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Compensation: No non-economic loss awards in unfair dismissal compensation

This report relates to 1 case(s)

Key points

In Dunnachie v Kingston-upon-Hull City Council, the House of Lords holds:

  • Lord Hoffman's comments in Johnson [2001] IRLR 279 (to the effect that the Norton Tool [1972] IRLR 86 construction of the statutory provisions regarding unfair dismissal compensation was too narrow) were obiter and, therefore, did not prevent the House of Lords from finding that unfair dismissal compensation should be restricted to economic losses only.
  • Against that background, consideration of the correctness of Norton Tool was required. As was found in that case, non-economic losses are not recoverable as part of an unfair dismissal claim. The parliamentary intention in 1971 was to restrict compensation to economic losses: if injury to feelings had been intended to be covered, separate, specific provision would have been made for this.
  • This does not leave the concept of compensation that is "just and equitable" without a role, as argued by Lord Justice Sedley in the Court of Appeal in Dunnachie [2004] IRLR 287 (CA). This phrase was intended to give tribunals the flexibility to make discretionary awards without recourse to common law concepts. It does not allow tribunals to award additional sums not amounting to loss.