Edwards V Chesterfield Royal Hospital Parliamentary Intention And

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Edwards v Chesterﬁeld Royal Hospital – Parliamentary Intention and Damages Caused by Maladministration of a Contractual Dismissal Procedure Kevin Costello*

In Edwards v Chesterﬁeld Royal Hospital NHS Foundation Trust [2011] UKSC 58 [2012] 2 W.L.R. 55 the Supreme Court addressed the following question: is an employee, who can establish that (a) if a contractual disciplinary process had been correctly administered he would have been exonerated, and (b) thereafter employed until retirement, able to sue for loss of the earnings that he would have acquired until retirement? Three members of the Supreme Court held that such a remedy was not reconcilable with the enactment, originally in the Industrial Relations Act 1971, of a statutory unfair dismissals protection regime. It was Parliament’s intention that an employee should not be able to outmanoeuvre the statute’s compensation limitation rules by deploying a superior common law remedy.This note considers that reading of Parliament’s intention.

The plaintiff in Edwards v Chesterﬁeld Royal Hospital NHS Foundation Trust1 (Edwards) was a surgeon whose career was ruined following an accusation that he had conducted an improper examination of a patient. Although Mr Edwards’ contract of employment established a disciplinary procedure for processing alle- gations of professional misconduct, that procedure was defectively operated (the panel which was convened did not include a lawyer or a doctor with the same clinical expertise as Mr Edwards). Mr Edwards was dismissed. It emerged that had the procedure had been properly observed Mr Edwards might have been reha- bilitated: when the same complaint was laid before the General Medical Council, its Investigation Committee quickly dismissed the charge. Edwards, in other words, was one of those cases in which a plaintiff alleges that a failure to properly comply with a disciplinary process has affected the outcome, and resulted in a miscarriage of justice. The question addressed by the Supreme Court has been in circulation since 1944: is an employee, who can establish that a contractual disciplinary process has been unfairly administered, able to sue for the earnings that he would have acquired if he had been exonerated and retained in employment?2 On one view, this is a straightforward application of the classical rule that damages are assessed

*School of Law, University College Dublin. 1 [2011] UKSC 58; [2012] 2 WLR 55.The appeal in the Edwards case was combined with a similar case, Botham v Ministry of Defence which raised similar issues. This note is concerned with the Edwards case alone. 2 Tomlinson v The London, Midland & Scottish Ry Co [1944] 1 All ER 537 (Tomlinson).

Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA Kevin Costello by measuring what the plaintiff’s economic condition would have been if the contract had been properly performed.3 On another view,damages corresponding to the employee’s full economic loss should not be recognised. To do so would offend the principal that the maximum of an employer’s liability for wrongful dismissal is to pay the employee damages for any notice period which he has been denied.4 A majority of the Supreme Court rejected the proposition that damages should be calculated according to this principle.The maximum damages which a non-culpable employee,who has not been given the hearing to which he or she is contractually entitled, could ever obtain is the sum of (a) the wages that he would have earned during the period that it would have taken for a disciplinary hearing to be completed; plus (b) notice pay.5 Lords Dyson,Walker and Mance relied on two principal grounds (described at 1 and 2 below). Lord Phillips was the independent member of this coalition: while agreeing with the overall result he was troubled by some of the grounds, and adopted an alternative argument (described at 4 below). (1) The primary argument (rehearsed in the judgment of Lord Dyson, with whom Lords Walker and Mance agreed) was an extension of the doctrine originally set out in the famous Johnson v Unisys6 (Unisys). The contractual remedy pursued by Mr Edwards (a remedy in which damages would be at large) would possess a superior capacity to the statutory unfair dismissals remedy (in which compensation was limited).The unfair dismissals code had been crafted in a sensitive policy exercise in which the interests of employers were balanced against the improvement in individual employment rights.To sanction the existence of a higher capacity common law remedy would be to upset that delicate balancing of rival social interests. (2) The second argument is based on section 207A of the Trade Union and Labour Relations (Consolidation)Act 1992 and involves the application of a point ﬁrst developed by Lord Hoffman in Johnson v Unisys.Section 207A(2) of the 1992 Act provides that where unfair dismissal proceedings concern a ‘matter to which a relevant Code of Practice applies’, and the employer has unreasonably failed to comply with the Code, the employment tribunal may take this into account in increasing the award.7 A ‘relevant Code of Practice’ is a code issued by Advisory, Conciliation and Arbitration Service (ACAS) or by the Secretary of State.8 In Unisys the plaintiff was provided with a company handbook which described the procedures to be followed in processing disciplinary charges against employees; the Unisys handbook had been framed by reference to the ACAS Code of Practice on Disciplinary Practice and Procedures in Employment.9 The rules in the Unisys

