THE INDUSTRIAL TRIBUNALS
CASE REF: 6454/09
CLAIMANT: Henry Dodds
RESPONDENT: Nortel Networks UK Ltd (in administration)
DECISION
The claimant’s unfair dismissal claim is well-founded. It is ordered that the respondent shall pay to the claimant the sum of £10,419 in respect of that dismissal.
Constitution of Tribunal:
Employment Judge (sitting alone): Employment Judge Buggy
Appearances:
The claimant was represented by Mr Andrew Stephens.
The respondent was not represented.
REASONS
1. For the general context to this case, see paragraphs 1-15 of the decision of an industrial tribunal in Mathews and Others v Nortel Networks UK Ltd (in administration) and Others [2014] NIIT 06598 009IT. What follows is by way of summary of that context.
2.
The respondent, Nortel Networks
UK Ltd (which is referred to below simply as “Nortel”) entered into
administration by order of the English High Court on
14 January 2009. That administration is still continuing.
3. Nortel is part of the wider Nortel Group (referred to below simply as “the Group”). That group is headed by the Nortel Networks Corporation (the ultimate holding company in the Group). On 14 January 2009, the Corporation (together with some of its Canadian subsidiaries) sought protection under Canadian bankruptcy law in order to facilitate a reorganisation of the Group for the benefit of its creditors. On the same day, Nortel Networks Inc (a private company, incorporated in the United States, which was the primary US operating company of the Group) and associated companies filed voluntary petitions in the Delaware Bankruptcy Court, seeking the protection of Chapter 11 of the United States Bankruptcy Code.
4. In January 2009, the Group was a global supplier of networking solutions, its business being based upon: (1) the development, licensing and maintenance of intellectual property; (2) the marketing of telecommunications, computer networks and software products; and (3) services based on that intellectual property.
5. In January 2009, the Group operated on a highly integrated basis, across multiple jurisdictions; that was the reason why there were co-ordinated insolvency filings. The order of the English Court extended not only to Nortel, but also to 18 associated companies operating in separate European jurisdictions (all of whom had their Centre of Main Interest within the jurisdiction of the courts of England and Wales).
6. According to the Nortel administrators, the position was as follows. At the outset, the object of the administration was to rescue the business of Nortel as a going concern. This required participation in a series of co-ordinated asset sales involving a reorganisation of various individual global business lines of the Group. This of itself involved the maintenance of the various businesses pending sale and the provision of transitional services following any sale.
7. On 30 March 2009, the joint administrators of Nortel gave notice terminating the employment of 89 people employed at Nortel’s premises in Monkstown, Newtownabbey, ostensibly by reason of redundancy. In June of that year, another substantial group (amounting to approximately 20 staff), also employed at Monkstown, were also made “redundant”. In March and June of 2009, many of the Nortel employees based in England and Wales were also made redundant.
8. All of the employees who were made redundant by Nortel in Northern Ireland in 2009 have benefited from protective awards which were made by an industrial tribunal in January 2011. Many of those employees applied to the Department for Employment and Learning (“the Department”) for payments, in the Department’s capacity as the statutory guarantor in respect of certain employment debts. Pursuant to those applications, most of those employees have received payments from the Department in respect of holiday pay, notice pay and redundancy pay, and also in respect of a protective award.
9. Unfair dismissal compensation is, however, outside the scope of the statutory guarantee.
The breach of contract claim
10. In these proceedings, this claimant also has a pending claim for breach of contract. That is a claim relating to an alleged contractual entitlement to redundancy pay, over and above the statutory redundancy pay entitlement. (That statutory entitlement has of course already been the subject of a successful application to the Department).
11. The claimant is not abandoning that contractual redundancy claim. However, the claimant and the administrators are agreed that there is no need for an industrial tribunal adjudication in respect of the contractual redundancy pay claim; instead, they expect that the matter can in due course be resolved, between the claimant and the administrators, during the course of the insolvency process.
12. This Decision is concerned only with this claimant’s claim of unfair dismissal, which was brought pursuant to Article 145 of the Employment Rights (Northern Ireland) Order 1996 (“ERO”).
