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In Hall v London Lions Basketball, Mr Hall was a professional basketball player who resigned when his employer failed to pay him the wages that it owed him. He claimed a constructive wrongful dismissal and that claim was upheld. He had been employed for a fixed term which had been due to expire some three months after his resignation and he argued that he should be awarded the pay he would have received in that period. The Tribunal noted, however, that there was a term in his contract which allowed him to terminate his employment with 14 days’ notice if there was a serious breach of contract on the part of the employer. The Tribunal therefore limited his damages to 14 days’ pay.

The EAT held that this was the wrong approach. In a breach of contract claim damages are calculated to put the employee in the same position that he or she would have been in if the contract had been properly performed. There is a longstanding rule that the calculation assumes that the employer would have performed the contract in the least onerous way possible. So in a normal wrongful dismissal case where the employee has been dismissed without notice, damages are based on what the employee would have received if the employer had given the minimum notice required under the contract. In this case however there was a fixed term contract with no provision allowing the employer to bring the contract to an early end by giving notice. That meant that the starting point was to consider what the employee would have received if the contract had been allowed to run its full term. The employee’s right to terminate the contract with 14 days’ notice was not a provision that the employer could insist on him using. Nor did it alter the fact that the employee was entitled to terminate the contract without notice in response to the employer’s fundamental breach. The Tribunal had therefore been wrong to limit his damages to 14 days. The correct measure was the amount that he would have earned over the remainder of the contract, with a reduction made for any earnings he received from other sources in that time.

Find out how we can help.  Our partner, Jon Dunkley, heads the Wollens specialist Employment Department.  Contact him today for an informal chat, without obligation on 01271 342268 or via email at [email protected].