Unfair dismissal: Employer only liable for losses it has caused

26 October 2009

The recent EAT case of Salford Royal NHS Foundation Trust-v-Roldan has provided useful clarification of two important issues relating to unfair dismissal:

• Firstly, an employer will only be liable for losses it has caused a dismissed employee in an unfair dismissal case.  It will not be liable for losses caused by the actions of a third party, such as a criminal prosecution following the dismissal which precludes the employee from finding alternative employment. 

• Secondly, where the dismissal occurred on or before 5 April 2009, the Tribunal must consider whether the employee would still have been dismissed if the employer’s procedures had been properly followed, in accordance with section 98A(2) Employment Rights Act 1996.

In this case, Ms Roldan was employed by Salford Royal NHS Foundation Trust as an intensive care unit nurse and allegations were made against her that she had been mistreating a patient.  After suspending Ms Roldan, carrying out an investigation into the matter and holding a disciplinary hearing, the Trust decided that the charges had been proved and Ms Roldan was dismissed.  Ms Roldan’s internal appeal against the decision failed and she subsequently brought an Employment Tribunal claim for unfair dismissal.

The Employment Tribunal found that the dismissal was unfair on the basis that a proper investigation had not been carried out by the Trust and decided that Ms Roldan would have found a job within six weeks of her dismissal.  However, the Employment Tribunal held that the Trust was responsible for Ms Roldan’s losses for a fourteen month period, during which Ms Roldan was prosecuted by the CPS for her conduct, was put on bail and eventually acquitted.  The Employment Tribunal determined that the referral to the Police was as a consequence of the Trust’s actions and awarded compensation of over £20,000.

The Trust, represented by Hill Dickinson, appealed this decision and was successful. 

The EAT held that “the acts of the police in charging and of the CPS in prosecuting [Ms Roldan] were matters which affected her ability to work but were not the direct consequence of acts attributable to the Trust”.  As such, the EAT found that the Employment Tribunal’s decision to award fourteen months’ losses was wrong and held that losses arising from the Trust’s dismissal of Ms Roldan only ran for six weeks. 

In addition, the EAT held that the Employment Tribunal had erred in law by failing to consider whether the outcome would still have been dismissal if the Trust’s procedures had been properly followed, in accordance with section 98A(2) Employment Rights Act 1996. 

Ms Roldan is seeking permission to appeal to the Court of Appeal.

Comment

Section 98A(2) Employment Rights Act 1996 has now been repealed and will only apply to dismissals which occurred on or before 5 April 2009.  As such, the clarity provided by this case in relation to the obligation on Tribunals to consider this provision will be somewhat limited.  However, the effect of the finding that an employer will only be liable for losses it has caused a dismissed employee, and not those caused by the actions of third parties, will be wide-reaching.  This is clearly good news for employers.