Industrial Tribunals Northern Ireland Decisions

THE INDUSTRIAL TRIBUNALS

 

CASE REF:   1085/15

 

 

 

CLAIMANT:                          Patricia Flanagan

 

 

RESPONDENT:                  Belfast Metropolitan College

 

 

 

REMEDY DECISION

The unanimous decision of the tribunal is that the claimant is awarded the following sums by way of compensation:-

 

            Basic Award                                                  £ 6,345.00

            Compensatory Award                                 £45,605.00

            Grossing up                                                  £ 3,121.00

            Total                                                              £55,071.00

 

Constitution of Tribunal:

Vice President:       Mr N Kelly

Members:                 Mr H McIlwaine

                                    Ms E May

 

Appearances:

The claimant was represented by Mr G Daly, Solicitor, of Francis Hanna & Company, Solicitors.

The respondent was represented by Mr C Hamill, Barrister-at-Law, instructed by J Blair Employment Solicitors.




 

Background

 

1.         In a decision issued in this matter on 7 April 2016, the tribunal concluded that the claimant had been constructively and unfairly dismissed by the respondent.  The decision in relation to remedy was reserved to a separate hearing.

 

2.         At a Case Management Discussion on 18 April 2016, the remedy hearing was listed for 27 June 2016.  At that remedy hearing both parties referred to previously exchanged written submissions on remedy and added oral argument.  A panel meeting was held on 19 July 2016 to reach a decision in relation to remedy.  This document is that decision.

 

Remedy

 

Basic Award

 

3.         The claimant had been employed from November 2005 to March 2015 by the respondent.  She had therefore been employed for nine complete years.  She was aged 51 at the date of constructive dismissal.  The appropriate calculation for the basic award is therefore:-

 

                        13.5 x £470.00 (statutory maximum)                     =                      £6,345.00

 

Future Loss

 

4.         In unfair dismissal cases, the object of the compensatory award is to compensate employees for the financial loss caused by their dismissal.  The object is not to punish employers for their wrongdoing.  An award should therefore not be increased either out of sympathy for the employee or as a means of expressing disapproval - Lifeguard Assurance Limited  v  Zadrozny [1977] IRLR 56. 

 

5.         In Dunnachie  v  Kingston-upon-Hull City Council [2004] IRLR 727, the House of Lords determined that the power to award compensation in respect of unfair dismissal is limited to a financial loss attributable to that dismissal.  It does not include non-economic loss such as injury to health or injury to feelings. 

 

6.         In the Zadrozny decision, Philips J stated:-

 

“The [employment] tribunal, in assessing compensation, should not fall into the benevolent error of awarding compensation, not for some loss due to the unfair nature of the dismissal, but more out of sympathy for the predicament in which the employee finds himself.”

 

7.         In Harvey on Industrial Relations and Employment Law, Volume 1, Division D1, at Paragraphs 2535 - 2540, two questions are indicated for the tribunal when assessing future loss.  Firstly, the tribunal must consider what would have happened but for the unfair dismissal.  It has to determine whether the employee would have continued in employment indefinitely or only for a limited period.  Secondly, the tribunal must calculate the actual loss for the period which is considered appropriate. 

 

8.         In this case, the claimant had been employed for some considerable time and if she had not been constructively and unfairly dismissed, the tribunal concludes that the probability is that she would have remained employed by the respondent for the foreseeable future.  She had a settled employment history with the respondent and there is no evidence on which a tribunal could properly conclude that her employment, if she had not been unfairly dismissed, would have terminated early. 

 

9.         The fixing of a relevant period for calculating future loss is not an exercise which can be done with mathematical precision on empirical evidence.  To use the term adopted in Harvey, Volume 1, D1, Paragraph 2567, it is a highly speculative exercise.  In Wardle  v  Credit Agricole Corporate and Investment Bank [2011] IRLR 604, the Court of Appeal (GB) concluded that an employment tribunal had been wrong to award compensation by considering loss over the claimant’s entire remaining career, subject to a reduction to reflect the chance of the claimant leaving the respondent’s employment in any event.  The Court stated:-

 

                        “I agree with Mr Jeans that it will be a rare case where it is appropriate for a court to assess compensation over a career lifetime, but that is not because the exercise is in principle too speculative.  If an employee suffers career loss, it is incumbent on the Tribunal to do its best to calculate the loss, albeit that there is a considerable degree of speculation.  It cannot lie in the mouth of the employer to contend that because the exercise is speculative, the employee should be left with smaller compensation than the loss he actually suffers.  Furthermore, the courts have to carry out similar exercises every day of the week when looking at the consequences of career shattering personal injuries.  Nor do I accept a floodgates argument.  The job of the courts is to compensate for loss actually suffered; if in fact the court were to conclude that this required an approach which departed from that hitherto adopted, then we would have to be willing to take that step.

 

However, in my view the usual approach, assessing the loss up to the point where the employee would be likely to obtain an equivalent job, does fairly assess the loss in cases - and they are likely to be the vast majority - where it is at least possible to conclude that the employee will in time find such a job.  In this case the Tribunal has in effect approached the case on the assumption that it must award damages until the point when it can be sure that the claimant would find an equivalent job.

 

In my judgment, that is the wrong approach.  In the normal case if a tribunal assesses that the employee is likely to get an equivalent job by a specific date, that will encompass the possibility that he might be lucky and secure the job earlier, in which case he will receive more in compensation than his actual loss, or he might be unlucky and find the job later than predicted, in which case he will receive less than his actual loss.  The Tribunal's best estimate ought in principle to provide the appropriate compensation.  The various outcomes are factored into the conclusion.  In practice the speculative nature of the exercise means that the Tribunal's prediction will rarely be accurate. But it is the best solution which the law, seeking finality at the point where the court awards compensation, can provide.”

