Tuesday 29 June 2010

Termination Payments

[Thanks to Alfred Weiss of Zenith Chambers for providing this case summary]

The Court of Appeal has handed down its decision in Gibb v Maidstone & Tunbridge Wells NHS Trust , which is authority for the proposition that when a public body relies on the irrationality of its own financial and management decision making as a defence to a claim by an employee, the court will generally only interfere with the decision where the figures are plainly inexplicable.

The Appellant was the Chief Executive of an NHS Trust that suffered the outbreak of a super-bug. The Trust decided, per Lord Justice Sedley, "that the sacrifice most likely to propitiate the deities of Whitehall and the media was their chief executive officer".

The High Court had erred in concluding that the decision to pay the Appellant £250,000 in a compromise agreement was ultra vires. The judge had reached his own conclusions as to what financial prudence might require. He had also wrongly concluded that the Trust's costs savings in entering into the compromise agreement rather than face a claim for unfair dismissal were likely to be illusory. The fact the Trust had, in deciding on the figure of £250,000, taken into account the Appellant's many earlier years of good service and the time it might take her to find other employment was not irrational.

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