3 Barber v Manchester Regional Hospital Board [1958] 1 WLR 181; Skidmore v Dartford and Gravesham Hospital NHS Trust [2003] UKHL 27; [2003] IRLR 445. 4 Tomlinson n 2 above; Gunton v London Borough of Richmond upon Thames [1980] 3 WLR 714. 5 Edwards n 1 above at [61]. 6 [2001] UKHL 13; [2003] 1 AC 518. 7 Inserted by the Employment Act 2008, s 3(2). 8 Trade Union and Labour Relations (Consolidation) Act 1992, ss 199, 203, 207A(4). 9 ‘The Unisys procedures [had] clearly been framed with regard to the [ACAS] code of practice’, n 6 above at [65].

© 2013 The Author.The Modern Law Review © 2013 The Modern Law Review Limited. (2013) 76(1) MLR 134–157 135 Damages for Wrongful Dismissal handbook were, therefore, a local, or indirect, implementation of the ACAS rules. Since the Unisys rules were indirectly ACAS rules, and since ACAS rules were a section 207 ‘Code of Practice’, it followed that their legal effect was that stated in section 207: a ‘Code of Practice’ compliance with which could be ‘taken into account’ by a tribunal in unfair dismissal proceedings. Because Par- liament had defined the legal effect of non-compliance with ACAS rules – as matters to be taken account of in unfair dismissal proceedings – they could not have the alternative effect for which the plaintiff contended: as contractual rules infringement of which could be redressed by a common law action. Lord Dyson then applied the Unisys reasoning to the code at issue in Edwards: the ‘Disciplinary Procedures for Hospital and Community Medical and Dental Staff’ (HC(90)9). In section 207A(2) Parliament indicated that non- compliance with matters recommended in a disciplinary code were to be rem- edied through the statutory unfair dismissal process (and, by implication, not through wrongful dismissal). That was the reason why non–compliance with circular HC(90)9 could not be actionable in contract. ‘Parliament linked a failure to comply with disciplinary or dismissal procedures with the outcome of unfair dismissal proceedings’.10 The section 207A argument does not work as neatly in Edwards as it did in Unisys. One problem is that there is a distinction between what Lord Dyson said was regulated by section 207A and what Parliament indicated should be subject to section 207A. Lord Dyson refers to ‘disciplinary procedure’ being governed by section 207A.11 The wording of section 207A is precise: it refers to (non-compliance with) a ‘relevant Code of Practice’. A ‘relevant’ Code of Practice is defined as a: (i) a Code of Practice issued by the Secretary of State for Employment or (ii) a Code of Practice issued by ACAS.12 The procedure at issue in Edwards, Circular HC(90)9), was neither a Code of Practice issued by ACAS nor a Code issued by the Secretary of State under the 1992 Act; the 1990 circular pre-dated the Act. Nor was this a case (like in Unisys)ofan employer, through non-compliance with an internal procedure, indirectly failing to comply with the terms of an ACAS Code of Practice.The provisions infringed in Edwards (the absence of a clinician of the same medical discipline and of a legally qualified chairman) do not correspond to anything in the ACAS Code of Practice on Disciplinary Practice and Procedures in Employment.13 Eight years before Edwards was decided, the House of Lords in Skidmore v

10 Edwards n 1 above at [37]. 11 ibid at [38–39]. 12 Section 207(4) deﬁnes a relevant code of practice as a ‘Code of Practice issued under [Chapter III] which relates exclusively or primarily to procedure for the resolution of disputes’. Chapter III envisages two classes only: a code of practice issued by ACAS (s 199) and a code of practice issued by the Secretary of State (s 203). 13 The Code was ﬁrst issued in 1977: Employment Protection Code of Practice (Disciplinary Practice and Procedures) Order 1977 (SI 1977/867) of 20 June 1977. The 1977 code was revised by SI 1998/44 (brought into effect on 5 February 1998).That, in turn, was superseded by the Employ- ment Code of Practice (Disciplinary and Grievance Procedures Order 2000 (SI 2000/2247) brought into effect on 4 September 2000. This was followed by ACAS Code of Practice 2004 brought into effect by SI 2004/2356.The latest code was brought into force on 6 April 2009 by the Employment Code of Practice (Disciplinary and Grievance Procedures Order 2009 (SI 2009/771).

