UK: Human Capital (Employment): In Sickness And In Wealth?

Last Updated: 3 September 2007
Article by Mark Shrives, David Beswick, Nick Jones and David Whincup

An employee may be entitled to damages for future loss of earnings following her constructive dismissal even though she was off work on extended sick leave (and not being paid) prior to resigning. This was the finding in the recent Employment Appeal Tribunal case of GAB Robins (UK) Limited v Triggs.

Mrs Triggs began working for GAB Robins as a secretary/ PA in September 1999. Prior to her leaving in March 2005 she worked for two investigators, Messrs Carter and Woffinden.

From about April 2001 Carter raised concerns with his manager, Mr Baldock, about what he saw as Mrs Triggs’ excessive workload. In August 2003, Mrs Triggs collapsed at home and was signed off work for one week with stress. Both Carter and Woffinden continued to raise the matter of her workload with Mr Baldock. Furthermore, in February 2004 an audit report identified a need for Mrs Triggs to receive assistance with her workload but still none was provided. In addition to the problem of overwork, Mrs Triggs also felt that she was being bullied by Mr Baldock. By 30 September 2004 she had had enough. She had just returned from two days sick leave only to receive a telephone call from Mr Baldock when he shouted down the telephone at her. Mrs Triggs left the office and did not return.

Mrs Triggs’ doctor signed her off sick with stress and depression (later diagnosed as anxiety and depression). No-one from senior management contacted her, the only significant contact being by GAB Robins’ HR Manager to discuss Mrs Triggs’ sick pay.

On 15 February 2005 Mrs Triggs resigned and she subsequently brought a claim of unfair constructive dismissal.

The Employment Tribunal found that Mrs Triggs resigned in response to GAB Robins’ conduct which had had a cumulative effect on her and that as no fair reason had been advanced for her dismissal, her dismissal was unfair. The Employment Tribunal also rejected GAB Robins’ argument that because her sick pay entitlement had expired (and so she would not have been paid if her employment had continued) Mrs Triggs should not be entitled to recover any loss of earnings following her constructive dismissal. It awarded her a sum in respect of future loss of earnings even though, had she not left, she would not have been earning anything anyway.

GAB Robins appealed. The EAT was asked to decide (among other questions) whether in these circumstances Mrs Triggs was entitled to recover loss of earnings as a result of her dismissal, the first time that this issue has been raised on appeal.

Section 123(1) of the Employment Rights Act 1996 provides that "the amount of the compensatory award [for unfair dismissal] shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal insofar as that loss is attributable to action taken by the employer" (our emphasis). GAB Robins sought to argue that Mrs Triggs’ loss of earnings after the termination date flowed not from her constructive dismissal in March 2005 but from her incapacity to work from the previous September. Counsel for Mrs Triggs, however, sought to argue that it was GAB Robins’ repudiatory conduct which led to Mrs Triggs’ medical incapacity in the first place, starting in September 2004 and continuing after her termination the following March, so giving rise to a continuing loss of earnings thereafter.

The EAT held that GAB Robins’ conduct consisted of a breach of the implied term of trust and confidence through an accumulation of events dating back to 2001, that the breach caused Mrs Triggs’ illness in September 2004 and that she accepted the breach when she quit in February 2005. Rejecting GAB Robins’ argument that Mrs Triggs’ cause of action lay not in the Employment Tribunal but in action for damages for personal injury in the civil courts, the EAT confirmed the House of Lords’ opinion in Johnson v Unisys. This said that an employee faced with a repudiatory breach of contract by his or her employer who accepts the breach and leaves is limited to a claim of unfair dismissal and has no separate common law claim based on the breach. Mrs Triggs’ remedy for loss of earnings therefore fell within Section 123(1).

In what appears to be a classic judicial fudge, the EAT further held that the breach of the implied term formed part of the constructive dismissal and that Mrs Triggs’ ill health caused by that breach was therefore to be treated as a consequence of the dismissal. This led to her loss of the earnings which would otherwise have been received at the full rate from GAB Robins and such loss was therefore attributable to "action" taken by them.

This decision has a certain logic to it, but does it apply only where the sickness pre-dates the termination and is the fault of the employer? Take some other similar circumstances where illness impairs the employee’s reemployment prospects:

  • Where the employee was sick pre-dismissal other than through the employer’s default. The compensation would cover the balance of the employee’s company sick pay (if any) but not any longer period, since the loss beyond then would not be attributable to any action by the employer but to the continuing sickness.
  • Where the employee was dismissed for sickness in fact caused culpably by the employer. If the dismissal is unfair then the employee’s compensatory award should not be reduced, since his inability to mitigate his loss by reason of sickness is attributable to the actions of the employer. However, Frewin v Consignia in 2003 confirms that it is entirely possible for a sickness dismissal to be statutorily fair even where the employer caused the sickness in the first place.
  • Where the employee becomes sick (and so unable to mitigate) as a result of the dismissal, i.e. after it. So far as a causative link between the dismissal and the illness could be shown, then the resulting loss is clearly attributable to the actions of the employer and so the employee’s award should be unreduced. Note that this is the case whether or not it was foreseeable that injury would result from the dismissal – this is a statutory claim, not a personal injury claim based on normal negligence principles.
  • Remember also Section 88 ERA 1996. Even if by the time of the dismissal the employee’s sick pay had expired, he will still be entitled to full pay in lieu of the statutory minimum part of his notice if his contractual notice period is not more than one week more than his statutory minimum entitlement.

Working Time (Amendment)

Regulations Approved

Coming into force on 1 October 2007, the Regulations provide:

  • for an increase in the annual leave entitlement from 4 weeks to 5.6 weeks (28 days for a fulltimer)
  • that workers become eligible for the first additional 0.8 weeks from 1 October 2007; for the second 0.8 weeks from 1st April 2009.
  • that leave may not be replaced by a payment in lieu except where the employment is terminated or during an initial transitional phase to 1 April 2009
  • for the possibility of limited carry-over of the additional annual leave
  • that the additional annual leave shall not apply to a worker whose employer already provides each worker employed by him with an entitlement to additional annual leave of 1.6 weeks or 8 days (whichever is the lesser) as at 1 October 2007 by virtue of a relevant agreement that satisfies the conditions set out the amending Regulations (i.e. the additional leave cannot be paid in lieu (except on termination), can only be carried forward into the following leave year and is paid).
  • that partial days’ holiday in the first year of service will no longer have to be rounded up to the nearest full day.

The Regulations apply to Great Britain only and a separate Statutory Rule has been made in respect of Northern Ireland (also coming into effect on 1 October).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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