Law Lords have quashed a ruling which increased compensation for people forced out of their jobs by bullying.
Unison is disappointed by the Law Lords' ruling
In February a Court of Appeal ruling overturned a legal interpretation that limited compensation to financial loss and ignored any mental effects.
Christopher Dunnachie, 36, had appealed against a decision by the Employment Appeal Tribunal which stripped him of a £10,000 award for psychiatric damage.
But five Law Lords have overturned the decision to reinstate the compensation.
Mr Dunnachie, who is married with three children, had worked for Hull City Council for 17 years as an environmental health officer until he was forced to quit in 2001 following a sustained period of bullying by his line manager.
Unison backed a claim by Mr Dunnachie, who took Hull City Council
to an industrial tribunal.
The tribunal found he was a victim of bullying which had caused him ill health.
As a result he was awarded £123,328, which included £10,000 for injury to his feelings.
Hull City Council took the case to an employment appeal tribunal, which removed the £10,000 award.
In February Mr Dunnachie went to the Court of Appeal, which reinstated the compensation
for psychiatric injury or hurt feelings brought on by bullying.
But this has now been lost because of the Law Lords ruling.
Two out of three of the appeal judges agreed the 30-year-old Industrial Relations Act could be interpreted to mean compensation could be awarded for any type of loss.
They agreed the case should be considered by the Law Lords for a definitive decision to be reached.
The Law Lords have now ruled that Parliament never intended the
Employment Rights Act to include a provision for unfair dismissal that would
compensate for psychiatric damage or injury to feelings.
Unison, the UK's biggest union, had hailed the appeal judges' decision as a breakthrough that would entitle thousands of employees
to more compensation and force bosses to tackle bullying in the workplace.
Speaking after the Law Lords' ruling, a Unison spokeswoman said: "We are bitterly disappointed as we felt the original ruling gave justice to unfair dismissal cases involving bullying.
She said in Mr Dunnachie's case it would not mean a monetary loss because he
was awarded the maximum, but it meant many others would miss the chance of increased compensation.
She added: "In most claims for unfair dismissal the average award is only £4-5,000 and
we are now campaigning for greatly increased awards in line with those won by
people in discrimination cases."
Paul Spencer, employment law partner at law firm Laytons, said the Lords were merely correcting a mistake made in 2001, which allowed 'injury to feelings' to be included in unfair dismissal compensation claims.
He said that led to a psychiatric damage claim being included with loss of earnings in most unfair dismissal cases, but that Thursday's ruling "should take the wheels off that bandwagon".
"It will also discourage a claim where there's no loss of earnings, even if the employer has acted totally unreasonably in the way they've treated people."
At the original Employment Tribunal hearing, Mr Dunnachie was awarded the maximum compensation available at the time of £51,700 plus a basic award of £3,000 and because of this, he did not benefit personally from the appeal judges' decision in February.