Employment Update: Unfair dismissal/compensation

15 October 2008

How should an employee be compensated for illness caused in part by employer’s conduct?

If successful in an unfair dismissal claim, the claimant may seek compensation for illness caused as a result of the dismissal, as well as loss of earnings.

In Adey-Jones v O’Dowd the claimant was unemployed for four months after being dismissed. She then found a temporary post at a lower salary for a few months before falling ill with a stress-related illness and then remaining unemployed for over a year.

The employment tribunal had awarded her compensation for loss of earnings for the whole period that her sickness was a direct result of the way she had been treated by her employer.

The EAT has now said that, in such a case the employee must prove that the illness has been caused by the unfair dismissal. Also the tribunal should not compensate on an ‘all-or-nothing’ basis but use a percentage approach where the illness is likely to have been caused only in part by the employer’s behaviour.

Points to note –

  • Compensation for future loss of earnings may not stop at the point where the claimant finds a new job if it is a temporary post at a lower salary or (as in this case) where the employee alleges that the replacement post only terminated because she became ill as a result of the manner of her original dismissal.
  • In an unfair dismissal case, the claimant can only claim compensation for illness caused by the dismissal itself. If they want to claim for illness caused by employer’s actions prior to dismissal, they must bring a breach of contract claim.