In Edwards v Chesterfield Royal Hospital NHS Foundation Trust the Court of Appeal has held that a claim for compensation can be recovered ( when an employer has conducted a disciplinary processin breach of its own contractual procedure.
Mr Edwards (“E”) was a consultant surgeon within the hospital Trust. After a disciplinary hearing he was dismissed without notice for alleged gross professional and personal misconduct. He has since been unable to obtain permanent employment in the NHS.
He brought a claim against the Trust for compensation: the basis of the case was that the disciplinary hearing was conducted in breach of a disciplinary procedure that formed part of his contract; the defects in the procedure led to the finding of misconduct; that the misconduct finding made it impossible to find permanent NHS employment. He alleged that the Trust's breach of contract caused career-long loss of over £4 million.
Before hearing evidnce about whether there had been a breach as alleged the Judge accepted the Trust's argument that any compensation could not exceed loss of earnings in respect of E's three-month notice entitlement. On appeal to the High Court, E persuuaded the court that he could also recover compensation equal to the earnings he would have received during the time it would have taken the Trust to follow the procedure correctly – perhaps a few weeks or months at most. This was still well short of E’s estimated lifetime loss so he appealed to the Court of Appeal (“CA”).
The CA continued to work on the assumption that the facts, as alleged by E, were true. So, it had to decide whether a person who suffers damage as a result of a breach of a contractual disciplinary procedure leading to findings of personal or professional misconduct, in turn leading to dismissal and a loss of professional status, can recover compensation. In short, the answer is “yes”, contrary to the general thrust of, but not the precise terms, of an earlier decision in the Hopuse of Lords.
This an important decision for employers whose disciplinary procedures are contractual. All employers are required by law to have disciplinary procedures in place but it is not a requirement that they are part of the employees’ contracts. Many employers make sure such procedures are not contractuual so that if there is a slip in the process an employee cannot automatically claim breach of contract.
Of course, a breach of a non-contractual procedure may have an impact in an unfair dismissal case but employees have to, normally, have 12 months service before being able to claim unfair dismissal. An employee with less than 12 months service can nonetheless claim breach of contract if an employer fails to follow a contractual procedure.
It is likely only to be in relatively rare cases, where an employee who suffers as Mr Edwards alleges so that he is effectivley unable to work in his profession, that big claims like this will arise but it is a salutary tale and employers should
- be sure to follow contractual procedures rigorously
- try to ensure that disciplinary (and grievance) procedures are not contractual.