Dartford and Gravesham NHS Trust14 researched the administrative history of the 1990 code. There the 1990 disciplinary code in Edwards was traced to a revi- sion begun in 198715 of an earlier Ministry of Health 1961 code on disciplinary proceedings.16 There was nothing in Skidmore about any connection between the NHS 1990 procedure and one of the ACAS Codes of Practice. Circular HC(90)9 may, as Lord Dyson states, be a ‘disciplinary procedure’.The issue is whether it is a ‘relevant Code’ for the purpose of section 207A. If it is not a relevant Code, it is not governed by section 207A. If it is not governed by section 207A then neither are the legal effects of non-compliance determined by section 207A. (3) Lords Dyson, Walker and Mance relieved the severity of their ruling with a sub-rule. Notwithstanding the general rule the courts would have jurisdiction to grant damages if the parties ‘otherwise expressly agree’.17 Lord Mance said that the ‘parties could by express agreement attach a different significance to the prescribed disciplinary procedures’.18 The minority expressed ‘puzzle[ment]’ at this refinement.19 Lord Kerr asked why if the rule excluding damages at large was excluded by public policy (the policy against subverting the unfair dismissal scheme) it should be capable of being ‘dis- placed by the express agreement of the parties’.20 The long-term consequence of this proviso may be the emergence, as standard provisions in contracts of employment, of Edwards’ clauses: clauses inserted at the insistence of employees, making infringements of contractual disciplinary processes accessible to damages at common law. (4) Mr Edwards claimed that his re-employment prospects had been tainted and claimed stigma damages.This was the element in Mr Edwards’ claim from which Lord Philips developed his own alternative argument. In Addis v Gramo- phone Co Ltd21 the House of Lords had held that a wrongful dismissal on premature notice could not be compensated by stigma damages: damages for the difficulties faced by a wrongfully dismissed employee in finding alternative employment. If, Lord Philips argued, the law forbids recovery of stigma damages in the case of one form of dismissal-related breach of contract (where the employee has been dismissed following unlawful notice) then equally it should forbid stigma damages in the case of another form of dismissal-related breach of contract (where the employee is dismissed following an illegally handled disciplinary hearing). It would make no sense to allow it in one case but not in the other.22

14 n 3 above at [13]. See also J. Hendy,‘Employer’s Discipline of Doctors in the NHS’ in W. Savage, Birth and Power (London: Middlesex University Press, 2007) 119. 15 (1987) 294 British Medical Journal 787. 16 HM(61)112. The terms of the procedure are set out in (1961) British Medical Journal Supplement 274. 17 Edwards n 1 above at [39]. 18 ibid at [94]. 19 ibid at [122]. 20 ibid at [154]. 21 [1909] AC 488. 22 Edwards n 1 above at [87].

