Gogay v Hertfordshire County Council

An employer breaches the implied obligation of trust and confidence by conduct objectively likely to destroy or seriously damage that relationship without reasonable and proper cause. Child-protection inquiries require a separate assessment of their implications for employees. They do not automatically justify suspension or describing ambiguous information as an allegation of sexual abuse. Alternatives to suspension and the information available at the time must be considered. Where a child's interests conflict with an employee's interests, the child's interests prevail.

Recognised psychiatric illness caused by an unjustified suspension can attract contractual damages for financial loss and non-pecuniary injury, subject to ordinary contractual principles. The exclusion of damages for distress and injured feelings does not extend to such illness in these circumstances.

The claimant was employed by the defendant local authority as a residential care worker in a children's home. A child living there had learning and communication difficulties and had suffered serious sexual abuse by her father. The child developed an attachment to the claimant and made ambiguous statements about her. Staff adopted guidelines preventing lone working with the child.

The authority arranged further child-protection inquiries and immediately suspended the claimant on full pay. Its suspension letter described the matter as an allegation of sexual abuse. The investigation subsequently found no case to answer. The claimant developed clinical depression, substantially caused by the suspension, and suffered loss of earnings.

Judge O'Brien in Cambridgeshire County Court found contractual breaches and awarded £26,073.19. The authority appealed against liability and the availability of damages for psychiatric illness. The claimant sought permission to cross-appeal out of time for additional earnings lost after a stay of execution prevented her obtaining the treatment assumed in the damages assessment. The central issues were whether the suspension was justified and whether the resulting psychiatric illness was compensable.

The appeal was dismissed and the cross-appeal allowed unanimously. Hale LJ delivered the substantive judgment. May and Peter Gibson LJJ expressly agreed.

1. Child-protection inquiries and decisions concerning an employee were distinct processes. The authority had common law duties of care and a duty under section 22(3) of the Children Act 1989 to safeguard children in its care. Those duties justified further inquiries independently of section 47. The court therefore left open whether the statutory threshold for a section 47 investigation had been crossed.

2. The implied employment obligation required reasonable and proper cause for conduct objectively likely to destroy or seriously damage trust and confidence. Applying Malik v BCCI, the court rejected the contention that breach required an intention to end the employment relationship. Breach of the term and entitlement to treat the contract as repudiated were separate questions.

3. The ambiguous information warranted inquiries, but describing it as an allegation of sexual abuse put it too high. The suspension and the terms of its communication seriously damaged the employment relationship without reasonable and proper cause. The authority should have checked whether the working guidelines had been breached and considered the need for separation and possible transfer or leave. Its immediate reaction was unjustified. This conclusion should not inhibit appropriate safeguarding inquiries. Where the interests of a child and an employee conflict, the child's interests prevail.

4. The exclusion of damages for distress and injured feelings was distinct from compensation for recognised psychiatric illness. The claimant's suspension contemplated continued employment and caused clinical depression. Johnson v Unisys concerned the manner of dismissal and was distinguished. French v Barclays Bank disclosed no evidence of psychiatric illness. Ordinary contractual principles permitted recovery for the claimant's financial loss and non-pecuniary injury. The finding that those losses were foreseeable at the relevant contractual time was upheld.

5. The original future-loss assessment was sound on the evidence then available, but assumed access to treatment funded by the award. The stay of execution defeated that assumption and prolonged the claimant's inability to work. Although the later evidence had limitations, the authority suffered neither surprise nor prejudice from the late application. Permission to cross-appeal out of time was granted, and damages were increased by £13,424.36. The order recorded dismissal of the appeal and allowance of the cross-appeal with costs.

• Court of Appeal (Civil Division): In [2000] EWCA Civ 228 , the court unanimously dismissed the authority's appeal, granted permission to cross-appeal out of time and allowed the claimant's cross-appeal. It increased damages by £13,424.36.
• Cambridgeshire County Court: Judge O'Brien found contractual breaches in a written judgment dated 20 March 1999. At a further hearing on 9 July 1999, he awarded £26,073.19 for personal injury and financial loss. He granted permission to appeal and stayed execution.