Appeal No. UKEAT/0416/09/JOJ
UKEAT/0417/09/JOJ

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 22 March 2010

Before
HIS HONOUR JUDGE McMULLEN QC
SIR ALISTAIR GRAHAM KBE
MS G MILLS CBE

MS C WARD	APPELLANT

MS G ASHKENAZI	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR R A CAPEK
(Representative)
Employment Law Consultants
Pear Trees Station Road
Sibsey
Boston
Lincs PE22 0SA	
For the Respondent	MR A SOLOMON
(of Counsel)
Instructed by:
Messrs Comptons Solicitors
90-92 Parkway
Regents Park
London NW1 7AN	

SUMMARY
UNFAIR DISMISSAL:  Compensation

The Employment Tribunal found the Respondent unfairly dismissed the Claimant for raising a question about her statutory rights.  She had been employed for 10 weeks and was entitled to one month’s notice.  It awarded compensation effectively of 7 weeks’ pay.  It found she would have been dismissed within that time in any event, and capped loss of earnings.  It correctly applied O’Donoghue and distinguished Scope applying discretion to facts found:  Dignite Funerals.  It erred in refusing as a matter of jurisdiction to award compensation for loss of accommodation, a benefit under the Employment Rights Act 1996 s. 123(2)(a), and to award an uplift.  The EAT awarded 50 per cent.

HIS HONOUR JUDGE McMULLEN QC
1.	This case is about compensation for unfair dismissal.  It is the judgment of the Court, to which all members, appointed by statute for their diverse specialist experience, have contributed.  We will refer to the parties as the Claimant and the Respondent.

Introduction

2.	It is an appeal by the Claimant in those proceedings against a judgment of an Employment Tribunal sitting at London South under the chairmanship of Employment Judge Taylor, in relation to remedy for unfair dismissal, registered with reasons on 20 July 2009.  The parties were represented by Mr Capek, a consultant, and Mr Solomon of Counsel.  The remedy hearing was the result of a finding by the same Employment Tribunal in the Claimant’s favour where the Respondent was represented by its solicitor, Mr Goldreich.  The reserved judgment there was sent to the parties on 20 January 2009.  The decision on remedy was also the subject of an extensive application for review on behalf of the Claimant but that was rejected by the Employment Judge in exercise of her powers under rule 35 (3).  She held that the prospect of a change of the judgment of the Tribunal did not justify a review and noted that the Tribunal had awarded compensation in the following way:

“2.	The Tribunal awarded compensation having regard to the facts of this case which included that the Claimant had been employed for a short time and had been released from her duties because her work performance had been considered unsatisfactory.”

3.	The Claimant claimed that she was automatically unfairly dismissed in respect of the exercise by her of a statutory right.  The Respondent denied that claim.  The Employment Tribunal upheld it and there is no appeal.  The Respondent had failed to produce written particulars and the Tribunal awarded the maximum amount of 4 weeks’ pay under s. 38 of the Employment Act 2002 giving compensation of £1,320.  The Tribunal’s judgment of unfair dismissal was visited with an award of compensation of £1,841.80.  The Tribunal refused to make an award uplifting the compensation pursuant to the provisions of s. 31 of the Employment Act 2002 broadly speaking for the failure by the Respondent to carry out any stage of the statutory procedures.  

4.	The Claimant appeals against certain parts of that judgment, and the refusal to review it.  In short, she contends that the Tribunal wrongly limited the forward scope of the award to one month and did not enlarge the award to take account of the benefits which she had sacrificed by reason of the dismissal, summarised as her accommodation and eating costs (she was engaged as a housekeeper). 