THE PARLIAMENTARY INTENTION ARGUMENT

Three members of the Supreme Court denied the damages claim principally on the ground that it was captured by the pre-emption doctrine laid down in Johnson v Unisys23 and re-affirmed in Eastwood v Magnox Electric plc and McCabe v Cornwall County Council.24 In Unisys the House of Lords held that the courts were not,on separation of powers grounds,constitutionally at liberty to recognise a common law rule against unfair dismissal.The court rejected the proposition that the principle of trust and confidence should condition the dismissal process. If dismissal at common law was conditioned by a duty of trust and confidence it would have to be preceded by a fair hearing; it would have to be justified by reasonable grounds.A common law dismissal regime protected in this way would be equivalent to the statutory protection – but without the limitations. Parlia- ment had deliberately made certain policy choices as to the circumstances in which, and the conditions subject to which, an employee might be compensated for unfair dismissal. Parliament had prescribed access limitation rules (withhold- ing access, for instance, from employees below a minimal service period) and compensation limitation rules (principally, its rules capping the amount recov- erable in compensation). An unregulated, parallel common law remedy would subvert these limitation rules. In Edwards three members of the Supreme Court extended the principle in Unisys, refusing to recognise the right of an employee dismissed in breach of a contractual disciplinary process to recover resulting loss of earnings damages. The real underlying concern may have been the amount of damages recov- erable if a common law remedy was recognised;25 Mr Edwards had claimed £3.8 million. The ‘distributive consequences’ of this was a concern.26 To recognise such a remedy would enable a plaintiff to outmanoeuvre the statute’s compensation limitation rules;27 in setting these Parliament has expressed its view ‘on how the interests of employers and employees, and the social and economic interests of the country as a whole, are best balanced in cases of unfair dismissal’.28 The minority (Lady Hale,Lords Kerr andWilson) objected on the ground that a contractually-based disciplinary provision was an ordinary contractual term. The proposition that damages should correspond to the plaintiff’s economic position had the contract been properly performed was orthodox legal principle.29 If Parliament, when it enacted the original unfair dismissal statute, the Industrial Relations Act 1971, had wished to extinguish the ordinary remedial effect of breach of contract it would have done so expressly. It had not done so.

23 Unisys n 6 above. 24 [2004] UKHL 35; [2005] 1 AC 503. 25 H. Collins,‘Note: Claim for Unfair Dismissal’ (2001) 30 Industrial Law Journal 305, 307. 26 L. Barmes,‘Common Law Implied Terms and Behavioural Standards at Work’ (2007) 36 Industrial Law Journal 35, 47. 27 Employment Rights Act 1996, s 124. 28 Eastwood n 24 above at [13]. 29 Edwards n 1 above at [130].

Lady Hale pointed out that there was nothing in the legislation to take away the existing contractual rights of employees.30 Lord Dyson then counter-argued that ‘the right to claim damages in respect of the manner of a dismissal did not exist before the 1971 Act’ and that ‘no example was cited to us of any case decided before the 1971 Act in which an employee was awarded damages for breach of contract for the unfair manner in which he had been dismissed’.31 It was this which explained why Parliament did not positively suppress a right to damages for loss of earnings resulting from dismissal administered in breach of disciplinary rules. No such remedy existed in 1971. If there had been such a remedy Parliament would have regulated it. The margin of difference between Mr Edwards succeeding or losing was very ﬁne.The outcome of the case depended on a single historical question: did such damages exist in 1971? The majority implicitly agreed that if such a remedy – damages for the personal economic consequences of a defective hearing which should have resulted in the re-instatement of the employee – did exist in 1971 it could not have read the Parliamentary intention in the way in which it did. If the remedy did exist in 1971 Parliament’s inaction would have to be read as agnosticism about the co-existence of the common law remedy.The court would have been bound to recognise Mr Edwards’ claim. There is material indicating that such a remedy may,in fact, have existed prior to 1971.

BARBER V MANCHESTER REGIONAL HOSPITAL BOARD32

In Edwards Lord Dyson stated that no authority had been cited to the Supreme Court in which a worker, who had been dismissed in breach of a contractual dismissal hearing process,had recovered damages.33 There is such authority:Barber v Manchester Regional Hospital Board (Barber) decided thirteen years before Par- liament enacted the Industrial Relations Act 1971. The extent of the co-incidence between Barber and Edwards is very high. Alexander Barber was also a medical consultant – described in Parliament as an ‘extremely distinguished gynaecologist’.34 Mr Barber’s contract, like Mr Edwards’, provided for a disciplinary process designed to protect against unfair dismissal. The 1990 NHS code at issue in Edwards has its remoter antecedents in the 1949 NHS code35 at issue in Barber.InBarber, like Edwards, it was argued that the defectively administered process had resulted in a miscarriage of justice. The discovery of a foetus on a rubbish tip in Oldham in 1950 led to the police investigating Mr Barber’s practice for registering still births. An independent

30 ibid at [121]. 31 ibid at [43]. 32 n 3 above. 33 Edwards n 1 above at [43]. 34 HC Deb vol 591 col 798 14 July 1958. 35 (1949) British Medical Journal (Supplement) 147, 151.

