United Kingdom Employment Appeal Tribunal

BAILII case number: [1995] UKEAT 878_94_0405

Appeal No. EAT/878/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 4th May 1995

Before

THE HONOURABLE MR JUSTICE MUMMERY (P)

MR S M SPRINGER MBE

MRS M E SUNDERLAND JP

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B O'DONOVAN          APPELLANT

WIMPEY GROUP SERVICES LTD          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

Revised


 


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APPEARANCES

For the Appellant THE APPELLANT IN PERSON

For the Respondents MISS C M SUNLEY

(Solicitor)

Wimpey Group

Services Ltd

Legal Department

27 Hammersmith Grove

London W6 7EN


 


MR JUSTICE MUMMERY (PRESIDENT): This is an appeal from the Decision of the Industrial Tribunal held at Southampton on 4th July 1994, with the Chairman sitting alone, to determine the question of compensation, in a case in which it was conceded that the applicant, Mr O'Donovan, had been unfairly dismissed by the respondent, Wimpey Group Services Ltd.

Extended reasons for the decision were sent to the parties on 3rd August 1994.

The Decision was that Mr O'Donovan should be awarded a basic award,of £1,406.25. No point arises on that in this appeal. The Appeal arises out of the level of the compensatory award.

The compensatory award was for £655.00. Details of how that was calculated will be explained later.

Mr O'Donovan decided to appeal, as, in his view, he was awarded less than he was entitled to for the compensatory award, and that there was an error of law in the approach of the Chairman of the Tribunal to the assessment of compensation. He served a Notice of Appeal on 7th September 1994.

The matter first came before the Employment Appeal Tribunal on a preliminary hearing on 25th October 1994. After hearing submissions from Mr O'Donovan in person, the Tribunal directed that the appeal should be allowed to proceed to a full hearing.

Today at the full hearing Mr O'Donovan has argued his own case with exceptional clarity and conciseness. He said that the appeal should be allowed and the matter be remitted for hearing by an Industrial Tribunal, consisting both of a Chairman and two lay members.

For Wimpey Group Services Ltd, Miss Sunley argued that for the reasons given by the Chairman, the level of compensation awarded is correct. This appeal should therefore be dismissed.

To determine who is right, it is necessary to examine the circumstances in which the matter of compensation came before the Chairman of the Tribunal. Mr O'Donovan had been employed since 1989 as a placement and monitoring officer by Wimpey Group Services Ltd. He was summarily dismissed on the 8th February. He presented an originating application to the Industrial Tribunal on 15th March 1994. He complained of unfair dismissal. He set out in a document attached to the IT1 the detailed grounds of which he contended that he had been unfairly dismissed.

This was initially contested by the Respondents. They gave as the reason for dismissal misconduct in using inappropriate language to his supervising manager, and failing to comply with reasonable instructions. In box 8 of the IT3 they conceded that he was an employee of the company. They set out details of his duties and conditions of work and contended, for the reasons stated in the IT3, that they had acted fairly and reasonably in dismissing him on the grounds given.

It was, however, subsequently conceded that the dismissal was unfair. The only matter on which the Tribunal was required to adjudicate was compensation.

In the Reasons for his Decision, the Chairman set out the details of the background to the proceedings, and noted that he had only to deal with the matter of compensation.

He found various facts relevant to compensation. He said that Mr O'Donovan worked part-time for the company. He had other activities outside his employment, which brought him in fees. Mr O'Donovan assumed in 1993, from his increasing work load, that it would be necessary for the Company to have a full-time placement officer probably in 1994. On the basis of his assessment of the situation he relinquished his fee earning work.

At a later date he was informally approached by the company, through a Mr Edwards, on the subject of him becoming a full-time employee. The Company had taken the same view of the situation as Mr O'Donovan had. Mr Edwards pointed out that the salary was only likely to be £10,000 a year which he did not think would be great interest to Mr O'Donovan. Indeed it was not, as confirmed by Mr O'Donovan. So no formal offer was made. Mr O'Donovan made it clear that he was not prepared to contemplate a post at a salary of £10,000.00 a year, because he was already earning 50% more than that under his existing contract with the Company.