5.	Directions sending this shortened appeal to a full hearing were given by HHJ Birtles and Members.

The legislation

6.	The relevant provisions of the legislation are not in dispute and so far as is relevant to the appeal is s. 123 of the Employment Rights Act 1996 which provides as follows:

“123	Compensatory award
	(1)	Subject to the provisions of this section and sections 124[, 124A and 126], the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.”
	(2)	The loss referred to in subsection (1) shall be taken to include‑
(a)	any expenses reasonably incurred by the complainant in consequence of the dismissal”

The facts

7.	The Respondent is a woman of substantial means in substantial premises in West London.  She engaged the Claimant as a housekeeper on 8 January 2008.  At the same time or shortly thereafter Mr Stevenson, who was not an employee, was engaged to carry out certain responsibilities on behalf of the Respondent.  In his short career, for he stayed there only until the summer, he dismissed a number of employees and on 10 March 2008 gave notice to the Claimant with an effective date of termination of 31 March 2008.  The Tribunal found that the reason was that she had sought to exercise her right to particulars of her employment terms.  

8.	The dismissal was therefore unfair and the Tribunal was asked to make a number of decisions.  The first was in relation to the effective date of termination, which, as we have said, was 31 March 2008.  It also decided in the absence of an agreed contractual term as to notice that one month would be appropriate, the Claimant living in staff accommodation in the house, against a minimum statutory entitlement of one week.  There is no appeal against that finding of fact.

9.	The Tribunal decided in making this award of compensation that it would pay attention to the period of notice and said this:

“9.	Turning then to the compensatory award, we recognise that the minimum period of notice would have been one week or one week's pay in lieu of notice, pursuant to section 86A of the 1996 Act; however, in awarding a compensatory award the Tribunal must have regard to what it considers would be a just award having in mind what a reasonable period of notice would be. We considered that the Claimant by working in a residential position might reasonably expect to receive one month's notice in order to have sufficient time to arrange her affairs, which would include finding alternative accommodation.  We find that the Claimant did not fail to mitigate her loss during that initial one month period.  The Tribunal therefore awards the Claimant compensation of one month's pay for the period commencing 1 April 2008 which we understand from the parties to be the sum of £1,841.80.”

10.	The compensatory award plainly pays attention to the notice period but does not expressly deal with any other factor.  The Tribunal did however indicate that it had looked again at the findings in the liability judgment and they do coalesce in the remedy judgment.  It held it had “no jurisdiction” to make an award for the accommodation and meal costs.  It further decided that no uplift award should be made.  

11.	As a result of its decision to cap the compensation the Claimant’s schedule of loss is very substantially reduced. Broadly speaking, as has been suggested by the exchange of correspondence between the parties, the Claimant achieved 6 per cent of her claim.

The Claimant’s case

12.	It is contended by Mr Capek, in some 40 pages of written submissions, in opening and in reply which have been very cogently put before us, that the Tribunal made errors and, in short, the Tribunal wrongly capped the compensation at one month.  In order to give effect to s. 123 the Tribunal wrongly paid attention to the contractual notice period found to be one month and did not go beyond it.  It was not just and equitable to cap the compensation at that period.  Secondly, logically consistent with the award of loss of earnings, the Tribunal ought not to have held to be outside its jurisdiction an award for the items described as accommodation and so on, which is a benefit under s. 123 (2) (a).  

13.	The Tribunal failed to make an uplift.  The uplift is between 10 and 50 per cent but it may be zero in exceptional circumstances.  No circumstances were put forward by the Respondent and the Tribunal erred in law in failing to make any uplift.  That much is conceded by the Respondent: the Tribunal wrongly regarded itself as precluded from making an uplift.  What is in dispute is whether the figure should be 0, 50 or somewhere in between.

14.	It is also conceded that the Tribunal erred in regarding it as matter of jurisdiction that it could not award compensation for the loss of the benefits of the accommodation.

15.	In those circumstances the Claimant contends that she is entitled to compensation of forward losses of about a year before she obtained employment and of a further year during which she had reduced earnings.