© 2013 The Author.The Modern Law Review © 2013 The Modern Law Review Limited. (2013) 76(1) MLR 134–157 139 Damages for Wrongful Dismissal medical enquiry panel was convened by Manchester Regional Hospital Board. Mr Barber argued that because of its extreme prematurity the birth was not registrable under the Births and Deaths Registration Acts 1836–1947.That panel of clinicians, advised by a lawyer, acquitted Mr Barber. However, notwithstanding the medico-legal judgment, the Board (having apparently misled Mr Barber into believing that he had been found guilty when, in fact, he had been exonerated)36 dismissed him. Mr Barber attempted to use his contractual right of appeal. Clause 16 of the standard conditions of employment of hospital medical staff provided for an appeal to a specialist medical panel appointed by the Minister of Health.37 Mr Barber had very good grounds for assuming that this specialist clinical body would clear him: after all the Manchester expert panel of inquiry had done so. However, he was denied a hearing when the Minister ruled – incorrectly the High Court subsequently found – that he had failed to prove that clause 16 had been incorporated into his contract of employment.38 The heavy-handed conduct of the Hospital Board made Barber a late-1950s cause célèbre.39 Barber mobilised a campaign on several fronts. A petition of 11,000 signatures was taken up and the matter was raised in both the House of Lords and the Commons. In the Lords the Labour peer,Viscount Stansgate, noted that Mr Barber’s case was ‘creating considerable concern and reaching the state of a scandal’.40 ‘Wounding comments’ were rehearsed in Parliament about the Board and the Ministry of Health (which had claimed privilege of its correspondence about the case).41 Alongside the political campaign, Mr Barber issued High Court proceedings.The Queen’s Bench Division held that if a hearing had been heard by the professional committee envisaged by Clause 16 Barber would have been exonerated. Damages in Barber were assessed according to precisely the same criteria which Mr Edwards, sixty years later, argued should regulate the assessment of his loss of livelihood.The High Court assessed the likelihood of the employee being retained in employment if the procedure had been properly applied, and, having found that probability established, calculated the period for which he would have remained in employment.42 It assessed (as a piece in the Modern Law Review put it) ‘the probable length of employment’.43 Judgment for the sum of £7,437,10s (considerably in excess of the maximum compensation

36 HC Deb n 34 above. 37 1949 NHS code n 35 above. 38 HL Deb vol 214 col 750 4 March 1959. 39 The wrongful dismissal proceedings earned Mr Barber, when he died in 1962, an obituary (which includes an account of the action). The Guardian 1 November 1962. 40 HL Deb n 38 above at [751]. 41 ibid (LordWinterton).TheTreasury Solicitor records in the Barber case remain closed until 2033:The National Archives: Public Record Ofﬁce,TS 58/244. 42 In the 1940s, in Tomlinson n 2 above, Cassels J had assumed without giving the matter any consideration that an employee dismissed in breach of a contractual disciplinary procedure was only entitled to a sum corresponding to his notice period. 43 G. Ganz, ‘Public Law Principles applicable to Dismissal from Employment’ (1967) 30 MLR 288, 301.

© 2013 The Author.The Modern Law Review © 2013 The Modern Law Review Limited. 140 (2013) 76(1) MLR 134–157 Kevin Costello limit of £4,160 subsequently set for unfair dismissal in the Industrial Relations Act 1971)44 was awarded.45 Yet Mr Edwards was denied what Mr Barber was granted (damages assessed according to classical principles for the effects of dismissal unfairly administered in breach of contract). The reason for this was, according to paragraph 43 of the Edwards decision, that Parliament had implicitly intended to outlaw a common law remedy of open-ended damages for employment dismissal. The reason it had not done so explicitly was that no such remedy was known to exist in 1971. But this overlooks Barber. The existence of the Barber decision generally was ampliﬁed in contemporary legal literature.46 Parliament was con- structively aware of it by the general presumption that Parliament is deemed to know the law.47 The state of Parliament’s awareness was higher than usual since the details of the case had been entered in the records of Parliament. Barber has never been discredited. But even if the decision was mistaken, Parliament might still have been expected to intervene in order to prevent the error perpetu- ating.Yet Parliament was complacent.This inertia is not easy to reconcile with the intention (attributed to Parliament by Edwards) that common law damages for loss of the chance of employment until retirement caused by an unfair hearing in breach of contract should not co-exist with the Industrial Relations Act 1971.

