United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 42_95_2211

Appeal No. EAT/42/95

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 22 November 1995

THE HONOURABLE MR JUSTICE KEENE

MRS E HART

MR A E R MANNERS

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TAYLORPLAN SERVICES LTD          APPELLANTS

(1) MR G MORRIS

(2) MR A ROBINSON          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellants MRS W AKWENUKE

Legal Officer

For the Respondents NO APPEARANCE/

REPRESENTATION BY OR

ON BEHALF OF THE

RESPONDENTS


 


MR JUSTICE KEENE: This is an appeal against a unanimous decision of an Industrial Tribunal sitting at Middlesbrough and entered in the register on 5 December 1994. By its decision the Tribunal held Mr Morris and Mr Robinson to have been unfairly dismissed. The Tribunal awarded Mr Morris four weeks' holiday pay and then awarded each Applicant (the employees) £200 for loss of statutory rights. The hearing was adjourned then to a date to be fixed when the basic awards due to the Applicants (now the Respondents) would be calculated, unless previously agreed.

The issue in this appeal relates solely to the award of £200 to each Respondent for loss of statutory rights. The facts as found by the Tribunal established that the Respondents' claims arose out of the loss by a company called Cleancare UK Ltd, of the cleaning contract at British Steel Redcar to Taylorplan Services Limited, with effect from 7 June 1993. Both the Respondents were employees of Cleancare UK Ltd, prior to the award of the cleaning contract to the present Appellants.

It was conceded by the present Appellants that the Transfer of Undertakings (Protection of Employment) Regulations 1981 applied to this situation. However, they argued before the Tribunal that they had not dismissed the Respondents. Mr Morris had begun work at British Steel Redcar in March 1990 and Mr Robinson had done so in November 1985. At the time of the takeover both men were absent from work. In the case of Mr Morris he had been absent since December 1992 as a result of sickness and in the case of Mr Robinson he had been absent from work since 1992 as a result of an accident.

Mr Morris gave evidence before the Tribunal that he received a copy of a letter from Cleancare to employees advising them of the change and that subsequently, despite his wife speaking to a representative of the company over the telephone, he received his P.45. Mr Robinson was also sent his P.45 and when he saw a representative of Taylorplan Services Ltd at Middlesbrough he was told "we do not know you". The Tribunal presumed that in both cases the P.45s were sent by Cleancare UK Ltd.

The Tribunal held that by virtue of the 1981 Regulations the Respondents had been dismissed by the Appellant company and since no reason had been shown for dismissal, those dismissals were held to be unfair. No appeal is brought against that aspect of the decision. The Tribunal, at the end of its decision, then went on as follows and we quote:

"12 As to compensation, since neither applicant was fit for work at the takeover no question of any compensatory award arises. Equally therefore the Employment Protection (Recoupment of Unemployment Benefit and Supplementary Benefit) Regulations 1977 will not apply.

13 As there is some doubt as to the applicants' gross and net wages we adjourned the hearing so that evidence can be produced on these points or figures agreed between the parties."

That would seem to be a reference to the need to calculate the basic awards to be made to the Applicants. The Tribunal then made however the awards to which we have already referred earlier in the course of this judgment.

The Appellants' Notice of Appeal takes two points which have been elaborated on today. First of all, it is said that:

"(1) The Tribunal erred in law in making the said award because it failed to take into account that both Mr Morris and Mr Robinson will not work again on account of ill health."

Secondly, it is contended, that:

"(ii) ... the Tribunal erred in law in making the said award because in paragraph 12 of the reasons for decision it is stated that no question of any compensation award arises. As an award for loss of statutory rights is a, or part of a, compensatory award, the Tribunal's order was in the premises, perverse."

The Appellants do not dispute that the award of £200 to each Respondent for loss of statutory rights refers to the fact that when someone is dismissed, it will take two years in a new job to build up continuous employment, so as to found a claim for unfair dismissal. Thus, the protection is in the meantime removed and has to be recreated, and the loss of that protection is part of the loss for which compensation is to be awarded. In addition, the award of money for the loss of statutory rights may also cover the fact that an employee, once dismissed, will also have to re-qualify for what are usually called "minimum notice rights" before dismissal.