The history of this unfair dismissal claim
13. Originally, the administrators were refusing to grant permission in respect of the pursuit of any employees’ claims. Unite the Union took proceedings in the English High Court challenging that refusal. (The judgment in that litigation is Unite the Union v Nortel Networks UK Ltd (in administration) [2010] IRLR 1042). While that litigation was still pending, the administrators granted consent for the pursuit of Article 217 complaints, and for the pursuit of equivalent complaints in Great Britain. (Article 217 complaints are complaints brought under Article 217 of ERO, in respect of an alleged breach of the requirements of Article 216 and/or of Article 216A of the 1996 Order).
14. In January 2012, the administrators announced that permission was now being granted to the Northern Ireland employees (and also to the GB employees) to pursue any pending employment tribunals complaints that they wished to pursue.
15. This hearing, in respect of this claimant’s unfair dismissal claim, was held long after that “general” grant of permission. Why the delay? For two main reasons.
16. First, all the Northern Ireland claimants initially agreed that no useful purpose would be served by holding unfair dismissal claims hearings until it became clear whether there would be a dividend to unsecured creditors and, if so, the extent of that dividend. (Unfair dismissal awards are unsecured claims in the context of an administration). The appropriateness of that first reason for delay has diminished over the years, mainly because of the following factors:
(1) According to the administrators, even after all the time which has elapsed since March 2009, they are still unable to give any useful indication as to the amount of any likely dividend payable to unsecured creditors, and are still unable to indicate a likely timescale within which any useful guidance as to the likely amount of any dividend might become available.
(2) All of the claimants who are currently represented by Mr Stephens (including this claimant) now want an industrial tribunal to arrive at conclusions in relation to their respective unfair dismissal claims.
17. Secondly, all parties (including all the claimants now represented by Mr Stephens) were agreed that the unfair dismissal claims should not be the subject of hearings until there has been a final resolution of questions as to whether or not various TUPE transferees should be joined as respondents to the unfair dismissal claims of various relevant claimants. Those issues were resolved in the late Spring of 2014.
This claim
18. This claimant was one of the Northern Ireland employees of Nortel who were dismissed, ostensibly on the ground of redundancy, in March 2009.
Liability
19. By email dated 14 July 2014, Ms Amanda Rowe, on behalf of the administrators, confirmed that they do not contest claims made in respect of unfair dismissal, against the respondent, by any Northern Ireland claimants.
20. Because the respondent is not contesting the unfair dismissal claim, I have jurisdiction to hear that claim as an employment judge sitting alone.
21. It is clear that the respondent dismissed this claimant without carrying out any individual consultation, in circumstances in which no relevant collective consultation had taken place. Accordingly, on that ground alone, the dismissal is unfair.
Compensation issues
22. The claimant received a payment in respect of redundancy from the Department. Accordingly, as Mr Stephens realistically recognised, this claimant is not entitled to the basic award element of unfair dismissal compensation. (See Article 156(4) of ERO).
23. Therefore, in this case, I must focus on calculating the amount of any compensatory award due to the claimant in respect of his unfair dismissal.
24. In the circumstances of this case, any compensatory award has to be assessed pursuant to Article 157 of ERO.
25. Article 157(1) provides that, subject to certain provisions which are not relevant in the present context, 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 [claimant] in consequence of the dismissal in so far as that loss is attributable to action taken by the employer”.
26. In assessing the amount of any unfair dismissal compensation which is due to this claimant, the key issues can be summarised as follows:
(1) How should past loss be quantified?
(2) In assessing the extent of past loss, what are the practical implications, if any, of rules relating to mitigation and causation?
(3) Should the claimant’s compensation be reduced pursuant to the Polkey principle?
(4) Should the amount of compensation be increased pursuant to Article 17 of the Employment (Northern Ireland) Order 2003 (“the 2003 Order”)?
Those issues are all addressed below.
The course of these unfair dismissal proceedings
27. For costs reasons, the administrators have decided not to participate in these proceedings.
28. The evidence in this case mainly consisted of the oral testimony of the claimant. During the course of that testimony, he referred to a written schedule of loss (“the Schedule”), which sets out the compensation claimed by him. The amounts set out in the Schedule were subject to some amplification and/or modification during the course of the testimony. The Schedule, as so modified, has provided a useful basis for assessing compensation in this case.