SECTION 27(1)(C) OF THE INDUSTRIAL RELATIONS ACT 1971 AND DOCK WORKERS’ REMEDIES IN DAMAGES FOR WRONGFUL DISMISSAL

Parliament’s attitude to the dismissal remedies of dock workers also throws a side light on its approach to the inter-relationship between common law damages for breach of disciplinary processes, on the one hand, and employment tribunals, on the other. Section 27(1)(c) of the Industrial Relations Act 1971 excluded ‘registered dock worker[s protected by] . . . the Dock Workers (Regu- lation of Employment) Act 1946’ from the entitlement to claim unfair dismissal. Registered dock workers were excluded from the 1971 Act protection against unfair dismissal because of the generosity of their existing remedies. Dock workers already had two layers of protection against dismissal. The ﬁrst was the specialist system of protection against unfair dismissal established by the Dock Workers (Regulation of Employment) Act 1946. The Dock Workers

44 Industrial Relations Act 1971, s 118(1). 45 The case cost the Ministry £13,865 (HC Deb vol 591 col 798, 4 July 1958). Mr Barber was eventually re-instated. The persistent Mr Barber collapsed and died in 1962 at a hearing in Manchester where he was conducting yet another set of legal proceedings against his employer (The Guardian 1 November 1962). 46 K. W.Wedderburn, Cases and Materials on Labour Law (Cambridge: CUP, 1967) 305; Ganz, n 43 above, 301. Signiﬁcantly, however, there was no reference to the Barber damages’ calculation in Mayne and McGregor on Damages (London: Sweet and Maxwell, 1961), or in subsequent editions of McGregor.This may explain why the case has sometimes been overlooked. 47 Rookes v Barnard [1964] AC 1129, 1174 (Lord Reid). Pennycook v Shaws (EAL) Ltd [2004] Ch 296, 308.

(Regulation of Employment) Orders 1947–1967,48 as the Donovan Commis- sion reported, ‘gave [dock workers] a very high standard of security against unfair dismissal’.49 Dock workers could only be dismissed by the decision of a local independent dock board; and where a dock worker was dismissed he was entitled under clause 18 to appeal to the Dock Workers Appeal Tribunal. A dismissed dock worker had a second remedy for breach of the disciplinary code: damages at large. Vine v National Dock Labour Board50 (Vine) concerned a Southampton dock worker dismissed in breach of the disciplinary process in the DockWorkers (Regulation of Employment) Order 1947.In this case the decision was unlawfully taken by the Southampton dock board (it had been illegally delegated to another body). Instead of appealing to the Dock Workers Appeal Tribunal,Vine pursued a wrongful dismissal action.The House of Lords held that, where a disciplinary hearing was defectively administered, the dismissal was a nullity;Vine was awarded £250 representing loss of earnings in the two years and nine months since his dismissal. If, as Edwards suggests, Parliament was concerned that statutory employment tribunals should not be capable of being outmanoeuvred by higher-capacity common law remedies, it might have intervened to regulate the Vine action. Vine was authority for the proposition that where a dock worker was dismissed by a dock board and where that dismissal was administered defectively the dismissal would be classiﬁed at common law as a nullity.The consequence of that would be that (subject to the employee having attempted to mitigate his damages) the employee would be entitled to the full amount of the resulting loss of earnings.51 Parliament knew that the more mechanical common law calculation could, in some cases, exceed the discretionary sum which the specialist dock workers’ unfair dismissals court, the Dock Workers Appeal Tribunal could award.52 But Parliament does not seem to have been troubled by the fact that a dismissed dock worker could negotiate a way around the compensation jurisdiction created by the Dock Workers Appeal Tribunal. Instead in section 27(1)(c) it turned dock workers away from the unfair dismissal remedy. By implication, Parliament must have approved this powerful sector of the labour force enjoying the strategic choice of using either the Parliamentary remedy, or alternatively the higher capacity common law remedy.This is the same dupli- cation which, according to Edwards, Parliament is supposed to have been determined to suppress.

