A recent Court of Appeal decision in the United Kingdom provides food for thought in the context of claims for unfair dismissal under Bermuda's employment legislation.

The decision in the case of Dunnachie v Kingston-upon-Hull City Council, reported on 11 February 2004, has radically expanded the scope of compensation in unfair dismissal claims in the United Kingdom.

The Court of Appeal held that compensation for unfair dismissal is no longer limited to pure financial loss; it can now include non-economic loss. This would appear to include loss in respect of distress, humiliation, damage to reputation and psychiatric injury resulting from an unfair dismissal.

The relevant Bermuda legislation is the Employment Act 2000, and particularly section 40 thereof. So far, it has not been tested in the Courts.

In deciding the case of Dunnachie, the UK court of appeal had to construe section 123(1) of the Employment Rights Act 1996 (UK).

That section provides that "the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to the action taken by the employer". That language is virtually identical to the language of section 40 (4) of our legislation.

A 1972 case, Norton Tool, construed the above language as only including quantifiable pecuniary loss. It remained an accurate reflection of the law until the recent House of Lords case of Johnson v Unisys, in which Lord Hoffman suggested that non-pecuniary loss should also be included.

The decision in the Dunnachie case is to the effect that the Norton Tool case was wrongly decided and should no longer be followed.

That leaves us with an interesting state of affairs in Bermuda.

While section 40 (4) of the Bermuda legislation tracks, so far as is relevant, section 123 (1) of the UK legislation, section 40 (5) purports to limit the amount of a compensation order to a maximum of 26 weeks wages.

This is potentially problematic because, while the UK legislation was at the time construed by the courts as only including quantifiable pecuniary loss, it has now been construed by the courts to allow recovery in respect of non-pecuniary loss.

This gives rise to some interesting questions for a conscientious lawyer to consider on behalf of his clients:

Is it fair that section 40 (4) should remain subject to the limits imposed by section 40 (5) now that the limits previously in place on non-pecuniary loss have been lifted?

Can it be acceptable that an employer may commit the most horrific act or series of acts entitling the employee to seek recovery in respect of non-pecuniary loss, yet that loss must be limited, in every case, to 26 weeks wages?

If it was thought to be just about right to allow compensation up to the amount of 26 weeks wages when non-pecuniary loss was excluded, is it still right to limit compensation in the same way now that non-pecuniary loss is no longer (presumably) excluded?

Perhaps these are matters that the legislative draftsman should consider. They are undoubtedly matters that in due course will make their way through our local courts. At the very least, they present some quite interesting food for thought.

Partner C. Jerome Dill is Local Team Leader of the Employment and Immigration Team within the Litigation Practice Group at Appleby Spurling Hunter. Copies of Mr. Dill's columns can be obtained on the Appleby Spurling Hunter website at www.applebyglobal.com.

This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.