The Chairman found that the Southern Region of the Company was the only that did not have a full-time placement and monitoring officer. A full-time post at a salary of £10,000.00 would bring the Southern Region into line with the others.

The Chairman referred to the summary dismissal of Mr O'Donovan for matters not connected with the facts he had found.

He stated an important fact relevant to his decision on compensation. On 11th April 1994, a full-time employee took up the post of placement and monitoring officer with the Company's Southern Region. The Chairman stated that when Mr O'Donovan was cross-examined, at the hearing, he was asked, `If he had not been dismissed, what would have happened with the offer of a full-time post at £10,000.00?' and his reply was `I would have continued on my existing contract, at £60 a day'. The £60 a day figure is arrived at in this way. Under the contractual arrangements of Mr O'Donovan with the Company, he was paid £7.50 an hour for the hours he worked. He could be required to work anything up to forty hours a week. In the period immediately leading to the date of his summary dismissal, he had, in fact, been required to work and had worked, at or near the maximum weekly hours.

Those were the facts on which the Chairman proceeded to assess compensation. There is no dispute about the basic award, or the bonus agreed to be due. The dispute was about the compensatory award. The argument on this appeal has centred on paragraphs 6 and 7 of the decision:

"... I have to reach a conclusion, on a balance of probabilities, as to what would have happened had the applicant not been unfairly dismissed in February. In the light of the applicant's own evidence to me, I am forced to conclude that the would not have accepted the full-time post at £10,000 per annum. He seemed to be under the impression that he had some form of existing contract to work such days as was required at £60.00 per day or part thereof, that he could continue with that, or, indeed, he seemed to believe he had some right to continue with that.

7. It is inevitable in the light of the fact that both the applicant and respondent appreciated the full-time post was necessary; that the respondent decided there had to be a full-time post; that that would be limited to £10,000 per annum; that was broached, as I have said, with the applicant who was frankly, not interested, and has made it clear to me that he found the salary so unattractive, he would not have accepted it. In the face of that, I have to conclude that the applicant's part-time contract would have been brought to an end lawfully on 11 April, when the full-time post came into existence. All that was required was for the respondent to give proper notice, or to pay money in lieu of notice. It no longer had a part-time post, or any requirement for a part-time post, which was the one occupied by the applicant. Thus, the reasons, at that stage, might have been described as redundancy; if not, it was certainly some other substantial reason, which was a potentially fair reason for terminating the applicant's employment."

In the light of those matters, the conclusion of the Chairman was that he could only award compensation to Mr O'Donovan for the period from the date of his dismissal on 8th February 1994 down to 11th April, when Mr O'Donovan's post was replaced by a full-time placement and monitoring officer paid at £10,000.00 a year. He said that, on that basis, there was no dispute that that amount was £1,015.00 less £600.00 payment in lieu of notice. He then concluded:

"As, in my view, the employment would have ended lawfully and fairly on 11 April, this is not a case where I can include anything in respect of loss of statutory rights."

Mr O'Donovan argues that there is a basic legal flaw in the decision of the Chairman. We agree. It is necessary for this matter to be remitted. The flaw is in the approach of the Chairman to the assessment of compensation. The fact was that Mr O'Donovan was dismissed on 8th February 1994. There was no dispute that it was an unfair dismissal. The reason given for his dismissal was mis-conduct. It was not a reason for his dismissal that he was redundant. There was no reliance on `some other substantial reason'.