48 SI 1947/1189 & SI 1967/1252. 49 Royal Commission on Trade Unions and Employers’ Associations 1965–1968 (Cmnd 3623) 557. 50 [1957] AC 488. 51 The one limitation on the right to damages from the point of ineffective termination was the duty of mitigation; Singleton LJ was concerned that this was had not been properly probed:‘Here was a ﬁt man of 52 who had been a dock labourer, and he claimed that he could not get work’ [1956] 1 QB 658, 672. 52 Clause 18(2) of the Dock Workers (Regulation of Employment) Order 1947 (SI 1947/1189) (as amended by the Dock Workers (Regulation of Employment) (Amendment) (Order) 1967 (SI 1967/ 1252)) gave theTribunal a wide discretion which would appear to have enabled it to take into account factors such as contributory misconduct in setting the amount of compensation for past loss.The Tribunal was given the discretion to restore the dock worker ‘as from such date . . . as the Tribunal may decide’.

PARLIAMENTARY INTENTION AND CONTRACTUAL DISMISSAL PROTECTION CLAUSES

A clause instituting a formal investigative process – a‘fair process’clause – like that in Barber, is a contractual provision designed to protect an employee from being arbitrarily dismissed. But this is not the only form of contractual protection against arbitrary dismissal.A second, more powerful, variety of contractual unfair dismissal clause is one restricting the grounds of dismissal, a clause limiting the range of an employer’s unrestricted common law prerogative to dismiss on notice for any reason. Clauses restricting the grounds of dismissal were well established before the enactment of the 1971 Act. The ‘grounds of dismissal restriction clause’ came to prominence in 1957 in McClelland v Northern Ireland General Health Services Board53 (McClelland). The plaintiff’s contract of employment provided for the dismissal of officers for ‘gross misconduct’; for being ‘inefficient and unfit to merit continued employment’; and for failure to take or honour the oath of allegiance.There was no provision for dismissal on any other grounds.The Board then dismissed the employee for redundancy.The House of Lords held that the grounds stated in the contract exhausted the Board’s entitlements. It had con- tracted out of its common law right to dismiss on notice for any reason. It could not, as Wedderburn said in 1966, ‘give her notice whenever it wished’.54 The ordinary common law rule is that a wrongfully summarily dismissed employee is only entitled to damages corresponding to the period of notice to which his contract entitled him. In 1969 Wedderburn and Davies assumed that the average damages’ claim in wrongful dismissal cases was in the region of just £40.55 The ‘grounds of dismissal restriction clause’ – for those employees fortunate enough to possess one – provided one of the few reliefs from this grim damages regime. A dismissed employee who could establish on the balance of probabilities that he would not have been dismissed on one of the permitted grounds would be entitled to damages for the period for which he would, if the contract had been properly performed, have remained in employment.That could be until retirement; or in the case of a fixed term contract, for the remainder of the term.This was confirmed in 1970 in Dunk v Waller.56 The plaintiff was an apprentice employed under a fixed-term four year contract. The contract could only be determined where the employee was guilty of misconduct or disobedience.The plaintiff was dismissed for failing a maths exam (not, of course,‘serious misconduct’). He proved that but for the unlawful dismissal he would probably have remained to the end of his contract. He was awarded £500 representing what he would have earned if the dismissal restriction clause had been properly complied with, and he had been retained until the end of his term. What was Parliament’s attitude to these clauses when it was enacting unfair dismissal legislation? According to Edwards, Parliament’s intention is tested by

53 [1957] 1 WLR 594. 54 K.W.Wedderburn, The Worker and the Law (London: McGibbon & Kee, 1st ed, 1966) 80. 55 K.W.Wedderburn and P. Davies, Employment Grievances and Disputes Procedures in Britain (Berkeley; London: University of California Press, 1969) 39. 56 [1970] 2 QB 163.

