MAGRATH LLP HUMAN RESOURCES UPDATE:

UNFAIR DISMISSAL: AWARDS FOR INJURY TO FEELINGS

For over 30 years, awards for unfair dismissal have only taken into account the Applicant's economic loss, as a result of the decision in Norton Tool Co Ltd -v- Tewson in 1972. However, following the judgment of the Court of Appeal in Dunnachie -v- Kingston upon Hull a City Council on 11th February 2004, this is no longer the case. Awards for injury to feeling in unfair dismissal cases can now take into account the Applicant's distress, humiliation, psychiatric injury (if any), damage to reputation or to family life. The fact that an individual is simply upset by the dismissal will not automatically result in compensation. Tribunals should only award compensation where there is psychiatric injury or real injury to the employee's self respect.

In its judgment, the Court of Appeal indicated that it would consider granting leave to appeal the decision to the House of Lords, and it is widely anticipated that this would happen and that the judgment will be overturned in due course. Referring to Leave to Appeal to the House of Lords in his closing speech, Lord Justice Sedley said "in the meantime Employment Tribunals should manage, list and decide cases in the knowledge that the last word has not been said, but is going to be said in the foreseeable future, on this topic".

Notwithstanding the fact that further developments in this area are anticipated, employers should be aware that, for the present, the law is that Employment Tribunals can award damages for injury to feelings in unfair dismissal cases. Clearly this increases the risk of higher awards of damages, and the likelihood that medical evidence will be needed to defend employee's claims of stress, depression and/or psychiatric injury.