The correct approach to compensation in those circumstances is to ask if Mr O'Donovan had not been unfairly dismissed on 8th February 1994, what would have his position have been? Mr O'Donovan submits that the answer is that his contract would have continued. It could not be unilaterally varied, particularly as to his remuneration. It could only be varied with his agreement. He submitted that the Company would not have been entitled to make a fundamental change to the terms of his contract without his agreement. It is irrelevant to approach the matter, as the Chairman did, by asking hypothetically whether he would have accepted the job accepted by his replacement on 11th April 1994.

The Tribunal Chairman approached the matter wrongly, by asking simply, "What had happened since Mr O'Donovan's departure? Would what has happened have affected his role in the Company?" The Chairman appears to have thought that the answer to the question of compensation was that his role in the Company would have altered, because the Company had a potentially fair reason for dismissing Mr O'Donovan, if he did not accept a different type of contract than he already had. It is accepted on this appeal by Miss Sunley, on behalf of the Company, that it was not correct on the part of the Chairman to describe Mr O'Donovan's existing contract as a `part-time contract', in contra-distinction to the new contract of the replacement on 11th April 1994, as a full-time contract. What Mr O'Donovan had was a full-time contract to work, if he was required to do so, the maximum number of hours.

In our view, the Chairman erred in law by losing sight of the fact that it was conceded that Mr O'Donovan was unfairly dismissed for alleged mis-conduct. The Chairman appears to have thought that 11th April 1994 was then the correct cut-off point for recovery, because, on that date, he could have been fairly dismissed for refusing to accept the contract accepted by his replacement. The reasoning was that, if Mr O'Donovan could have been dismissed in any event, he would not have suffered loss attributable to his unfair dismissal. The fallacy in this approach to this case, is that the question whether Mr O'Donovan could have been fairly dismissed for redundancy or some other substantial reason, was hypothetical. There was never any determination of it by the Industrial Tribunal at any stage. The Chairman found as a fact, in his extended reasons, that Mr O'Donovan had agreed in cross-examination that he would not have accepted the full-time post at £10,000.00 a year, if that had been offered to him. That is described at the end of paragraph 7 `as a potentially fair reason for terminating his employment. But that is not the same question as whether he would have been unfairly dismissed, in all the circumstances, if he had refused to accept the new contract. That is a hypothetical state of affairs, never an issue for the Tribunal, because it was conceded that he had been unfairly dismissed for another different reason.

In those circumstances, we are of the view that the Chairman erred in law in treating the 11th April 1994 as the cut-off point. What happened on 11th April 1994 is not relevant to the assessment of Mr O'Donovan's compensation. Compensation should be assessed on the normal basis of asking what loss Mr O'Donovan has suffered in consequence of being unfairly dismissed? This case is not complicated by factors, such as contributory fault, which is not relied on by the Company, or a failure to mitigate. The application of the cut-off point, 11th April 1994, is irrelevant and erroneous.

For all those reasons, this matter should go back to another Industrial Tribunal with two lay members sitting with the Chairman, to determine compensation for the unfair dismissal for alleged mis-conduct.

The Tribunal should exclude from its consideration any questions of what might have happened, if he had been dismissed for some other reason, such as redundancy or `some other substantial reason' of the kind canvassed in the case cited by Miss Sunley, Hollister v. The National Farmers Union [1979] 1RLR 238, in particular, paragraph 12. That case was concerned with whether the dismissal was unfair for "some other substantial reason", the reason in fact given for the dismissal. In this case it is not relevant to enquire into that, because a reason was given, which it is conceded, did not constitute a valid reason for dismissal.

We would add this. It may be in the light of the reasons given, that an agreement can now be reached between the parties as to the appropriate amount of compensation. We suggest that Mr O'Donovan submits to Miss Sunley, in the near future, the computation of the amount which he calculates he is entitled to, on the basis described, with supporting documents or facts. It would be possible for the Company to consider whether they challenge that, and, if so, to what extent. We hope that it would be possible to avoid a further hearing on this matter. But, of course, if agreement cannot be reached, there will be a further hearing along the lines suggested.