Veitch Penny LLP - Exeter | Crediton, Devon

Case

Fraser v HLMAD Ltd
Court of Appeal - 15 June 2006

Issues

(1) Contracts of Employment
(2) Wrongful dismissal
(3) Damages

Facts

Roderick Fraser had been appointed chief executive of the Respondent company. Following his dismissal, he made a claim to the Employment Tribunal for unfair dismissal and wrongful dismissal. He specified in his claim form that "insofar as my claim for damages for wrongful dismissal exceeds the Tribunal's jurisdiction of £25,000, I expressly reserve the right to pursue an action in the High Court". He also began an action in the High Court in order to recover the excess of any award that he would receive for wrongful dismissal in the Employment Tribunal. His original wrongful dismissal claim continued at Tribunal.

The Employment Tribunal confirmed that Mr Fraser had been unfairly and wrongfully dismissed. Accordingly his damages for breach of contract were found to be just over £80,000 but the award was limited to the statutory cap of £25,000.

His former employers then applied to strike out the action he had started in the High Court. They argued that the wrongful dismissal claim had already been litigated in the Employment Tribunal and this prevented Mr Fraser from taking the matter further in the civil courts. The employer argued that since the first claim had not been withdrawn the doctrine of cause of action estoppel applied thereby preventing the second claim from being made. This application to strike out was allowed and Mr Fraser appealed to the Court of Appeal.

Decision

The Court of Appeal found that the High Court had been correct to strike out his claim for the balance of the award over the £25,000 statutory cap. It found that damages awarded for wrongful dismissal in the Employment Tribunal cannot be "topped up" in the High Court. The Court of Appeal applied the common law doctrine of merger of causes of action. This means that once a tribunal has given final judgment for wrongful dismissal, the cause of action for wrongful dismissal mergers into the judgment and is extinguished.

Comments

The lesson in this case is clear. Claimants must confine claims in employment tribunal proceedings to unfair dismissal only unless they are sure that any claim for wrongful dismissal is worth £25,000 or less. If the claim is worth more than this, then the claim for wrongful dismissal should be made in the High Court. This is in line with Tribunal Service guidance.

The statutory cap of £25,000 for wrongful dismissal has not been raised since 1994 despite the fact that under unfair dismissal the ceiling is regularly raised.

Rachel Billen - Associate Solicitor, Commercial 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

This Employment Law Update does not constitute legal or other professional advice and should not be relied on as such. You should take specific advice regarding your circumstances before taking any action based on the information contained within this Update.