Johnson v Unisys Limited [2001] UKHL 13 is a leading UK labour law case on the measure of damages for unfair dismissal and the nature of the contract of employment.

The House of Lords held that while Mr Johnson had been dismissed unfairly there could be no compensation for the manner of Mr Johnson's dismissal if that would exceed the statutory scheme laid out in the Employment Rights Act 1996 and the accompanying limits on compensation that could be sought through the system of employment tribunals.

It would also defeat the intention of Parliament that claims of this nature should be decided by specialist tribunals, not the ordinary courts of law.Lord Steyn, dissenting, argued the statutory remedies in salary for wrongful dismissal inadequate, and the statutory term of notice did not prevent developing an implied term of good faith and fair dealing.

Freedom of contract meant that the stronger party, usually the employer, was free to impose his terms upon the weaker.

Subject to observance of fundamental human rights, the point at which this balance should be struck is a matter for democratic decision.

My Lords, in the face of this express provision that Unisys was entitled to terminate Mr Johnson's employment on four weeks notice without any reason, I think it is very difficult to imply a term that the company should not do so except for some good cause and after giving him a reasonable opportunity to demonstrate that no such cause existed.

On the other hand, I do not say that there is nothing which, consistently with such an express term, judicial creativity could do to provide a remedy in a case like this.

In Wallace v United Grain Growers Ltd (1997) 152 DLR (4th) 1, 44-48, McLachlin J (in a minority judgment) said that the courts could imply an obligation to exercise the power of dismissal in good faith.

For breach of this implied obligation, McLachlin J would have awarded the employee, who had been dismissed in brutal circumstances, damages for mental distress and loss of reputation and prestige.

In Mahmud v Bank of Credit and Commerce International SA [1998] AC 20, 51 Lord Steyn said that the true ratio of Addis's case was the damages were recoverable only for loss caused by a breach of contract, not for loss caused by the manner of its breach.

As McLachlin J said in the passage I have quoted, the only loss caused by a wrongful dismissal flows from a failure to give proper notice or make payment in lieu.

On the other hand, if such damage is loss flowing from a breach of another implied term of the contract, Addis's case does not stand in the way.

It follows, my Lords, that if there was no relevant legislation in this area, I would regard the question of whether judges should develop the law by implying a suitable term into the contract of employment as finely balanced.

Part X of the Employment Rights Act 1996 therefore gives a remedy for exactly the conduct of which Mr Johnson complains.

The question is whether the courts should develop the common law to give a parallel remedy which is not subject to any such limit.

Judge Ansell, to whose unreserved judgment I would pay respectful tribute, went in my opinion to the heart of the matter when he said: "there is not one hint in the authorities that the...tens of thousands of people that appear before the tribunals can have, as it were, a possible second bite in common law and I ask myself, if this is the situation, why on earth do we have this special statutory framework?