Compensation for non-economic loss is recoverable again after the Court of Appeal's majority decision to overturn a key Employment Appeal Tribunal (EAT) decision delivered last Summer. The EAT had ruled in Kingston Upon Hull City Council v Dunnaiche (2003) IRLR 384 that awarding non-pecuniary compensation in unfair dismissal cases was outside the remit of employment tribunals.
Awards for non-economic loss had followed remarks made by Lord Hoffman in Johnson v Unisys (2001) ICR 480, in which he expressed the view that the statutory formula for unfair dismissal was wide enough to embrace such damages. Article 157 of The Employment Rights (NI) Order 1996 defines the unfair dismissal compensatory award as "such amount as the tribunal considers just and equitable in all the circumstances, having regard to the loss sustained by the complainant in consequence of the dismissal."
The Court of Appeal decided by majority that
• s. 123 of ERA 1996 (Art. 157 of The Employment Rights (NI) Order 1996) is wide enough to embrace non-pecuniary loss; and
• Tribunals may only compensate for "a real injury"to self respect.
This decision allows the legislation to be interpreted in such a way so that compensation can be awarded for "non-economic"loss or injury to feelings arising from the conduct of the dismissal. It will in effect open the door for all those who are humiliated, distressed or embarrassed by an unfair dismissal, to claim more money which in practice may mean every person who wins a case. The ruling gives rise to much uncertainty especially concerning the calculation of compensation. The Court proposed to grant the authority leave to appeal to the House of Lords. Considering the contradictory positions reached by the majority and dissenting judges an early referral to the House of Lords is needed.