A new Court of Appeal decision could open the floodgates to more “injury to feelings” awards in unfair dismissal cases.

In June 2003 the Employment Appeal Tribunal held that compensation for unfair dismissal claims is limited to economic loss only and does not extend to damages for injury to feelings or pride in the case of Dunnachie v Kingston Upon Hull City Council.

Lorna Thomas, employment lawyer at national law firm Shoosmiths explained: “The case was appealed and Thursday’s decision clarifies that damages for injury to feelings flowing from the dismissal are available in unfair dismissal claims. Damages will not be awarded in every case but only those where there is a “real injury” to the employee’s self respect.”

In a previous case in 2001, the House of Lords decided that it was within the power of the employment tribunal to award compensation for distress, humiliation, damage to reputation in the community or to family life as part of an unfair dismissal award and this case builds on that precedent.

Lorna warns that this decision is potentially very significant for employers: “Most employees claiming unfair dismissal (in particular, constructive dismissal) are likely to add on a claim for injury to feelings arising from the dismissal. If successful under this head, the compensatory award is likely to increase, in some cases, quite significantly.”

Whilst it has clarified that an Applicant is able to recover damages for injury to feelings arising from the manner of dismissal, the Court of Appeal has not decided whether it is possible to recover damages for injury to feelings arising from the fact of dismissal.

It is very difficult to distinguish between the fact and manner of dismissal and this issue alone is likely to generate much case law in the future.

Leave to appeal to the House of Lords, if requested, is likely to be granted.