Rose Gibb v Maidstone & Tunbridge Wells NHS Trust

Wriggling out of a contractual commitment on the basis of your own wrongdoing is quite a stunt: it is exactly what an employer attempted in Rose Gibb v Maidstone & Tunbridge Wells NHS Trust [2010] EWCA Civ 678.

An NHS Trust was responsible for a number of hospitals where clostridium difficile had run riot and caused many deaths. A critical report was anticipated from the Healthcare Commission (HC) and somebody had to go.

The Board of the Trust, under pressure, decided it would be the Chief Executive even though their own solicitor’s report said that the HC report disclosed no reason to dismiss. The Board did a deal with the Chief Executive to pay her £250,000 for a compromise agreement. When ministers heard of the deal the Trust was instructed not to pay and not to negotiate, no doubt because of the fear of bad publicity. When the Trust was sued it argued that the settlement was beyond its powers to agree because it was “irrationally generous”. The argument was that they did not have the power to act in such an unreasonable way and in consequence the agreement was void. At the first hearing a High Court judge agreed and held that the most that should have been offered was a total of the contractual notice pay and the maximum award for unfair dismissal. He decided that it had been irrational for the Board to take into account the value of a confidential settlement, recognition of past good service and the time it would take her to find another job. He also criticised the failure to observe Treasury guidance about paying more than sums contractually due only on an exceptional basis.

The Court of Appeal had none of this and in a remarkably robust judgement it held that the full amount had to be paid. It was not wrong for the criticised factors to have been taken into account “…the constraint of rationality will not close the door on some degree of generosity…” Also they were very firmly of the view that it needed to be recognised that guidance from the Treasury was not law and should not have been treated as if it was. Government was firmly put in its place.

The closing remarks of one judge said it all. A senior officer who had done nothing wrong had been a “ sacrifice on the altar of public relations”.

First published in The Grapevine Magazine August 2010

Further Information
If you would like further information or to comment in general regaring this case, please contact:

Sejal Raja
sejal.raja@rlb-law.com


Disclaimer

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