Following the decision in Johnson v Unisys Ltd  IRLR 279 HL ("Johnson"), there has been a growing trend for employment tribunals in the UK to grant compensation for non-economic loss in unfair dismissal cases.
However, in a recent UK case Dunnachie v Kinston-upon-Hull City Council and other appeals  IRLR 384 ("Dunnachie"), the Employment Appeal Tribunal ("EAT") held that non-economic loss was not recoverable in respect of unfair dismissal in employment tribunals.
Before the case of Johnson, the common view was that claims for compensation in unfair dismissal cases included only economic loss but not non-economic loss. The goalpost was moved after Lord Hoffman stated in Johnson that he saw no reason why compensation should not include distress, humiliation, damage to reputation in the community or to family life.
Following the decision of Johnson, employment tribunals began to grant compensation for non-economic loss in unfair dismissal cases, including claims for physical injury, psychiatric illness, anger, depression, humiliation and loss of esteem. This trend grew and led to a number of appeals and cross-appeals at the same time. As these cases related to the same legal issues (i.e. whether non-economic loss could be recovered in unfair dismissal cases), the EAT decided to hear all these cases together in Dunnachie.
Central Legal Issues
In order to reach a decision, the EAT identified three central legal issues:
- What has the law been in respect of recovery of non-economic loss for unfair dismissal?
- What is the effect of the decision in Johnson?
- Is non-economic loss now to be recoverable for unfair dismissal?
The EAT Decision
The EAT addressed the above issues in turn as follows (using the same numbering as above):
- After a detail analysis of case law and statutory provisions in England & Wales as well as in other Commonwealth jurisdictions, the EAT concluded that prior to Johnson, claims for compensation in unfair dismissal cases could only succeed in respect of economic loss and any claims for non-economic loss were excluded.
- Regarding the view expressed by Lord Hoffman in Johnson, EAT decided that the view did not bind employment tribunals to abandon the established principle in more than 30 years of authority in that only economic loss could be recovered in unfair dismissal cases.
As such, EAT considered that Johnson did not require there to be a change in the law.
- The EAT considered that there should not be an unconsidered extension in every unfair dismissal case of a claim for general damages for various types of non-economic loss such as distress, depression, stress and injury to feelings.
Accordingly, the EAT concluded that there was no reason for employment tribunals to change course to allow recovery of non-economic loss.
Applying the conclusion above, the EAT ruled out any claim for non-economic loss in Dunnachie.
The decision in Dunnachie may not last very long as there is a good chance that the case will go to the Court of Appeal. However, until the decision of Dunnachie is overridden, it is unlikely that employees bringing claims in the UK will be successful in claiming non-economic loss in respect of unfair dismissal.
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