therefore have the necessary one year's service to bring an unfair dismissal claim. She was told she would be paid her three months notice but this was not paid.

Ms Harper brought a claim of wrongful dismissal for her notice period and also for the loss of a chance of recovering compensation for unfair dismissal. The Tribunal awarded compensation for her notice pay and also for the loss of chance. The total compensation awarded was £25,000: the maximum recoverable for a breach of contract claim under the Employment Tribunals Extension of Jurisdiction Order 1994.

Virgin Net appealed against the loss of chance decision but not against the notice pay decision.

The EAT said it was impermissible to allow a claim for loss of chance to circumvent the statutory qualifying period as set out in the Employment Rights Act 1996. Quoting the words of Lord Millett in Johnson they said to allow such a claim would "be a recipe for chaos". They decided following Johnson that an applicant cannot recover, by way of damages for breach of the contract of employment, loss flowing from the fact and manner of the dismissal itself. Turning to Raspin the EAT suggested that as far as the decision rested on events unconnected with the dismissal, the failure to follow the contractual disciplinary procedures has arguably survived Johnson. However the EAT did not resolve the issue because they did not need to. Commentators have suggested that their comments are inconsistent with Johnson and wrong.

What is now clear following Virgin Net is that claims for loss of the chance of claiming unfair dismissal where an employee does not have the necessary qualifying service cannot succeed. Claims for wrongful dismissal relying on breaches of contractual disciplinary policies may still succeed. Advisors need to be careful to check whether disciplinary policies are contractual or not before advising wrongful dismissal claims based on the Raspin exception. Many disciplinary policies are not contractual so care is needed.

The case is being appealed to the Court of Appeal.