 

10.      In this particular case, the claimant had substantial employment experience.  She had worked within the education sector.  She had managed an advice centre for enterprise and small businesses.  She had owned and had managed a retail shop.  She had been responsible for a development agency for seven years.  She had some computer skills and also had an MBA with a focus on enterprise and small businesses.  She had particular expertise in the albeit narrow field of creativity and innovation. 

 

11.      The claimant had applied for relatively few jobs before the hearing.  The respondent had worked that out as approximating to less than one application per month.  That was no doubt due in part to the claimant’s own decision to concentrate on her own business acting as a self-employed consultant in the area of creativity and innovation.  The claimant had also failed to register with any employment agencies.

 

12.      The claimant in her statement of loss for the purposes of the remedy hearing has adopted the common practice of first claiming loss of net earnings to the date of hearing; in this case 15 months.  That is the common practice in cases of this type and is based on the decision of the National Industrial Relations Court in Norton Tool Company Ltd  v  Tewson [1973] 1 All ER 183. 

 

13.      The text book in this area, ‘Employment Tribunal Remedies’ by Korn & Sethi 4^th Edition states at Paragraph 6.38 that in this particular case, ‘the NIRC said that compensation should be assessed under four headings’.  It continues that the first of those headings should be:

 

            “Immediate loss of earnings - that is, the loss of earnings between the date of dismissal and the date of hearing.”

 

14.      However the NIRC does not appear to have said that in terms in the Norton Tool decision.  The NIRC when considering the correct manner for assessing compensation in relation to the loss of employment did not say that the first element in such compensation should be the loss of wages up to the date of the hearing; whether that hearing is by an employment tribunal or by some other judicial body.  The date of any such hearing is subject to considerable variation and is impacted upon by a range of matters such as the availability of parties, the availability of counsel, the availability of witnesses and the availability of listing time.  In real terms there can on occasion be significant delays and equally cases can move exceptionally quickly on occasion.  In the tribunal’s view, it is highly unlikely that the NIRC, or anyone else, ever intended that a significant element of compensation should be determined by such a random event.  The statutory basis for assessing compensation is to assess actual loss.  It is not appropriate to assess a significant portion of actual loss by fixing that proportion to the listing dates given to that case. 

 

15.      The NIRC separated the component parts of appropriate compensation into four headings:-

 

                        (a)       immediate loss of wages;

 

                        (b)       manner of dismissal;

 

                        (c)        future loss of wages;

 

(d)       loss of protection in respect of unfair dismissal or dismissal by reason of redundancy.

 

            In relation to the first category, ie ‘immediate loss of wages’, the NIRC was not, as appears to be suggested in the text book and in the claimant’s submission, suggesting that compensation should be awarded automatically or                             semi-automatically in relation to loss of earnings up to the date of hearing.  It was in that context looking at the requirement then contained within the Contracts of Employment Act 1973 in relation to notice pay on the termination of employment.  It was focusing therefore on the amount of notice pay that an unfairly dismissed employee would have received if he had been dismissed in the proper manner.

 

16.      Therefore the issue in the present case and indeed in all such cases appears to be the speculative exercise of assessing when the claimant could be expected to obtain alternative equivalent employment and therefore fixing an appropriate point for future loss which should run from the date of dismissal and which should not depend on the dates on which the tribunal was listed for hearing.

 

17.      The claimant had been in receipt of a substantial salary : £44,658.00 together with a final salary defined benefit pension.  The claimant’s qualifications and experience would, in the opinion of the tribunal, enable her to apply for middle management posts in the public or private sectors.  She would be qualified for both permanent and fixed-term posts.  The tribunal recognises that such posts do not become available as often as lesser paid posts.  The tribunal concludes that it would take some time to find an equivalent post given the current restrictions in both public and private sector employment.  The tribunal, as an industrial tribunal, concludes that the appropriate period would be two years from the date of dismissal.

 

18.      The claimant has therefore incurred a loss of two years net salary minus the net self-employment earnings during that period.

 

19.      The claimant earned an average net pay of £2,637.00 monthly while employed by the respondent.  She earned an average of £1,448.00 from self- employment following her dismissal.  The loss of net wages over the two year period is:-

 

                        24 x £1,189.00                                  =                                  £28,536.00

 

20.      The claimant had been in the respondent’s final salary pension scheme.  Each party had engaged actuaries for the remedy hearing.  It was agreed that the appropriate methodology for calculating pension loss was the Ogden Tables.  Various figures for pension loss were agreed on that basis for different periods of future loss.  The appropriate figure for a two year period was £16,569.00.

 

21.      The appropriate figure for loss of statutory rights in this case is £500.00.

 

22.      The total compensatory award is therefore made up as follows:-

 

                        Loss of net wages                                                                £28,536.00

 

                        Pension loss                                                                         £16,569.00

 

                        Loss of Statutory Rights                                                     £    500.00

 

                        Total                                                                                      £45,605.00

 

23.      That portion of the compensatory award which exceeds £30,000.00  is subject to income tax and therefore should be grossed up to take account of that liability.  The claimant’s marginal tax rate for the relevant year appears to be 20%:-

 

                        £45,605.00 - £30,000.00                             =                      £15,605.00

 

                        £15,605.00 x 20%                                        =                      £  3,121.00

 

24.      The total amount due to the claimant is therefore:-

 

                        Basic Award                                                                          £ 6,345.00

 

                        Compensatory Award                                                         £45,605.00

 

                        Grossing up                                                                          £ 3,121.00

 

                        Total                                                                                      £55,071.00

 

25.      This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

 

 

 

 

 

 

 

Vice President

 

 

Date and place of hearing:          27 June 2016, Belfast

 

 

Date decision recorded in register and issued to parties: