The Employment Appeal Tribunal (EAT), in the case of The Wise Group (TWG) v Mitchell (M), was faced with the issue of an employee who was summarily dismissed in breach of contract and who would have had the necessary one year's service to bring a claim for unfair dismissal had the contractual disciplinary procedure been followed.
TWG was contractually entitled to terminate M's employment on one month's notice but chose to summarily dismiss M. Although there was no payment in lieu of notice clause in the contract, TWG decided to pay M one month's salary. In response to M's claim for compensation for wrongful dismissal, TWG conceded that the summary dismissal was in breach of contract but maintained that M had not suffered any actual loss.
The tribunal held that the summary dismissal related to conduct and therefore the employer had been contractually obliged to operate its disciplinary procedure prior to any dismissal. In addition, the tribunal found that TWG's failure to operate the procedure had led to M being dismissed prior to acquiring one year's service and accordingly M had been deprived of the right to claim for unfair dismissal.
In relation to the question of damages, the tribunal identified three additional heads of damage to that of the one month payment in lieu of notice. The first head of damages was compensation in relation to the period during which the disciplinary process would have lasted until the date of lawful termination. As alternative heads of damage, the tribunal identified compensation for the lost opportunity to remain employed by TWG (head 2) and compensation for the lost opportunity of claiming unfair dismissal (head 3). However, before a remedies hearing could take place, TWG appealed to the EAT.
The EAT held that the Court of Appeal's decision in Harper v Virgin Net Ltd made it clear that an employee cannot recover damages for loss of the chance to claim unfair dismissal from his employer at common law. Harper concerned an employee who had been summarily dismissed without receiving the contractual notice period of three months, which would have taken her over the one-year qualifying period for bringing a claim for unfair dismissal. The Court of Appeal in Harper, asserted that the employee had not actually lost the right to claim compensation for unfair dismissal as she had never gained the right in the first place. Accordingly in the present case, the EAT held that the tribunal had erred in deciding that M could recover damages for the lost opportunity of claiming unfair dismissal.
As concerns the second head of damages, the EAT held that there was no authority to support the making of such an award. Accordingly, TWG's appeal in relation to the second and third heads of damages was allowed.
It is important to note that the EAT did reach its conclusion with some degree of reluctance given the potential scope for some employers to benefit from summary dismissals in breach of contract shortly before one year's qualifying service is attained, to the detriment of the employee in question. Moreover, employers should be aware that the decision in Harper v Virgin Net Ltd has been appealed and is due to be heard by the House of Lords on 31 October 2005.