Thousands in line for compensation claims

The judges overturned an interpretation of the law dating back 30 years which limited any compensation to economic loss and ignored psychiatric damage caused by bullying.

Christopher Dunnachie had appealed against a decision of the Employment Appeal Tribunal, which had stripped him of an award of £10,000 for psychiatric damage.

Two out of three of the appeal judges yesterday agreed that the Industrial Relations Act could be interpreted to mean that compensation could be awarded for any type of loss. They agreed that the case could go to the House of Lords for a definitive decision by the Law Lords.

Mr Dunnachie, 36, worked for Hull City Council for 17 years as an environmental health officer until he was forced to quit. The judges heard how in 2001 he resigned from his job after being subjected to a "sustained period of harassment and bullying" by his line manager, which went unchecked and unrecognised by his council employers.

Married with three children, Mr Dunnachie stuck it out until he found a lower status job further away at Doncaster Council. He then resigned and successfully claimed unfair dismissal.

Momentous victory

Dave Prentis, general secretary of Unison, the union which backed Mr Dunnachie's case, said: "This is a momentous victory which will have widespread implications for other cases of unfair dismissal. It is also a significant legal move which will make the law on unfair dismissal much fairer.

"Until today any compensation award made by an employment tribunal could only take account of economic losses such as being out of work or, as in Christopher Dunnachie's case, being forced to accept a lower paid job.

"Tribunals did not have the power to award compensation for psychiatric harm or distress, humiliation, damaged reputation in the community or to family life."

In most tribunal cases the compensation for financial loss is well under £10,000. This new ruling means that, if a claimant has suffered additional stress or humiliation, they could be entitled to compensation for personal damage.

Mr Prentis added: "It is a real step forward and it should make employers think very carefully about tackling workplace bullying or pay the price."

Workplace bullying

At the original Employment Tribunal hearing Mr Dunnachie was awarded the maximum compensation available at the time of £51,700 plus a basic award of £3,000 - because of this he will not benefit personally from yesterday's decision.

Lord Justice Sedley, who gave the lead judgment, said the tribunal had found that Mr Dunnachie had been forced to resign after "a prolonged campaign of harassment".

"This was a bad case of workplace bullying, compounded by an equally serious refusal by management to deal with it. The blow to a conscientious employee's self-esteem which such treatment delivers may well be the unkindest cut of all, worse in many ways than the monetary loss."

He said that, although there was no medical evidence of psychiatric harm, Mr Dunnachie had been reduced to "a state of overt despair" by his treatment.

In May 2002, the tribunal awarded him a total compensatory award of £123,328, including an award of £10,000 for psychiatric damage, which had to be cut to the statutory cap of £51,700.

Hull City Council appealed to an Employment Appeal Tribunal (EAT) which took away the £10,000 after ruling that compensation was limited to pecuniary loss under a judgment made in 1972.

However, in a House of Lords ruling in 2001, Lord Hoffman said that the word "loss" in employment legislation should not just refer to financial loss.

The EAT said the remarks by Lord Hoffman were no more than "an expression of opinion" and had no judicial value for deciding future awards.

Dignity and fairness

Lord Justice Sedley said today: "Compensation for non-economic loss brought about by the manner of an unfair dismissal is on authority and on principle recoverable."

Mr Justice Evans-Lombe said the law already allowed the tribunal to award compensation for any loss which can be shown to directly flow from an unfair dismissal.

However, Lord Justice Brooke, dissenting, said employment tribunals had been told by Parliament to compensate victims for the loss they had suffered from being unfairly dismissed and the decision in the case of Norton Tool 30 years ago was the natural interpretation of the law.

Mr Dunnachie, who was not at today's hearing, said later: "Hull City Council still refuses to accept that I was a victim of bullying, but the way I was treated still has an impact on my career and family life.

"Hopefully, Unison will lead the way with other unions to ensure that employers treat their employees with dignity and fairness."

Johnny Thomson