26 March 2010
In a previous INSIGHT we reported on Gibb -v- Maidstone and Tunbridge Wells NHS Trust. Ms Gibb appealed the High Court’s decision; this was heard last week.
The Court of Appeal has reserved Judgment, we will report as soon as it is available. Ms Gibb's case is that her employer, the trust, had the power to pay her £75,000 in lieu of six months’ notice plus a further £175,000 as severance pay under a compromise agreement agreed between them when she resigned as Chief Executive. HM Treasury disagreed and ordered the trust to pay only the £75,000 element; this was justified by arguing that the terms of the severance agreement were outside the powers of the trust to agree to. This argument as to whether the agreement was ultra vires and, as a consequence, what are the lawful powers of NHS employers in such circumstances is of crucial importance.
A number of comments by the Lord Justices hearing the case have been published in a recent edition of the Health Service Journal. These cannot be taken as an indication of what the Judgment is likely to be but two, in particular, are of note:
- Lord Justice Laws said that when a public body and its employee entered into a contract in good faith, "I would think that it would take a great deal to persuade the court to interfere".
- Lord Justice Rimer questioned why the trust had paid money in lieu of notice but not the likely amount of any employment tribunal award.
Clearly whatever the result the rationale of the trust is being held up to intense scrutiny and this informs others of the approach needed to evidence why any payment is made and its amount. We will keep you informed of future developments.
Hill Dickinson has a wealth of experience in dealing with the full
range of employment and pensions issues. If you have any queries
relating to the above, or any other legal matter, please do not
hesitate to contact us
for advice.
