Avoiding the exclusion zone: damages for injury caused by dismissal

Over a century ago, Mr Addis was humiliatingly dismissed from his managerial role by his employer, Gramophone Co Limited.  He claimed damages for hurt and upset.  However, in a decision which remains relevant today, the House of Lords decided that Mr Addis could not, as a legal principle, recover damages for the injury he suffered as a result of the manner in which he was dismissed.  This was because termination of employment is a contractual issue between the parties, and damages are not normally recoverable for injury resulting from breach of contract. 

The House of Lords had the opportunity to reconsider this principle in the 2001 case of Johnson v Unisys Mr Johnson’s employers made allegations to him regarding his conduct, and asked him to attend a meeting.  No specific allegations were put to him, and later that same day he was summarily dismissed.  He suffered a major psychiatric illness.  The question before the court was: can an employee recover damages for injury resulting from the manner of their dismissal?  The House of Lords affirmed the Addis principle and confirmed he could not.

In 2004 the House of Lords heard two conjoined appeals relating to this principle, sometimes known as the “Johnson exclusion zone”.  In Eastwood and Williams v Magnox Electric plc, management within the defendant company tried to secure falsified evidence against the claimants to be used in disciplinary proceedings against them.  By the time of their disciplinary proceedings, both claimants had depression.  They were sacked and brought personal injury claims.  At first instance and in the Court of Appeal their claims were dismissed.  They appealed to the House of Lords.

In the case of McCabe v Cornwall County Council and others the claimant was dismissed after allegations of sexual misconduct towards pupils.  He was successful in his unfair dismissal tribunal claim on the basis that there was a breach of the defendant’s procedures when investigating the allegations.  Unlike in Eastwood and Williams, his claim was allowed by the Court of Appeal, but the defendant appealed.

The appeals were heard by the House of Lords together, deciding on the issue of where the line should be drawn between the conduct prior to the dismissal and the dismissal itself.  What is the limit to the Johnson exclusion zone?  In the lead judgment, Lord Nicholls answered as follows: if before a dismissal, an employee has an accrued right of action, that cause of action remains unimpaired by his subsequent dismissal.  It was considered that all three claimants had causes of action which accrued before the dismissals and their cases were allowed to proceed.

The most recent opportunity for the courts to consider this principle arose in the 2013 case of Monk v Cann Hall Primary School (1) Essex County Council (2) Ms Monk was employed as an administrator.  Following reorganisation, the school wrote to her advising that her employment would be ending due to redundancy.  However, over a month before it was due to end, she was publicly escorted from the premises.  She brought proceedings for personal injury in the High Court.

Being unaware of the Johnson exclusion zone, the council initially admitted liability.  However, they subsequently became aware of the Johnson decision and applied for permission to withdraw their admission and to strike out the claim which was allowed.  Ms Monk appealed.  She argued that her case fell outside of the Johnson exclusion zone because she was not actually dismissed by being escorted from the premises but rather a month or so later when the notice of redundancy came into effect.  The Court of Appeal allowed the defendant to withdraw its admissions of liability but allowed Ms Monk’s appeal against the striking out of her claim.  She was allowed to continue with her claim, so as to argue that the defendant’s conduct in marching her off the school premises was independent from her later dismissal.

The decision in Addis remains valid, but also controversial, today.  It is controversial because it can be interpreted as giving employers carte-blanche to treat employees badly on dismissal.  It has the potential to create strange consequences, for example, as Lord Steyn commented in Eastwood, “The…reasoning in Johnson…means that, although the exercise of the power to suspend must be exercised with due regard to trust and confidence…the more drastic power of dismissal may be exercised free of any equivalent constraint.”

It also creates practical difficulties as it creates a “boundary line” between events arising before the dismissal, which are actionable in a personal injury claim, and events relating to the actual dismissal, which are not.  Where the line falls, will not always be clear.  It also creates scope for difficulties in determining the relative contribution to the injury of events before dismissal and the dismissal itself.

In Eastwood, Lord Steyn called for a review of the Johnson decision by Parliament: “The subject is of enormous importance.  The personal contract of employment affects almost all individuals….As a result of Johnson the law in the vitally important area of personal contracts of employment is in an unsatisfactory state.….It prevents, and will continue to prevent, the natural and sensible evolution of our employment law in a critical area”.

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