Since the introduction in the early 1970s of the right not to be unfairly dismissed, courts and tribunals have strictly applied the principle that compensation for unfair dismissal is limited to financial loss - essentially lost wages and employment benefits - and that no matter how devastating it can be to be dismissed, damages for hurt feelings cannot be recovered.

A couple of years ago, an almost throwaway remark made by a judge in the House of Lords caused concern among employers and their representatives.

It appeared to suggest that compensation for hurt feelings might, after all, be properly awarded by employment tribunals.

Employees then began including such claims in the course of unfair dismissal proceedings.

In February, the Court of Appeal, in the case of Dunnachie v Hull City Council, agreed that they could legitimately do so.

Mr Dunnachie had worked as an environmental health officer at Hull City Council for 17 years.

In 2001, he resigned and claimed constructive unfair dismissal, arguing at the tribunal that he had been bullied by his line manager for a long time.

The tribunal upheld his claim and awarded him a six-figure sum, which included £10,000 for injury to his feelings.

The Court of Appeal agreed this was correct.

The council appealed this ruling to the Lords, which disagreed with the Court of Appeal and made it clear the law relating to unfair dismissal cannot allow compensation for injury to feelings.

The Lords' view was that if Parliament had intended such compensation to be payable, then it would have made this clear when drafting the laws.

Stephen Elliott is a solicitor in the employment team of North-East law firm Ward Hadaway. He can be contacted on 0191-204 4000 or by email at stephen.elliott@wardhadaway.com

Published: 03/08/2004