Boris Ignachkov The case of Addis v Gramophone Co Ltd [1909] AC 488 is a seminal decision in employment law, specifically concerning the scope of damages for wrongful dismissal. In this summary, you will learn all about the facts of the case, the legal principles that came out of the decision, and answers to key questions about this case.
Legal Principles and Key Points in Addis v Gramophone
- In the case of Addis v Gramophone Co Ltd [1909] A.C. 488, it was held that when a servant claims damages from his employer for wrongful dismissal, they cannot claim further damages for the manner of the dismissal, their injured feelings, or potential losses stemming from the fact that the dismissal makes it more difficult for them to obtain fresh employment.
Facts of the Case Addis v Gramophone
- C was employed as a manager in Calcutta by D. His contract stated he could be dismissed by 6 months’ notice.
- In October 1905, D gave C his 6 months’ notice, but appointed his successor and took steps to prevent C from acting as manager for this period.
- In December 1905, C returned to England. In 1906, C brought an action for wrongful dismissal and breach of contract for obstructing C’s right to act as manager for the 6-month period.
Issues in Addis v Gramophone
- Having proven wrongful dismissal, could C claim further damages for mental distress or loss of reputation stemming from the wrongful dismissal?
Held by the House of Lords
- Finding for D, that C was only entitled to damages for loss of wages and commission equal to 6 months of earnings. C could not claim damages for injured feelings or loss of reputation. In breach of contract cases, there may be fraud, defamation or violence, but these can only be pursued in a separate action for tort.
Lord Atkinson
- I have always understood that damages for breach of contract are in the nature of compensation, not punishment. The general rule in these cases was stated by Cockburn J in Engel v Fitch.
- As a general rule, a vendor who for whatever reason fails to perform his contract is bound to place the purchaser in the position he would have been in if the contract had been performed. The purchaser will be entitled to the difference between the contract price and the market price.
- In Sikes v Wild, Lord Blackburn stated that the existence of misconduct may render the contract voidable on grounds of fraud, or create an action for deceit, but it could not alter the effect of the contract itself.
- There are 3 well-known exceptions to the general rule. The first, actions against a banker refusing to pay a customer’s cheque when they have funds to do so. Secondly, actions for breach of promise of marriage. Lastly, actions where the vendor of real estate, without any fault, fails to make title.
- “In many other cases of breach of contract there may be circumstances of malice, fraud, defamation, or violence, which would sustain an action of tort as an alternative remedy to an action for breach of contract. If one should select the former mode of redress, he may, no doubt, recover exemplary damages, or what is sometimes styled vindictive damages; but if he should choose to seek redress in the form of an action for breach of contract, he lets in all the consequences of that form of action. One of these consequences is, I think, this: that he is to be paid adequate compensation in money for the loss of that which he would have received had his contract been kept, and no more” [496].
- Exemplary damages ought not to be and are not according to any true principle of law, recoverable in such an action as the present, and the sums awarded to C should therefore be decreased by the amount at which they have been estimated.
Significance of the Case in Legal Development
Addis v Gramophone Co Ltd has profoundly shaped the doctrine of damages in employment law, influencing several key cases:
- Jarvis v Swans Tours Ltd (1973): Explored damages for disappointment and distress in a contract for a holiday, which contrasted with the strict limitations seen in Addis for employment contracts.
- Johnson v Unisys Ltd (2001): Revisited the boundaries of damages for wrongful dismissal, particularly the exclusion of damages for the manner of dismissal.
- Edwards v Chesterfield Royal Hospital NHS Foundation Trust (2011): Further examined the scope of damages, particularly whether damages can include losses from a dismissal handled in a procedurally unfair way.
Exam Questions and Answers
Below, you will find answers to questions that are most commonly asked based on this case.
How might the principles from Addis v Gramophone apply to modern remote or gig economy workers?
The principles from Addis v Gramophone may apply differently to remote or gig economy workers who often have contracts that include varied terms regarding termination and damages. For these workers, the case raises questions about the extent to which non-traditional employment contracts can seek damages for dismissal, especially without a fixed workplace or standard working hours.
In what ways could changes in employment law legislation impact the principles established in Addis v Gramophone?
Recent developments in UK employment law, such as the introduction of the Good Work Plan, aim to enhance protections for workers, potentially influencing the scope of damages for wrongful dismissal. Although Addis v Gramophone set limitations, legislative changes might allow claims for distress under specific conditions, reflecting modern work relationships and the need for emotional well-being in employment practices.
What are the implications of this case for cases where mental health is significantly affected by the manner of dismissal?
In the UK, the recognition of mental health impacts due to wrongful dismissal is becoming more prominent. For example, the Equality Act 2010 protects employees from discrimination, which can include severe impacts on mental health due to dismissal practices. Cases such as Yapp v Foreign and Commonwealth Office [2014] suggest courts may award damages if the manner of dismissal exacerbates health conditions, slowly expanding beyond the traditional limits set by Addis v Gramophone.