29. In representing this claimant, Mr Stephens has had the benefit of advice and guidance from Mr Frances Bondoumbou. I have also received written submissions (“Submissions”), which Mr Bondoumbou drafted. I have taken those Submissions into account in deciding this case.
30. In 2012, various unfair dismissal claims, brought by ex-employees of Nortel who were made redundant in Great Britain in 2009, were heard by an employment judge sitting at Reading. Those claims were the subject of a written judgment (“the Reading judgment”) by Employment Judge Gumbiti-Zimuto; that judgment was issued on 26 April 2012.
31. During the course of this hearing, my attention was drawn to the Reading judgment.
In arriving at my conclusions in this case, I have had regard to the statements of applicable legal principles in the Reading judgment.
Past loss
32. Pursuant to Article 157(1), the claimant is clearly entitled to recover in respect of any loss sustained by him up to the date of the hearing, provided that any such loss has been sustained in consequence of the dismissal, and is attributable to the dismissal.
33. Article 157(4) provides that, in ascertaining the loss referred to in paragraph (1) of that Article, the tribunal is to apply the same rule:
“... concerning the duty of a person to mitigate his loss as applies to damages recoverable under the common law of Northern Ireland”.
It is clear law that, in relation to any failure to mitigate, the onus of proof rests upon the respondent.
34. However, that is not the end of the matter. Even if a failure to mitigate has not been proven, I still have to be satisfied, on the balance of probabilities, that the loss complained of is loss which was sustained in consequence of the dismissal, and that it is a loss “attributable to” action taken by the employer. (See Article 157(1), already referred to above).
35. In the English Court of Appeal, in Dench v Flynn and Partners [1998] IRLR 653, Sir Christopher Staughton made the following relevant observations:
“What has to be assessed in terms of [the GB equivalent of Article 157(1) of ERO] is 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 ...
That is the ordinary common sense test of the common law. Was the loss in question caused by the unfair dismissal or by some other cause? The tribunal must ask itself and answer that question and then ask what amount it is just and equitable for the employee to recover”.
36. In Whelan v Richardson [1998] IRLR 114, the point was made that, in the context of a claim for an unfair dismissal compensatory award, the assessment of loss has to be judged on the basis of the facts as they appear at the date of the assessment hearing (the date on which the tribunal or employment judge carries out the assessment in respect of the loss which is claimed).
37. In most unfair dismissal cases, the remedies hearing takes place within about six months of the date of the dismissal. So this is a very unusual case, because the amount of the compensatory award in this case is being assessed more than six years after the date of the dismissal. However, in my view, in assessing loss in this case, I am carrying out precisely the same task as I would have had to carry out if the compensatory award in this case was being assessed in September 2009.
38. If I had been assessing compensation in this case in 2009, I would have had to arrive at a view as to what I thought was likely to happen, in relation to the claimant’s income, during the period beginning in October 2009. Because of the lengthy delay in assessing the claimant’s compensatory award claim, I now have the advantage of knowing precisely what did happen from October 2009 onwards.
39. Accordingly, I know much more now than I would have known if I had been assessing the amount of compensation in this case in September 2009; and I am obliged to take account of that knowledge. (See paragraph 36 above).
40. In Whelan v Richardson, Judge Peter Clark set out the following principles:
“...
(2) Where the applicant has been unemployed between dismissal and the assessment date then, subject to his duty to mitigate and the operation of the recoupment rules, he will recover his net loss of earnings based on the pre-dismissal rate. Further, the industrial tribunal will consider how long the loss is likely to continue so as to assess future loss.
(3) The same principle applies where the applicant has secured permanent alternative employment at a lower level of earnings than he received before his unfair dismissal. He will be compensated on the basis of full loss until the date on which he obtained the new employment and thereafter for partial loss, being the difference between the pre-dismissal earnings and those in the new employment. All figures will be based on net earnings.
...”
