Edwards v Chesterfield Royal Hospital NHS Foundation Trust

Where an express contractual disciplinary procedure is incorporated into an employment contract, breach of that procedure may attract ordinary contractual remedies, including damages for loss caused by resulting misconduct findings. The statutory unfair-dismissal scheme under the Employment Rights Act 1996 does not remove contractual rights. The Johnson exclusion area concerns claims based on the implied term of trust and confidence in relation to dismissal; it does not bar a claim based on a distinct express contractual obligation. Recovery remains subject to proof of causation and remoteness. A notice clause does not imply security of employment until retirement.

Mr Edwards, a consultant surgeon, was summarily dismissed for personal and professional misconduct. His contract contained a three-month notice clause and, on the assumptions required for the preliminary issue, an express disciplinary procedure governing the composition and conduct of the disciplinary panel. He alleged that breach of that procedure caused the adverse findings and substantial long-term loss of career earnings.

District Judge Jones limited the claim to the contractual notice period. Nicol J allowed an appeal to the extent of adding the period required for a compliant disciplinary procedure, in [2009] EWHC 2011 (QB). The central issue was whether an express contractual disciplinary breach could support damages beyond notice and the procedural period, including loss caused by the misconduct findings.

1. Appeal allowed. Lord Justice Moore-Bick delivered the leading judgment. Lloyd LJ agreed, and Ward LJ agreed with both judgments. The application under CPR Part 24 was treated as a preliminary issue. Since the pleaded facts had to be assumed in Mr Edwards’ favour, and the parties had presented full argument, the legal issue was suitable for determination without a trial.
2. Effect of Johnson. The ratio of Johnson v Unisys Ltd [2001] UKHL 13 was that the common law did not imply a term requiring fairness in the manner of dismissal and that the courts could not develop the implied term of trust and confidence to create such an obligation alongside the statutory unfair-dismissal scheme in the Employment Rights Act 1996. Lord Hoffmann’s observations about the contractual effect of disciplinary procedures, at paragraphs 60–66 of his speech, were obiter and were not binding.
3. Contractual disciplinary terms. On the assumed facts, the disciplinary procedure was incorporated into the contract. Its breach therefore gave rise to ordinary contractual remedies, including damages. The statutory particulars provisions did not prevent parties from agreeing that disciplinary terms should be legally binding. Gunton v Richmond-upon-Thames London Borough Council [1980] I.C.R. 755 supported recovery for the period required to complete agreed disciplinary proceedings. The reasoning in Skidmore v Dartford and Gravesham NHS Trust [2003] UKHL 27 supported the same conclusion.
4. Johnson exclusion area and loss. The Johnson exclusion area concerns claims founded on the implied term of trust and confidence in connection with dismissal. It does not bar a claim founded on a separate express contractual disciplinary obligation. The court disagreed with the reasoning in Botham v Ministry of Defence [2010] EWHC 646 (QB). Although damage to reputation or personal distress caused only by the manner of dismissal is ordinarily irrecoverable, loss caused by a distinct contractual breach may be recoverable. Causation and remoteness remained matters for trial, and full employment until retirement was not guaranteed.
5. Alternative argument. The notice clause was incompatible with an implied term that Mr Edwards could be dismissed only for good cause or would remain employed until retirement. The challenge to Gunton therefore failed. The decisions below were varied and the appeal was allowed.

1. Court of Appeal (Civil Division): Allowed the appeal and held that, on the assumed facts, damages for breach of the express disciplinary procedure were not legally limited to notice and the procedural period.
2. High Court (Queen’s Bench Division): Nicol J allowed the appeal from District Judge Jones and varied the order to include loss during the period required for compliant disciplinary proceedings, in [2009] EWHC 2011 (QB).
3. District Judge Jones: Granted a declaration limiting the claim to loss of earnings during the three-month contractual notice period.