United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR R J LANE (Representative) The Legal Protection Group Ltd Careassist Court Wheatfield Way Hinckley Fields Leicestershire LE10 1YG
For the Respondent	IN PERSON


 


JUDGE PETER CLARK: This is an appeal by the employer, Shires Management Limited, and a cross-appeal by the Respondent employee, Mr Wood, against the assessment of compensation made by an Industrial Tribunal sitting at Leicester on 30 August 1996 (the remedies decision) following that Tribunal's earlier decision, after a hearing held on 1 August 1996 (the liability decision) that the Appellant had unfairly dismissed the Respondent. Extended Reasons for the remedies decision are dated 1 October 1996; and for the liability decision, 12 August 1996.

The Liability Decision

The background is that the Respondent was employed by the Appellant from 12 August 1991 until 17 November 1995, finally as a car park supervisor. Following a history of earlier disciplinary action against the Respondent the final events leading to his dismissal on 17 November 1995 related to his removing certain material from the employer's site during October 1995.

Having investigated the Appellant's reasons for dismissal the Tribunal concluded that dismissal fell outside the range of reasonable responses open to the Appellant, and was unfair; further, they found that there was no contributory fault on the part of the Respondent. The matter was adjourned for a remedies hearing due to want of time to be held on 30 August 1996.

The Remedies Decision

The issue was limited to the assessment of compensation. The Respondent did not seek re-employment.

Having rejected the Appellant's contention that the Respondent would have been made redundant in any event on 31 March 1996, thus cutting-off his loss flowing from his unfair dismissal at that date, the Tribunal proceeded to assess his loss of earnings, the basic award being calculated at £1,260.

Compensatory Award

The Tribunal found that the Respondent's net weekly pay at the date of dismissal with the Appellant was £196.84, and that 41 weeks had elapsed between the date of dismissal and the date of the remedies hearing, a total sum of £8,070.44.

Upon dismissal, the Tribunal found, the Respondent received 2 months gross pay in lieu of notice, that is £2,253.34. From that figure the Tribunal deducted 30 per cent in respect of tax and National Insurance and gave the Appellant credit for that reduced sum, namely, £1,577.33, which is described in the reasons as "a net payment in lieu of notice".

Further, the Tribunal made a deduction for monies earned by the Respondent in new employment which he had commenced on 4 December 1995. It calculated the period from 4 December 1995 until the remedies hearing to be 38 weeks, whereas it is common ground between the parties that it is in fact 39 weeks.

In calculating the net earnings from the new employment to date the Tribunal took his normal net monthly pay to be £792.12, that is, £182.79 per week. However, for one week in six he received an additional on-call payment making his monthly net pay £825, where he received an on-call payment, that is, £190.38 per week.

Accordingly, held the Tribunal, of the 38 weeks, 32 were to be assessed at the lower rate, making a total of £5,849.28, and 6 weeks at the higher rate, that is, £1,142.28, a total of £6,991.56.

Pausing there, the Tribunal found, on the calculation so far, a credit owing to the Appellant of £498.45.

The Tribunal then proceeded to assess the Respondent's future loss of earnings. It took a multiplier of 28 weeks, and a multiplicand of £12.89 per week, being the Tribunal's assessment of the difference between the Respondent's net pay with the Appellant and his net pay from his new employer; that is a total of £360.92.

There were further awards in respect of loss of statutory rights; £200; cost of clothing in the new employment; £200; and loss of pension rights £757.12. The overall compensatory award was calculated at £1,019.59.

The Appeal

The Appellant takes three points in relation to the Tribunal's calculation of the compensatory award.

(1) It is submitted that the Appellant was entitled to full credit for the termination payment of £2,253.34. A notional deduction of 30 per cent, representing tax and National Insurance, ought not to have been made, that is, the sum of £676.

We think that submission must be right. The first £30,000 of any termination payment is tax free in the employee's hands under the relevant taxing statutes. It is now well-established that the general rule in calculating the compensatory award following a finding of unfair dismissal is that the employer is entitled to credit for all monies paid by way of pay in lieu of notice or ex gratia severance payment on dismissal. MBS Ltd v CALO [1983] ICR 459; Babcock FATA Ltd v Addison [1987] IRLR 173. There are exceptions to the general rule, but none apply in this case.

Mr Wood does not challenge the legal principle outlined above, but submits that in fact he received only £1,785.34 by way of pay in lieu of notice. Having considered the pay slip and submissions on both sides we reject that submission. A credit of 2 weeks gross was taken by the Appellant in December against an overpayment of 2 weeks pay in November. The Tribunal's finding of fact as to the gross payment in lieu must stand. Accordingly, the Appellant is entitled to a further credit of £676 against the compensatory award made by the Tribunal.

(2) It is common ground that in allowing credit to the Appellant for net pay received by the Respondent from his new employment prior to the remedies hearing the appropriate multiplier is 39, not 38 weeks. Accordingly, the Appellant is entitled to a further credit of one week's net pay in the Respondent's new employment, against the loss to the date of the remedies hearing.

(3) As to that figure, Mr Lane has challenged the Tribunal's approach to that calculation. The difference is that on the Tribunal's calculation the net weekly figure was £183.95; on Mr Lane's approach it is £187.85, a difference of £3.90 per week.

Appeals to the Employment Appeal Tribunal are on a point of law only. Industrial Tribunals necessarily have to make rough and ready calculations on the material before them. The difference in this instance is de minimis. We are not satisfied that the Appellant has shown any error of law in this part of the Tribunal's calculation.

We are reinforced in our view that we should not interfere with this part of the Tribunal's assessment by the full wage details, which were not before the Industrial Tribunal, but which Mr Wood has placed before us. These show, for the relevant period, a net average wage of £183.

We therefore reject this ground of appeal.

Cross-Appeal

The Industrial Tribunal intended to assess the loss of the Respondent's pension rights by taking one year's employer's contributions to the Group pension scheme to which the Appellant and its employees belonged. It assessed that loss at £757.12, based on a document produced by the pension provider, Equitable Life Assurance. However, in so finding the Industrial Tribunal misunderstood the evidence.

That document records that for the year 1 April 1995 to 31 March 1996 the employer contributed net after charges £757.12 on the Respondent's behalf. That was taken as one year's contribution. However, contributions were made only for the period 1 April 1995, when the Respondent joined the scheme, until his dismissal on 17 November 1995, a period of 8½ months. Therefore 12 months contributions would be 12 ÷ 8½ × £757.12 = £1,068.87. Accordingly the Respondent is entitled to additional compensation under this head of loss of £1,068.87 - £757.12 = £311.75.

Conclusion

In the result we shall allow both the appeal and cross-appeal to the extent indicated above and substitute for the Industrial Tribunal's finding a compensatory award of £471.39 made up as follows:

The Industrial Tribunal compensatory award: £1,019.59

Less:

Pay in lieu £676

One weeks pay £183.95

£ 859.95

£ 159.64

Add:

Pension loss £ 311.75

£ 471.39

The basic award of £1,260 remains as before.

Accordingly, the total sum payable to the Respondent in respect of his unfair dismissal is £1,731.39, a reduction in the Industrial Tribunal's total award of £548.20.