41. The claimant has already
received a sum in respect of loss sustained as a result of the breach of the
respondent’s obligation to provide due notice in respect of his dismissal. (The
Department has already provided the claimant with a sum in respect of that
loss). The claimant was entitled to 12 weeks notice. Accordingly, in this unfair
dismissal case, as Mr Stephens realistically recognises, the period in respect
of which loss can be recovered began only on 23 June 2009, when
12 weeks had elapsed since the date of the dismissal. Accordingly, the latter
date, 23 June 2009, was the beginning of the period in respect of which
compensation is claimed in these proceedings. The claimant makes no claim in
respect of loss (if any) sustained at any time after 18 July 2010.
42. Accordingly, in the context of this claim for unfair dismissal compensation, the period in respect of which compensation is sought is the period beginning on 23 June 2009 and ending on 18 July 2010. (In this Decision, that period is referred to as “the applicable period”).
43. This claimant was unfit for work from 23 June 2009 until 17 July 2009. If he had still been employed by the respondent during that period of unfitness, he would have received sick pay from the respondent. In these proceedings, he makes a claim in respect of that sick pay. I consider that claim to be well-founded, subject to deduction of sums received by the claimant by way of contribution-based Employment Support Allowance, in respect of the period 23 June - 17 July 2009. If the claimant had continued to be employed by the respondent during the unfitness period, he would have received “sick” pay amounting to £1,198. During that unfitness period, he received contribution-based ESA of £220. The difference between £1,198 and £220 is £978. I consider that that sum of £978 is recoverable by this claimant as part of his claim for unfair dismissal compensation.
44. Throughout the period from 18 July 2009 until 18 July 2010, the claimant was fit for work. He told me that, throughout that period he was seeking employment, but was unable to obtain employment.
45. In respect of the entire period from 18 July 2009 until 18 July 2010, I am not satisfied that the claimant failed to mitigate his loss. (The employer has failed to discharge the onus of proof, which rests upon an employer, in that connection). Nevertheless, I have decided not to make an award to the claimant in respect only of the loss claimed in relation to the entire period from 18 July 2009 to 18 July 2010. Instead, I have made an award to the claimant in respect only of the loss claimed for in relation to the period from 18 July 2009 until 17 January 2010. I am satisfied that the loss sustained by the claimant during the period from 18 July 2009 until 17 January 2010 was caused by the unfair dismissal, as distinct from being caused by something else. I am not satisfied, on that causation issue, in relation to the loss claimed for in respect of the period from 18 January 2010 until 18 July 2010. In arriving at the latter conclusion, I have taken account of the limited nature of the evidence available to me in respect of the claimant’s job search efforts during the relevant period. I have also taken account of the fact that although, by the beginning of the second period (by 18 January 2010), the claimant had received no job offers whatsoever, that was still the position throughout the second relevant period (from 18 January 2010 until 17 July 2010). It seems to me that, when a person is out of work for a very lengthy period, the further one gets from the date of the original dismissal, the less likely it is that the unemployment can appropriately be attributed to the original dismissal, in circumstances in which there is limited detail regarding efforts to obtain work.
46. If the claimant had been
employed by the respondent during the period from
18 July 2009 until 17 January 2010, his net pay would have amounted to £9,091.
47. The aggregate of £978 (see paragraph 43) and £9,091 (see paragraph 46) is £10,069. To that sum of £10,069, I add £350 in respect of loss of statutory rights. The aggregate of those two amounts is £10,419.
Polkey?
48. Should the amount specified in the last preceding paragraph be reduced, as a result of the application of the Polkey principle? I have decided that there will be no “Polkey” deduction, against the following background and for the following reasons.
49. At paragraph 44 of its judgment in Software 2000 Ltd v Andrews [2007] IRLR 568, the Employment Appeal Tribunal described and, in effect, endorsed the following judicial guidance (as set out in earlier judgments) in respect of what it described as “the Polkey approach”:
“... [T]he Polkey approach – assessing what would have happened had the dismissal been fair – was wholly consistent with the principle of assessing of loss flowing from the dismissal on a just and equitable basis, which is the principle underlying [the GB equivalent of Article 157]. These should be approached as “a matter for the common sense, practical experience and sense of justice of the employment tribunal sitting as an industrial jury” ... [T]he Employment Tribunal’s task was “to construct, from evidence not speculation, a framework which is a working hypothesis about what would have occurred had the [employer] behaved differently and fairly”.
