Gunton v Richmond-upon-Thames London Borough Council: CA 1980

The plaintiff college registrar had been the subject of disciplinary proceedings, but the defendant had not followed the contractual procedure. The judge had ordered an inquiry as to damages on the basis that the Plaintiff was entitled to remain in the council’s employment until retirement age unless in the meantime liable to redundancy or dismissal under the disciplinary procedure, allowance being made for the plaintiff to mitigate his loss.
Held: The employee was entitled to damages representing the salary he would have earned if the procedures had been followed and then during the one month’s notice period on which the employment could have been terminated. (Shaw LJ dissenting)
Buckley LJ said that the adoption of the disciplinary regulations disenabled the council from dismissing the plaintiff on disciplinary grounds until the procedure prescribed by those regulations had been carried out. However, once that disciplinary process had been completed the council could have given notice and brought the contract of employment to an end.
Brightman LJ accepted that there was no right to sue for wages after the employer’s repudiation: ‘An employee’s remedy, if he is unlawfully dismissed by his employer, is damages. He cannot obtain an order for specific performance because it is not available to compel performance of a contract of service against an unwilling employer.’
He rationalised the continued existence of the contract, by positing a distinction between Mr Gunton’s status as an employee, which was terminated when he was excluded from work, and the contract of employment, which subsisted until it was lawfully terminated, saying: ‘It is clear beyond argument that a wrongfully dismissed employee cannot sue for his salary or wages as such, but only for damages. It is also, in my view, equally clear that such an employee cannot assert that he still retains his employment under the contract. If a servant is dismissed and excluded from his employment, it is absurd to suppose that he still occupies the status of a servant. Quite plainly he does not. The relationship of master and servant has been broken, albeit wrongfully by one side alone. The same would apply to a contract for services, such as an agency. If a two year agency contract is made between principal and agent, and the principal wrongfully repudiates the contract of agency after only one year, quite plainly the agent cannot hold himself out as still being the agent of the principal. He is not. The relationship of principal and agent has been broken. I do not think it follows, however, from the rupture of the status of master and servant, or principal and agent, that the contract of service, or the contract of agency, has been terminated by the wrongful act of the master or the principal. What has been determined is only the status or relationship. So in the result the servant cannot sue in debt for his wages, which he is wrongfully deprived of the opportunity to earn; or for his fringe benefit, such as the house which the carpenter in Ivory v Palmer [1975] ICR 340 had the right to occupy as part of his emoluments. As the relationship of master and servant is gone, the servant cannot claim the reward for services no longer rendered. But it does not follow that every right and obligation under the contract is extinguished. An obligation which is not of necessity dependent on the existence of the relationship of master and servant may well survive; such as the right of the master in Thomas Marshall (Exports) Ltd v Guinle [1979] Ch 227 that the servant should not during the term of the contract deal on his own account with customers of the plaintiff company.’
Shaw LJ dissented, on the ground that the continued vestigial existence of an unperformable contract was an artificial fiction devoid of any connection with the true state of affairs: ‘I cannot see how the undertaking to employ on the one hand, and the undertaking to serve on the other can survive an out-and-out dismissal by the employer or a complete and intended withdrawal of his service by the employee. It has long been recognised that an order for specific performance will not be made in relation to a contract of service. Therefore, as it seems to me, there can be no logical justification for the proposition that a contract of service survives a total repudiation by one side or the other. If the only real redress is damages, how can its measure or scope be affected according to whether the contract is regarded as still subsisting or as at an end? To preserve the bare contractual relationship is an empty formality. The servant who is wrongfully dismissed cannot claim his wage for services he is not given the opportunity of rendering; and the master whose servant refuses to serve him cannot compel that servant to perform his contracted duties. In this context remedies and rights are inextricably bound together. It is meaningless to say that the contract of service differs from other contracts only in relation to the availability of remedies in the event of breach. The difference is fundamental, for there is no legal substitute for voluntary performance.’


Buckley, Shaw, Brightman LJJ


[1980] ICR 755, [1981] Ch 448


CitedThomas Marshall (Exports) Ltd v Guinle ChD 1979
The managing director defendant had resigned before the end of the contractual term. There was an express covenant in his contract against using or disclosing the company’s confidential information during or after his employment. It was submitted . .

Cited by:

CitedEdwards v Chesterfield Royal Hospital NHS Foundation Trust QBD 31-Jul-2009
The claimant, a consultant surgeon had been subject to disciplinary proceedings by his employer. They were however conducted in a manner which breached his contract. The GMC had summarily dismissed the same allegations. The claimant now appealed . .
CitedEdwards v Chesterfield Royal Hospital NHS Foundation Trust CA 26-May-2010
The claimant, a consultant doctor, sought damages saying that his employer had failed to follow the contract when disciplining and dismissing him. The GMC had dismissed as unfounded the allegation on which the dismissal was based. He sought damages . .
CitedEdwards v Chesterfield Royal Hospital NHS Foundation Trust SC 14-Dec-2011
The claimant had been employed as consultant surgeon. He had been dismissed in a manner inconsistent with the extress terms of his employment contract. He sought common law damages for the manner of his dismissal. The employer appealed.
Held: . .
Dissent ApprovedSociete Generale, London Branch v Geys SC 19-Dec-2012
The claimant’s employment by the bank had been terminated. The parties disputed the sums due, and the date of the termination of the contract. The court was asked ‘Does a repudiation of a contract of employment by the employer which takes the form . .
AppliedBoyo v London Borough of Lambeth CA 8-Mar-1994
An employee dismissed by his employer’s act of repudiation of the contract, is entitled to receive money in lieu of notice as well as compensation for a reasonable period for carrying out the appropriate disciplinary procedure.
Ralph Gibson LJ . .
CitedRigby v Ferodo Ltd HL 1988
The House considered a claim for constructive dismissal where the employer had changed the terms of the employment contract by unilaterally imposing a pay cut.
Held: It was possible for an employee to continue to work under protest as to the . .
Lists of cited by and citing cases may be incomplete.

Employment, Damages

Updated: 06 May 2022; Ref: scu.416162