The Respondent’s case

16.	On behalf of the Respondent, it is contended that the Tribunal did not lose sight of the statutory remit under s. 123.  It paid attention to one factor which was the notice period but there were very firm findings of fact which predicated that approach.  These findings were that Mr Stevenson had authority to dismiss, that the Claimant was concerned about his actions, that before the trigger event of the Claimant’s request for contractual particulars Mr Stevenson had told the Claimant that she no longer worked for the Respondent and that he had prior to that formed the view that the Claimant was disruptive.  The Tribunal formed the view that she would not survive very long, that she would have been dismissed, and in the additional words used by the Judge at the refusal to review, “issues relating to her performance would have caused her dismissal”.

17.	It is submitted that the dismissal would have occurred during the shortest economic period that the Respondent could have taken blamelessly to have dismissed the Claimant ‑ that is one month. Whether or not the Respondent had a good reason, a bad reason or a whim, so long as it was not a reason which was impermissible under the statutory provisions dismissal would have occurred, and there is no challenge to the finding of a dismissal within a short period of time.  Both parties made submissions about the length of time the Claimant would have survived, and whereas the Tribunal could have been less economic with its reasons the parties know precisely what it is that has caused the cap.

The legal principles

18.	The legal principles to be applied in a case such as this emerge from two judgments of the Court of Appeal: Scope v Thornett [2006] EWCA Civ 1600 and O’Donoghue v Redcar and Cleveland B.C. [2001] EWCA Civ 701.  In the latter, the rules relating to the forward assessment of loss were approved in the light of findings that the Claimant would not have survived beyond a period of time.  Potter LJ giving the judgment of the Court said this:

“44: .... An Industrial Tribunal must award such compensation as is “just and equitable”.  If the facts are such that an Industrial Tribunal, while finding that an employee/applicant has been dismissed unfairly (whether substantively or procedurally), concludes that, but for the dismissal, the applicant would have been bound soon thereafter to be dismissed (fairly) by reason of some course of conduct or characteristic attitude which the employer reasonably regards as unacceptable but which the employee cannot or will not moderate, then it is just and equitable that compensation for the unfair dismissal should be awarded on that basis.  ….
…
51.	It seems to us to follow that it cannot be said that to refuse to assess on a percentage risk is necessarily wrong in principle, especially in a case of this kind where the Industrial Tribunal was considering whether the appellant would or might be fairly	dismissed within or after a given period.  The eventual approach of the tribunal, as we read their reasons, was to consider the chance of the appellant being fairly dismissed by six months from the date of her unfair dismissal.  If (as it appears) they concluded that there was a 100 per cent chance of her being dismissed within six months, we can see nothing wrong in principle with the exercise which they performed

53.	… the Industrial Tribunal were satisfied that the chances of a possible fair dismissal taking place after an actual, unfair dismissal were 100 per cent (i.e. certain) by a particular date.  That seems to us a legitimate approach.  Where the appellant was in the estimation of the Industrial Tribunal on an inevitable course towards dismissal, it was legitimate to avoid the complicated problem of some sliding scale percentage estimate of her chances of dismissal as time progressed, by assessing a safe date by which the tribunal was certain (if it felt able to be certain) that dismissal would have taken place and making an award of full compensation in respect of the period prior thereto, (ignoring any question of 'interim' percentages).”

19.	It seems to us to follow that when there is a finding that dismissal would have occurred then that would cap the compensation.  Although Potter LJ uses the word “fairly” in parenthesis in the above citation, it must be recalled that in our case the Claimant had less than one year’s service and so absent any impermissible reason for dismissal, such as the exercise of a statutory right, the Respondent does not have to be tested on fairness for the purposes of s. 98 Employment Rights Act 1996.

20.	O’Donoghue was a case where there was a firm finding of a dismissal in any event.  In Scope v Thornett there was no such finding and the matter was regarded as one to be determined by the predictive and speculative powers given to a tribunal.  That case turned on the fact that there was material for the decision and that distinction was drawn expressly for Pill LJ said this:

“33.	O'Donoghue v Redcarand Cleveland Borough Council [2001] 1 IRLR 615 was also a case in which the employment tribunal's conclusion that the employment would not have continued longer than a date six months after the effective date of termination was upheld in this court.  Mr Blake fairly draws attention to factual differences between that case and the present case.”