50. As Underhill P pointed out at paragraph 18 of the Employment Appeal Tribunal judgment in Compass Group PLC v Ayodele [2011] IRLR 802:
“The real question here is about how a Polkey point ought to be raised. The primary burden is no doubt on the employee to prove his loss. In the ordinary case, however, that burden is discharged simply by showing that he has been (unfairly) dismissed, since that prima facie establishes that he has lost the earnings that he would have received had the employment continued: the loss is in principle indefinite, at least up until the natural terminus of retirement – though of course in practice it will usually be limited by reference to the time it has taken, or should have taken, for him to find a new job at the same rate of pay. If the employer wishes to rely on the fact, or the chance, that the earnings would have been lost at some earlier date for some particular reason ... it is for [the employer] to raise that contention and to support it with any evidence that may be necessary (though often the relevant evidence will overlap with what is in any event before the tribunal for other purposes) ...”.
51. In Pinewood Repro Ltd (t/a Country Print) v Page [2011] ICR 508, it had been contended on behalf of the employer that, because a third of relevant staff were being made redundant, the claimant had had a one-in-three chance of being made redundant, and that that percentage chance should therefore have been taken into account, in reducing the claimant’s compensatory award, on the basis of the Polkey principle.
52. That contention was the subject of robust arguments, on behalf of the claimant, in terms which were mentioned at paragraph 42 of the EAT judgment:
“42. Finally, in relation to the Polkey issue, the guidelines in [Software] make it clear that it is for the employer to adduce relevant evidence on which he wishes to rely to show that the employee would or might have ceased to be employed in any event. The tribunal in this case had found that there was no cogent evidence to enable them to attempt to reconstruct “what might have been”: see Software paragraph 54(3). Simply because there were three possible candidates with close marking did not mean that there was a one in three chance that the claimant would be dismissed ...”.
At paragraph 47 of its judgment, the EAT, in essence, endorsed those arguments:
“47. Accordingly, we cannot find fault with the tribunal’s determination [on a scoring issue] nor do we find fault on the Polkey issue. At the end of the day, the tribunal determined that there was no cogent evidence from the employer as to whether he would have been dismissed in any event, leaving only the evidence from the claimant which suggested that he would not have been dismissed in the redundancy selection exercise and that actually that possibility was clearly accepted by the tribunal. We, therefore, agree that there was no cogent evidence which would have allowed the Tribunal to speculate with the degree of certainty suggested in the Software case ... In our view, the “one in three argument” is completely fallacious – it is not evidence based”.
53. For reasons which are explained below, the statutory dismissal procedure was not applicable in the circumstances of this case. However, it is clear that this dismissal was unfair because, although there was no collective consultation in relation to the group of dismissals which included this dismissal, there was no individual consultation with the claimant in relation to his selection for redundancy.
54. In this case, I have assumed (in favour of Nortel) that it is contending that the compensatory award should be reduced in line with the Polkey principle. However, I have received no evidence which provides a proper foundation for any reduction of the amount of the compensatory award, on account of any possibility that, even if the claimant had not been unfairly dismissed, (when he was in fact unfairly dismissed) he would have been, or might have been, fairly dismissed:
(a) at that time or
(b) at some date thereafter.
55. The fact that substantial numbers of the staff of the respondent at Monkstown were made redundant in 2009 is a fact which does not in itself provide any adequate evidential basis for concluding that the claimant’s compensatory award should be reduced to reflect some percentage chance that he could or would have been fairly dismissed, by reason of redundancy, either at the time when he was actually dismissed, or at some later date. (I simply do not know whether Nortel’s choice of redundancy pools was fair, whether the relevant redundancy process was in many respects carried out fairly, or whether it was carried out through an entirely unfair process).
56. My understanding is that Nortel no longer operates in Northern Ireland. My understanding is that most, if not all, of the “remaining” Nortel staff, who were still employed in Northern Ireland after June 2009, were ultimately transferred, through TUPE transfers, to the employments of various transferees. However, I have no evidence as to whether this claimant would have been assigned to any such transferred entity, or as to the specific transferred entity to which he would have been assigned (if he had not been dismissed in March 2009). Furthermore, I have no evidence on the question of whether all of the transferred employees, in all of the transferred entities, were ultimately dismissed by way of redundancy.
