So exactly how much has been handed in compensation to Sharon Shoesmith, Director of Children’s Services at Haringey when Baby P died? And why was it so much? The answer lies in the complex legal issues – but certainly Haringey’s refusal to sack Shoesmith with a lawful procedure ramped up the pay-out as well as legal costs.
BBC’s Newsnight was quick to withdraw it’s claim that the payment was £600,000, saying within half an hour or so of broadcasting it that that was a “total” figure and that what she would actually receive would be rather less (presumably after her legal costs). If Haringey had not insisted it would pay her nothing, it would have been less still – as little as £35,000.
The legal situation is complicated, not least because Shoesmith chose to pursue a judicial review against the then Secretary of State Ed Balls and Haringey Council for her summary “sacking by TV” rather than a tribunal case. Her dismissal was announced at a live press conference on 1 December 2008 after a damning Ofsted report into 17-month-old Peter Connelly’s death in 2007 and Balls’s direction that she should be replaced. Shoesmith found out about it as a result of that broadcast.
The Court of Appeal in 2011 accepted that Balls’ direction was unlawful and hence so was the dismissal by Haringey, even though the council was acting on the Secretary of State’s order.
The court’s finding, though, was not a finding of “unfair dismissal” as would have been available before an Employment Tribunal nor one of “wrongful dismissal” – dismissal contrary to contractual terms, actionable through the civil courts.
‘It is a settled principle of law that if a public authority purports to dismiss the holder of a public office in excess of its powers, or in breach of natural justice, or unlawfully, the dismissal is, as between the public authority and the office-holder, null, void and without legal effect’ – Lord Bingham
Instead the case was taken under administrative law and was a finding of illegality against public authorities, Balls’ Children, Schools and Families Department plus, consequentially, Haringey Council).
Lord Justice Kay, giving the lead judgment in the appeal case, noted that Shoesmith’s remedies in a conventional unfair dismissal tribunal case, capped at about £70,000, would have been much less than under the judicial review she was pursuing.
Crucially Kay noted: “[Shoesmith] claims entitlement to her contractual pay and other benefits until such time as her employment is lawfully terminated”. He cited Lord Bingham in McLaughlin v Governor of the Cayman Islands  1 WLR 2839:
“It is a settled principle of law that if a public authority purports to dismiss the holder of a public office in excess of its powers, or in breach of natural justice, or unlawfully (categories which overlap), the dismissal is, as between the public authority and the office-holder, null, void and without legal effect, at any rate once a court of competent jurisdiction so declares or orders. Thus the office-holder remains in office, entitled to the remuneration attaching to such office, so long as he remains ready, willing and able to render the service required of him, until his tenure of office is lawfully brought to an end by resignation or lawful dismissal.”
Kay further noted: “Ms Shoesmith’s case on this point is well-founded, the consequences would be far more valuable to her in both financial and reputational terms than any decision of the Employment Tribunal could ever be, given the low cap on compensation.”
Kay found that “the directions of the Secretary of State … have been vitiated by procedural unfairness”. They were therefore unlawful and hence it was unlawful for Haringey to have followed them up with a sacking “with immediate effect without any compensation package or payment in lieu of notice” (para 104).
Since Shoesmith was never fairly dismissed (in legal terms, whatever one’s moral view might be), her compensation kept ticking up from the point of the dismissal – and presumably continued to tick up while Haringey refused to pay her anything, preferring the risky business of resisting her in the law courts.
In other words, if the sum is indeed a hefty one, it is because of Haringey’s insistence (made clear in its early press conference) that it would pay Shoesmith nothing – not even a basic entitlement to notice pay. Had they simply terminated her contract, paid her notice and whatever was in the contract for loss of office, the sum might have been tens of thousands rather than hundreds of thousands – and without the big legal sums they seem to have had to cough up to reach the £600,000 figure.
Kay opined that three months’ pay plus pension contributions might have been reasonable, say £35,000 or so. Instead Haringey faced the prospect of a McLaughlin order – that she should be paid as if she had never been sacked. That would indeed be around half a million – one assumes a figure between those two was the one actually arrived at – but at huge expense to the public purse.
Case in full: R (Shoesmith)
See also Sharon Shoesmith and the Rule of Law