Redundancy 375and his wrongful dismissal damages, even after mitigation, came to £84,300: £53,000 was for
loss of wages. Other headings were: withdrawal from the company life insurance scheme;
loss of private health benefits; loss of the use of a company car; and loss of fees from a
consultancy business he was setting up.
In Chapter 5 we saw that the purpose of contract damages is to put the injured party in
the position he would have been in if the contract had been performed as agreed. The
injured party will be able to claim for any foreseeable loss which resulted from the breach
of contract. Such losses might include the type of matters claimed for in Shove v Downs
Surgical plc, as well as rather more obvious matters. However, damages can only be
claimed for matters which would have arisen if the employer had not breached the contract.
So if the employee was contractually entitled to a bonus, damages could be claimed in
respect of this. If, however, the bonus was discretionary, damages could not be claimed. The
claimant must take all reasonable steps to mitigate the loss. If the dismissed employee
receives jobseeker’s allowance, this will be deducted from the damages.
The employment tribunal can award £25,000 damages for wrongful dismissal. If the
wrongful dismissal claim is for more than £25,000, it must be pursued through the ordinary
courts. In practice, few claims for wrongful dismissal are made before an employment
tribunal as the compensatory award for unfair dismissal allows a tribunal to award damages
for lost wages.
Redundancy
Section 139(1) of the ERA 1996 explains that an employee has been made redundant if he
was dismissed wholly or mainly because:
(i) the employer ceased, or intended to cease, to carry on the business; or
(ii) the employer ceased, or intended to cease, to carry on the business in the place where
the employee was employed; or
(iii) the need for work of a particular kind to be carried on, or to be carried on in the place
where the employee worked, had either ceased or diminished or was expected to
do so.
Where the employer moves the place of business, whether or not the employees have been
made redundant will depend upon how far the business moved and the amount of incon-
venience caused to the employees by the move.
The meaning of the words ‘work of a particular kind’ have caused difficulty. In Safeway
Stores plc v Burrell (1997)it was held that s. 139(1) involved a three-stage process:
(i) It should be asked if the employee has been dismissed.
(ii) It should be asked whether the requirements of the employer’s business for employees
to carry out work of a particular kind had ceased or diminished or were expected to
do so.
(iii) It should be asked whether the dismissal of the employee was caused wholly or mainly
by the state of affairs identified at stage two.
If the answer to the questions posed in the three stages was in each case ‘yes’ then the
employee had been made redundant. This test was approved by the House of Lords in
Murray v Foyle Meats (1999).