The Appellants recognise also that this is what the Industrial Tribunal was dealing with at this stage in its award. It has become a well recognised practice to make such an award. In the case of the award for the loss of the protection against unfair dismissal until two years has passed in continuous employment, that has been normally of a fairly limited amount as part of the compensatory award.

In both cases it seems to us that such awards form part of the compensatory award which is made under Section 74(1) of the Employment Protection (Consolidation) Act 1978. That reads as follows:

"74(1) Subject to sections 75 and 76 ... 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."

Before us Mrs Akwenuke has argued that it can be deduced from the decision of the Tribunal in this case that both the Respondents were permanently incapacitated. She says that that can be deduced from the fact that neither man was fit for work at the date of the takeover on 7 June 1993 coupled with the fact that the Tribunal was not prepared to make a compensatory award.

In connection with that last point of course, she is referring to what the Tribunal was saying in its decision at paragraph 12. She draws our attention to the decision of this Appeal Tribunal in the case of S H Muffett Ltd v Head [1987] ICR 1, and in particular to passages on pages 2 and 3 thereof. At page 2 E Sir Ralph Kilner Brown, giving the judgment of the Employment Appeal Tribunal, referred to the fact that:

"... in addition to the normal matters [requiring compensation] there are two heads of loss which may have to be considered when assessing the amount of compensation to be awarded. The first is what is generally called `loss of statutory industrial rights,' which was originally introduced by Sir John Donaldson as `loss of protection' in Norton Tool Co Ltd v Tewson [1972] ICR 501. This refers to the qualifying period of one year, now two years, in other employment before acquiring the statutory protection against unfair dismissal."

He then went on to refer to the fact that normally, because of the problem of quantifying any such loss, a standard amount was awarded. He then proceeded to refer to the other head of such loss as being what is generally referred to as the "loss of the right to long notice". In relation to this, he said at page 3 B - C:

"We recognise the force of Lord McDonald's observations in Gourley v Kerr (unreported), 10 February 1982, that such loss can only be significant in an exceptional case because it depends upon the double contingency that the dismissed employee will get a new job and, second, that he would be dismissed from that job before building up the same entitlement to the period of notice applicable to the first job. In our judgment an industrial tribunal must use its knowledge of local conditions and consider the remoteness or otherwise of these contingencies. We have in mind that in certain areas, such as those in which electronic engineering provides a wide scope for movement from one employer to another, these contingencies may not be so remote as in those areas dependent largely upon heavy industry which is in permanent and accelerating decline and where dismissed employees may find it quite impossible to find other work.

We accept the criticism that this industrial tribunal do not appear to have made a pragmatic assessment of the remoteness of this head of loss but have considered the matter in the abstract as being in general so speculative and unlikely that no award was called for."

In reliance upon that Mrs Akwenuke submits that it is clear that an Industrial Tribunal cannot disregard the circumstances of the individual case and moreover that, whichever type of loss of statutory rights is being dealt with in the present case, if it is clear that an Applicant would not work again in any event, then no award should be made.

We are not, for our part, satisfied that it was inevitable that no award should have been made in this case to these Respondents. It may be that the Tribunal did have regard to the circumstances of these two men. It is not clear from the decision whether they did or not in making this particular award for loss of statutory rights.

On the other hand, we are bound to say that we do find it difficult to interpret the decision when the Tribunal refuses to make a compensatory award and yet makes this award for loss of statutory rights. There may be some inconsistency here, but that is unclear. It may be that the Tribunal's approach was internally consistent, but one cannot tell.

As a result we take the view that the right course is now to remit this matter to the same Industrial Tribunal for it to state its reasons for making the award which is now challenged, the £200 award for loss of statutory rights in the circumstances of this case. That is our decision.