Langley and another v Burlo

EAT: Elias J (President), Mr P A L Parker and Mr P Smith: 3 March 2006

Under her contract of employment the claimant was entitled to eight weeks' notice and to statutory sick pay during absence through illness. Shortly after she had been injured in a car accident, and while she was on 18 weeks' sick leave, she was summarily dismissed by her employers, following a disagreement about a pay rise. An employment tribunal upheld her complaints of wrongful and unfair dismissal, holding that the dismissal was both in breach of her contractual entitlement to notice and was unfair in that she had not been given a proper disciplinary hearing or told of her right to appeal. The tribunal found that, had the claimant been given notice, it would have been at her contractual rate of pay and calculated compensation for the wrongful dismissal based on eight weeks' net pay, rather than on the statutory sick pay she would have been receiving during what would have been the notice period. In calculating the compensatory award for the unfair dismissal claim, the tribunal did not include any sum referable to the notice period, as that loss had already been included in the compensation for wrongful dismissal.

The employers appealed, contending that the claimant was only entitled to compensation for the notice period based on sick pay; and the claimant cross-appealed, contending that, in any event, a compensatory award for unfair dismissal under section 123 of the Employment Rights Act 1996 should include a sum for the notice period based on full pay.

The Employment Appeal Tribunal held:
(1) The contractual term for payment during sickness absence was clear and there was no justification for the tribunal's conclusion that it was inapplicable to a notice period. Section 88(1) of the Employment Rights Act 1996, whereby an employee was entitled to her usual remuneration for any part of the statutory notice period she was unable to work because of sickness, was disapplied in the claimant's case by section 87(4) since her contractual notice period exceeded the statutory period by more than a week. Accordingly, her damages had to be measured by the rights which would have arisen under the contract unaffected by the statutory provisions.
(2) Although it was good industrial relations practice for an employer to make full payment in lieu of notice to an employee who, during that period, would be absent sick, at least where the notice period was not unduly long and there was no indication at the time of dismissal whether the illness would last for the whole of the notice period, (per the majority) it was impermissible, in awarding compensation for unfair dismissal under section 123 of the Employment Rights Act 1996, to read into that section the additional factor that a tribunal might have regard not only to the loss flowing from the dismissal but also to a failure to comply with good industrial relations practice. Further, it was not possible to treat such practice as a source of a separate duty breach of which could sound in damages, nor was it possible to award such compensation on the ground that it was just and equitable for employees to be compensated for foreseeable losses flowing from breaches of good practice. Accordingly, there was no legitimate basis for assessing the compensatory award so as to provide a bonus above the loss in fact flowing from the dismissal itself.

The appeal was allowed and the cross-appeal was dismissed.

Appearances: Sarah Wilkinson (Ashurst) for the employer; Ayoade Elesinnla (J R Jones, Ealing) for the claimant.