Legislation
Case law: ‘stigma damages’ payable only where loss follows from unfair dismissal
30/07/2010 07:29
Employers do not need to pay so-called ‘stigma damages’ (ie for injured reputation) where the loss suffered by an unfairly dismissed employee does not follow directly from the unfair dismissal, according to a recent ruling.
In this case, an employee was summarily dismissed by her employer for gross misconduct. She then started a job with a new employer but, following receipt of an unfavourable reference from her old employer, she was dismissed from that job as well.
The employee started proceedings in an employment tribunal, and it was accepted that her original dismissal had been automatically unfair, as the employer had failed to follow the statutory disciplinary procedures that applied at that time. She also claimed compensation for the loss of her new job, which she alleged was the result of an inaccurate reference and unfounded accusations made against her by her old employer to her new employers.
The tribunal refused to award such compensation and, on appeal to the Employment Appeal Tribunal (EAT), the employee argued that her loss was in consequence of her dismissal and attributable to the acts of her employer, so she was entitled to compensation for ‘stigma damages’. However, the EAT ruled that the unfavourable reference was not in consequence of the unfair dismissal, but followed from the events which would in any event have given rise to dismissal. Therefore, no award of compensation was made.
Operative date
- Immediate