Veitch Penny LLP - Exeter | Crediton, Devon

Case

Edwards v Chesterfield Royal Hospital NHS Foundation Trust
Court of Appeal – 26 May 2010

Issues

(1) Breach of contract
(2) Compensation
(3) Contracts of employment

Facts

Mr Edwards was a consultant trauma and orthopaedic surgeon. He was found guilty of gross misconduct and dismissed without notice. As the upper limit on employment tribunal claims is limited to £65,300 and £25,000 for wrongful dismissal, he brought a claim for breach of contract in the High Court worth more than £4 million. He claimed that the Trust failed to follow its disciplinary procedure which was described as being contractually binding (i.e. part of his contract of employment) before dismissing him. He argued that the Trust:

• had not appointed a person with legal qualifications to chair the disciplinary panel;
• had not appointed as a member of the disciplinary panel a clinician of the same medical expertise as himself; and
• refused to allow him to be legally represented at the disciplinary hearing.

He alleged that if the correct procedure had been adopted, then he would not have been found guilty of misconduct. He also alleged that the guilty finding prevented him finding comparable permanent employment.

The Trust applied for a preliminary ruling to determine the amount that Edwards could claim. It argued that compensation for breach of contract is supposed to put a claimant in the position he would be in had the contract been performed properly i.e. in this case by payment in lieu of the three months’ contractual notice set out in his contract of employment.

At first instance, the Trust was successful, deciding that Mr Edwards’ losses were limited to his loss of earnings over the contractual notice period.

Mr Edwards appealed the matter to the Court of Appeal – arguing that it was unfair to restrict his potential damages in this way.

Decision

The Court of Appeal found that where a breach of a contractual disciplinary procedure leads to an incorrect finding of misconduct, which goes on to prevent the employee from securing alternative employment, then additional damages can be awarded to reflect the loss of income sustained as a result of the breach of contract on the basis that he was unable to obtain future employment as an NHS Consultant. Mr Edwards’ case will now go forward to a full hearing to consider his allegations in full.

Comments

It is understood that the Trust is considering whether to appeal the judgment. Pending that appeal, there is now precedent allowing the Courts the ability to award large sums to high earning staff, if a contractual disciplinary or capability procedure is not followed, although it should be remembered that Mr Edwards still has to establish that his losses flow from the breach and are reasonably foreseeable. In light of this judgment, NHS Trusts and other public sector employers will need to ensure that any contractual policies are followed closely, as a failure to do so may lead to a substantial claim for loss of career, reputation etc.

Rachel Billen – Associate Solicitor, Employment Department at Veitch Penny.
Tel: 01392 278381, Fax: 01392 410247, Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it