57. In this case, there was insufficient evidence before me for the purpose of allowing me to construct, from evidence not speculation, a framework which would provide a working hypothesis about what would have occurred had Nortel behaved differently and fairly. (See paragraph 49 above). I fully understand that there may be sound economic reasons for the decision of the administrators not to become involved in this unfair dismissal hearing. However, in the absence of that participation, I am constrained to conclude that I have no adequate evidence that the claimant would have been dismissed by Nortel in any event, even if a fair selection procedure had been followed; or that he would subsequently have been fairly dismissed, by reason of redundancy, by a TUPE transferee; or indeed even that he would have been assigned (after March 2009) to any particular entity which was subsequently the subject of a TUPE transfer. In this connection, I note that it has been contended on behalf of the claimant that the March 2009 and June 2009 dismissals were not really by reason of redundancy, but were instead prompted by a desire on the part of the administrators to reduce the workforce so as to make the various sub-businesses more attractive to potential purchasers. (In the absence of evidence in these proceedings on behalf of Nortel, I am in no position to decide the latter issue either way). I have been left with no adequate evidential basis for arriving at the “framework” which would provide an appropriate “working hypothesis” about what would have happened to the claimant’s employment, in March 2009 or at some subsequent date, if this dismissal process had been conducted fairly. (Again, see paragraph 49 above).
58. Having said all that, I consider that the compensation in this case might well have been substantially reduced if adequate evidence on the Polkey issue had been presented to me.
An Article 17 uplift?
59. Article 17 of the Employment (Northern Ireland) Order 2003 (“the 2003 Order”) applies to unfair dismissal claims.
60. Paragraph (3) of Article 17 is in the following terms:
“(3) If, in the case of proceedings to which this Article applies, it appears to the industrial tribunal that –
(a) the claim to which the proceedings relate concerns a matter to which one of the statutory procedures applies,
(b) the statutory procedure was not completed before the proceedings were begun, and
(c) the non-completion of the statutory procedure was wholly or mainly attributable to failure by the employer [to comply with a requirement of the procedure],
it shall, subject to paragraph (4), increase any award which it makes to the employee by 10 per cent and may, if it considers it just and equitable in all the circumstances to do so, increase it by a further amount, but not so as to make a total increase of more than 50 per cent”.
61. The effect of regulation 4(1)(b) of the Employment (Northern Ireland) Order 2003 (Dispute Resolution) Regulations (Northern Ireland) 2004 is that the statutory dismissal procedure does not apply in relation to the dismissal of an employee if the relevant dismissal is one of a number of dismissals in respect of which the duty in Article 216 of ERO (the duty of an employer to consult representatives when proposing to dismiss as redundant a certain number of employees) applies.
62. It is clear that the Article 216 duty applied in the context of this claimant’s dismissal, not least because a protective award, pursuant to Article 217 of ERO, has already been made in respect of him. Accordingly, it is clear to me that Article 17 of the 2003 Order does not apply in the circumstances of this case.
63. Unfortunately, regulation 4(1)(b) had not come to my attention when I issued Decisions in a number of previous Nortel unfair dismissal cases.
Summary and overall conclusions
64. I have assessed the claimant’s past losses as amounting to £10,069. To that sum, I have added the sum of £350 in respect of loss of statutory rights. (See paragraph 47 above). The aggregate of £10,069 and £350 is £10,419.
65. The claimant has not sought any compensation in respect of future loss, and none has been awarded.
66. The figure of £10,419 is not subject to any “Polkey” reduction. (See paragraph 48 above).
67. That figure of £10,419 is not subject to any increase pursuant to Article 17 of the 2003 Order. (See paragraph 62 above).
68. Accordingly, the claimant is entitled to a compensatory award of £10,419.
Recoupment of benefit from awards
69. The Recoupment Regulations apply. Attention is drawn to the notice below, which forms part of this Decision. The prescribed element is £10,069. The prescribed period is the period from 18 July 2009 until 17 January 2010. The amount by which the monetary award exceeds the prescribed element is £350.
Interest on industrial tribunal awards
70. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.
Employment Judge:
Date and place of hearing: 1 October 2014, Belfast.
Date decision recorded in register and issued to parties: