The Times Educational Supplement (p3) reports that Jennifer MacPherson was employed at Darenfelin primary school near Abergavenny, on a one-year contract in September 1998. The school was facing an autumn inspection.
Mrs MacPherson was poached by the headteacher Richard Southwell while she was working at All Saints primary school, Ebbw Vale, which had been inspected by a team headed by the same lead inspector assigned to Darenfelin.
But in August 1999, Mrs MacPherson was dismissed and replaced with a newly-qualified teacher, saving the school about£7,000.
'We do no accept that the applicant would have resigned her other appointment if Mr Southwell had been as explicit as he contends in telling the teacher that the post was strictly for one year and no more.'
The school and Monmouthshire CC claimed that cash constraints and the avoidance of a budget deficit necessitated a reorganisation which led to the dismissal of Mrs MacPherson.
But the tribunal ruled that the headteacher was fully aware of the budgetary issues arising from the appointment. It also said that the month's delay between the decision not to renew the contract and informing Mrs MacPherson was unfair.
John Sheen, Monmouthshire's assistant education director, said: 'We are looking carefully at the wording of contracts, perhaps ensuring a dismissal date is made implicit at the appointment stage.'