© 2013 The Author.The Modern Law Review © 2013 The Modern Law Review Limited. (2013) 76(1) MLR 134–157 143 Damages for Wrongful Dismissal whether it took any steps to modify an established common law entitlement. Abstention can be interpreted as implicit approval of the co-existence of the common law right.57 Applying this test, it appears that Parliament’s intention was that these clauses should continue to have full effect. Parliament, when it was enacting the 1971 Act, never modiﬁed this entitlement. It cannot be argued, as it was in Edwards, that the reason for this was that Parliament was unaware of this device. The ‘grounds of dismissal restriction clause’ was very well known at the time that the 1971 Act was being debated. Cases in which plaintiffs claimed damages for infringement of such job security clauses were being litigated in the late 1960s.58 Indeed, it has always been subsequently assumed that these job security clauses survived the enactment of the Industrial Relations Act 1971, and that Act’s successors.59 There was express conﬁrmation in Edwards that the right of an employee to recover open-ended damages for dismissal in breach of a ‘grounds of dismissal restriction clause’ survived the enactment of the Industrial Relations Act 1971. In Edwards Lord Mance held that the rule would not affect the ‘case of an employee with an express contractual right not to be unfairly dismissed’. Here damages would be at large: they would be ‘measured on the basis that the contract would have continued unless and until the employee left, retired or gave cause for dismissal’.60 If this is so, then Parliament intended two things: (i) that full compensatory damages for breach of ‘grounds of dismissal restriction’ clauses should continue to co-exist with the statutory regime, but (ii) that full compensatory damages for breach of pre-dismissal ‘fair process’ clauses should not. But a ‘grounds of dismissal restriction clause’ is merely another form of contractual dismissal protection clause. It is a dismissal protection clause in the same way that the pre-dismissal hearing clause at issue in Edwards was a dismissal protection clause. It is obviously anomalous that one species of contractual dismissal protection clause (a ‘grounds of dismissal restriction’ clause) should be capable of being redressed by full compensatory damages, and the statute’s compensation limits avoided, but another (a ‘ fair process’ clause) not have this effect. Parliament could have had no reason for distinguishing between the two. In both cases the employee has obtained a contractual protection against dismissal; in both cases the employee has a concurrent remedy under the Employment Rights Act 1996; in both cases the employee is seeking to prefer the common law route in order to obtain a higher award of damages. Where the unfair dismissal protection clause happens to be in one form (a ‘grounds of dismissal restriction’ clause) the employee will be allowed to avoid the statute’s

57 Edwards n 1 above at [42]. 58 Dunk v Waller ibid; Jonescu v Governors of the Royal Free Hospital, The Guardian 6 February 1965 (which involved a medical consultant arguing that his contract, like that in McClelland, had extinguished his liability to be dismissed on notice. McClelland was distinguished: the contract in the case at hand did not contain an exhaustive list of grounds of dismissal). 59 Kaur v MG Rover Group [2005] IRLR 40 at [24–26]. 60 Edwards n 1 above at [105].

© 2013 The Author.The Modern Law Review © 2013 The Modern Law Review Limited. 144 (2013) 76(1) MLR 134–157 Kevin Costello compensation limits; where the protection is in another form (a ‘fair process’ clause) he will not. It seems implausible that Parliament could have intended to discriminate so severely between two related contractual clauses with similar objectives. Recognising Mr Edwards’ claim would, of course, have avoided that reading of Parliament’s intentions.

CONCLUSION

Edwards disallows employees dismissed in breach of contractual disciplinary processes, whose livelihood has been impaired, access to the remedy of damages calculated in the conventional way. Underlying the result is a reading of the state of the Parliamentary consciousness in enacting the Industrial Relations Act 1971. The effect of the decision is softened by the Supreme Court’s rec- ognition that employer and employee may expressly negotiate a contractual entitlement to damages. Even if the Edwards clause becomes a standard clause in contracts of employment the effect of the decision will still be felt by a transitional constituency of employees whose contracts do not include such a clause. The justiﬁcation for denying damages calculated in the conventional way is based on deference to an assumed Parliamentary intention. Does Edwards attribute to Parliament an anxiety which it had never actually expe- rienced? Parliament is presumed to know the law. By 1971 some quite promi- nent sectors in the labour force (dock workers and NHS hospital doctors) were recognised as possessing (a) enforceable disciplinary procedural rights with (b) accompanying entitlements to damages which (c) could exceed the compensation limits which would be possessed by ordinary industrial tribunals or by the Dock Workers Appeal Tribunal. Yet Parliament remained inert. Edwards overlooks some arguably relevant historical sources. Instead, it obliquely char- acterises the employment rights reforming Parliament of 1971 as regressive. A mistreated consultant in 1950s Manchester (the forgotten Mr Barber) denied the opportunity to exonerate himself, and deprived of the chance of employment until retirement, was held entitled to damages calculated at large. Sixty three years later a Derbyshire consultant denied the opportunity to exonerate himself, and deprived of the chance of employment until retirement, has been held entitled to little more than his notice pay.