Eastwood v Magnox Electric plc

An employee cannot recover common-law damages in contract or tort for loss caused by the unfair manner of dismissal. Such a complaint falls within the statutory unfair-dismissal scheme in Part X of the Employment Rights Act 1996, including its specialist tribunal jurisdiction and statutory limits.

The implied term of mutual trust and confidence does not create a parallel remedy for the way an employment relationship is terminated. The circumstances of dismissal may comprise an extended pre-dismissal course of conduct. Whether they do so is a factual question in each case.

Two long-serving employees alleged that their employer conducted a fabricated and unfair disciplinary campaign, resulting in stress-related illness and their dismissals. Both pursued unfair-dismissal complaints before an Employment Tribunal. Mr Williams succeeded, and the employer later reached an agreed financial settlement with Mr Eastwood.

The Llangefni County Court decided a preliminary issue against the employees. It held that their proposed contractual and negligence claims were barred by the statutory unfair-dismissal regime. The employees appealed, contending that their claims concerned breaches during the continuing employment relationship rather than the manner of dismissal.

The central issue was whether the claims were nevertheless excluded by Johnson v Unisys Ltd [2001] 2 WLR 1076.

1. Appeal dismissed unanimously. Peter Gibson LJ, with whom Mantell LJ and Sir Swinton Thomas agreed, held that the County Court was correct to dismiss the claims on the assumed facts.
2. The majority decision in Johnson v Unisys Ltd [2001] 2 WLR 1076 was binding. Unfairness in the manner of an employee’s dismissal cannot found a common-law claim, whether framed in contract or tort. It must be pursued through the statutory unfair-dismissal regime in Part X of the Employment Rights Act 1996.
3. The implied term of mutual trust and confidence cannot be used to obtain damages for the way in which employment is terminated. The statutory scheme would be undermined if an employee could obtain a parallel and uncapped common-law remedy for matters within the Employment Tribunal’s jurisdiction.
4. The relevant dismissal circumstances are not confined to events at, or immediately before, dismissal. They may consist of a pattern of conduct over time. Whether earlier conduct forms part of the manner or circumstances of dismissal is a question of fact.
5. Here, the alleged campaign, the disciplinary processes, the resulting illness and the claimed post-dismissal inability to work were all part of the circumstances attending dismissal. They were matters for which compensation could be sought in the Employment Tribunal. The court therefore did not need to determine remoteness or other issues.

The appeal was dismissed with costs, subject to detailed assessment, with an interim costs payment of £20,000.

• Court of Appeal: Dismissed the employees’ appeal and upheld the conclusion that their common-law claims were unsustainable.
• Llangefni County Court: On a preliminary issue, gave judgment for the employer after applying the tests under the Civil Procedure Rules.