21.	An Employment Tribunal is of course required to give reasons so that its judgment can be understood correctly (see Meek v City of Birmingham District Council [1987] IRLR 250 (CA)), but that must be tempered by the factual circumstances  which are known to the parties (see Derby Specialist Fabrication v Burton [2001] ICR 833).  The exercise in determining compensation is firstly one of fact and then one of discretion; see Dignity Funerals Ltd v Bruce [2005] IRLR 189B.  In the assessment of compensation, benefits in kind can be considered: see Paggetti v Cobb [2002] IRLR 861 and Scottish CWS v Lloyd [1973] IRLR 93 NIRC.

Discussion and conclusions

22.	We prefer the arguments for the most part of Mr Solomon.  The central issue is why the Tribunal capped the forward losses of the Claimant at one month.  As a matter of legal analysis the Claimant has done rather better than the award of one month’s notice, which was the contractual entitlement, for as is accepted from the chronology we set out above one month’s notice would have expired on 9 April 2008 and she was in fact paid wages in lieu or awarded compensation to take her to 30 April 2008.  There is no specific challenge, but as a matter of fact she ended up with three weeks more pay than she would otherwise have been entitled to in contract.  

23.	The finding does pay attention specifically to the period of notice of one month but the Tribunal is to be acquitted of making an error of law for it is a finding firmly based on its earlier findings in the liability judgment, which we have summarised above in the submissions of Mr Solomon.  

24.	This was a case where the Claimant could not survive, and it is not open to her today to speculate as to whether or not she would have had a chance at a disciplinary procedure had she accepted the written terms and procedures which the Respondent put before her.  Lest there be any doubt about that, however, Mr Solomon submitted that the letters to Ms Ashkenazi herself from the Claimant had been received by her.  Although objection is taken to the form of that information, it seems to us that the Respondent was aware of the circumstances of the Claimant’s work.  The Judge, on refusing the application for a review, summarised succinctly that there were performance issues relating to the Claimant and that is no doubt the reason why the Tribunal capped at one month the time during which she would be compensated.  In our judgment, although there could have been more detailed explanation, in the light of what we know of the evidential dispute placed before the Tribunal the parties cannot say they do not know why the award was as it was.  The Tribunal cannot be criticised for the award.  The Tribunal also made the award on the basis of what was just, and we consider that missing out the words “and equitable” does not vitiate its judgment.  It plainly had in mind this very old statutory test dating back to the source of the jurisdiction in 1971.  

25.	Consistent with that, it ought however to have awarded compensation for loss of benefits.  It is conceded that the Tribunal erred when it said it was outside its jurisdiction to make such an award.  The outcome of that concession is either that the judgment was otherwise unarguably right or the matter should be decided again.  We cannot say that it was the former.  Section 123 (2)(a) plainly envisages benefits in kind, the authorities which Mr Capek has put before us make that clear.  There may be a dispute as to whether the Claimant actually incurred additional costs in accommodation and food while she was, as she put it, “sofa surfing with relatives” but that is as to the kind of compensation rather than as to the principle.  Doing the best we can, the figure she put forward, based on rented comparables in the private sector, will serve the purpose which we have in mind in this case.  By parity of reasoning the forward period for loss of those benefits will be the same as for the loss of earnings.  Mr Solomon realistically accepted that he would not, if this were to be our view, challenge that.  It would however be different if the matter were remitted, which it is not.

26.	As to the uplift, it is also conceded that, the Employment Tribunal made an error.  The pragmatic position, adopted on instructions by Mr Solomon, is that if it were to be argued that the judgment is as we have said he would not resist an award of an uplift.  There are no exceptional circumstances which exist in this case, and so, as we understand it, if we make the awards as sought to carry out the principles we have set out there would be a 50 per cent uplift to that.  

27.	The appeal is allowed in part, otherwise the appeal is dismissed.  Permission to appeal refused [reasons not transcribed].