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Reward for Failure

05 July 2010 #Employment

Public sector organisations are more susceptible to public scrutiny and need to account for significant decisions made or catastrophes that arise.    A high profile case surrounding the outbreak of a superbug in hospitals was recently heard in the Court of Appeal.

In the case of Gibb -v- Maidstone and Tunbridge Wells NHS Trust, an investigation was carried out by the Healthcare Commission in relation to the outbreak of the superbug and the measures taken by the Trust to control it.   The report revealed that there were flaws with the leadership of the Trust and a review was needed to ensure that its responsibilities met an acceptable standard.  Although no subsequent adverse findings were made against the integrity of the Trust`s Chief Executive, the Trust nevertheless decided to terminate her employment under a compromise agreement. 

The Trust later sought to withhold the compensation payment (approx. £175K) arguing that the decision made was irrational and the Trust was acting outside the boundaries of its authority in agreeing the compensation payment.  The High Court agreed that the payment was ‘irrationally generous` on the basis that notice pay plus the maximum award for unfair dismissal would only amount to approximately £140K.  The Trust had also improperly taken into account the Chief Executive`s years of service and the likely difficulties that she would face in finding alternative employment. 

However, on appeal the decision was overturned.  The High Court had wrongly concluded that the costs savings in entering into the compromise agreement rather than face a claim for unfair dismissal were likely to be ‘illusory`.  Neither was it irrelevant to take into account the Chief Executive`s long service and likely problems in securing future employment.

The Court of Appeal held, "he must not show undue favours, but the constraint of rationality does not close the door on some degree of generosity for the sake of good relations and mutual respect between employer and employee..."

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
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