United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR R NICOLLE Solicitor Messrs Lovell White Durrant Solicitors 65 Holborn Viaduct London EC1A 2DY
For the Respondent	MR T WALKER Solicitor Messrs Walkers Solicitors 6 Red Lion House Alexandra Road Hounslow Middx TW3 1JS


 


JUDGE PETER CLARK: Mr Giles, the Applicant, commenced employment with UPS Ltd on 23 November 1993.

On 29 December 1995 he suffered injury in an accident at the premises of a third party when he was hit by a pallet truck driven by a member of the third party's staff.

As a result of those injuries he was unfit for work with UPS and did not return to work prior to his dismissal on 3 February 1997.

Initially, he received contractual sick pay until 19 February 1996. Then, from 19 February until 25 July 1996 he received statutory sick pay. After that date he received no pay but was in receipt of incapacity benefit. Throughout the period he was certified as unfit for work.

Prior to his accident the Applicant was based at UPS' Isleworth depot. That site was closed down on 31 December 1996 and the business based there was transferred to a new centre at Kings Cross. Of the 100 employees at Isleworth 45 were found alternative employment elsewhere; the remainder were made redundant. At that time the Applicant, still on the payroll although not in receipt of wages, was overlooked. He was not informed of the closure of the Isleworth depot, was not considered for deployment, nor was he then dismissed by reason of redundancy.

The first contact with the Applicant since April 1996 came in the form of a letter dated 21 January 1997 from Human Resources asking for an up-date on his condition. He did not respond at that time. That was followed by a letter of dismissal dated 3 February 1997 with immediate effect. He did not receive the four weeks' notice, or pay in lieu of notice, to which he was, on the face of it, entitled under the terms of his contract of employment.

On 11 April 1997 he presented a complaint of unfair dismissal to the Industrial Tribunal. The claim was resisted and came on for hearing before an Industrial Tribunal sitting at London (South) on 25 June 1997. At the hearing it was conceded on behalf of UPS that the dismissal was unfair due to lack of consultation; an argument that the contract had been frustrated was abandoned. It was further accepted by UPS that the Applicant was entitled to a basic award; the issue was whether he was entitled to any sum and if so how much by way of a compensatory award.

For UPS the following submissions were made below:

(1) The Applicant had suffered no loss since, at the time of dismissal, he was not in receipt of any pay and there was no reasonable prospect of his returning to paid work with UPS at the time. UPS sought to rely upon a medical report dated 6 March 1997 from a Consultant Orthopaedic Surgeon, Mr da Costa, who had examined the Applicant on that day at the request of his solicitors, Messrs. Walkers, for the purposes of the personal injury claim which we understand the Applicant has commenced for damages against the third party whose employee had driven into him on 29 December 1995. We shall return to the relevance of that report later in this judgment.

(2) There was, in any event, no job for the Applicant to return to at Isleworth. More than one-half of the former work force there had been made redundant at the end of 1996 and on the evidence of Mr Goodson, who was called on behalf of UPS, there was no suitable alternative employment available for the Applicant.

(3) The Applicant had been in receipt of incapacity benefit since 25 July 1996. He was looking to pursue an alternative career. There had been a failure to mitigate his loss. Any continuing loss was not attributable to action taken by UPS in unfairly dismissing him.

The Industrial Tribunal found that the Applicant's loss of earnings, based on his pleaded net pay with UPS, presumably prior to his accident, was directly attributable to their conduct. It specifically excluded from consideration the content of the medical report dated 6 March 1997, on the basis that it was obtained post-dismissal. It also considered the Applicant's receipt of Incapacity Benefit to be irrelevant. UPS did not take any steps to ascertain the Applicant's medical condition before dismissing him. Further, it was not acceptable to the Industrial Tribunal for UPS to concede unfair dismissal and then seek to avoid its consequences.

The Tribunal went on to make further material findings in their extended reasons dated 22 July 1997. First, that UPS would very likely have been able to dismiss the Applicant fairly on redundancy grounds, making a redundancy payment equal to the basic award now conceded by UPS, at the time of the Isleworth depot closure on 31 December 1996 or early in 1997, if it had adopted appropriate procedures. Since it did not do so, the Tribunal held that the Polkey principle could not be invoked. Secondly, the Tribunal found that UPS could also very likely have dismissed on grounds of capability, had they first obtained a medical report on the Applicant's condition. In either case, consultation ought to have taken place which might, despite evidence given on behalf of UPS, have resulted in alternative employment. The Tribunal accepted the Applicant's evidence that had he known his job was at risk he would have returned to work.

As to the mitigation point, the Tribunal found at paragraph 17 of their reasons that the Applicant was not in a position to return to his old job for the foreseeable future, thus he had no option but to look for alternative work. There was no failure to mitigate.

In these circumstances, the Industrial Tribunal upheld the submission made on behalf of the Applicant by Mr Walker that he should recover his full loss of earnings, based on the pre-accident figure with UPS, from the date of dismissal until the date of the hearing, and a further six months' future loss; thus his loss of earnings, past and future, was assessed at £9,601.94. He was also awarded £250 for loss in respect of loss of statutory rights.

In this appeal Mr Nicolle submits on behalf of UPS that the Tribunal has misapplied s.123(1) of the Employment Rights Act 1996 and misdirected itself as to the relevant principles of law which emerge from the speeches in the House of Lords in the case of Polkey v A E Dayton Services Ltd [1988] ICR 142.

Section 123(1) provides:

"Subject to the provisions of this section and sections 124 and 126, 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."

The first stage, submits Mr Nicolle, is to determine what the employee would have earned had the employment continued. In this case he would have earned nothing unless and until he returned to work. As to that the Tribunal declined to consider the medical report, which contained Mr da Costa's opinion that the Applicant would not recover for some time, probably one to three years. He was not, on 6 March 1997, fit for work as a multi-drop driver. Further, the Tribunal made no finding on UPS's evidence that no alternative employment was available for him and which he was capable of performing.

What the Tribunal did find was that UPS could very likely have dismissed the Applicant fairly on the grounds (a) of redundancy in early 1997 and (b) capability, had they carried out the proper procedures. That is where the Polkey principle comes into play. If a fair procedure would have resulted in dismissal, the Applicant has suffered no loss, save for the time it would have taken to complete a fair procedure and on the facts of this case that would have been time for which the Applicant received no pay. Alternatively, if he might have preserved his employment following a proper procedure, then the Tribunal must assess that chance in percentage terms and reduce the full loss accordingly.

Instead of taking the proper approach under Polkey, submits Mr Nicolle, the Tribunal appear to have found UPS to have been at fault in dismissing the Applicant without prior consultation and without obtaining a medical report and wrongly assumed that, despite his medical condition and the closure of the Isleworth depot, the Applicant would have returned to work as a result of the consultation process, regardless of his medical condition and the availability of suitable alternative work with UPS.

Finally, Mr Nicolle addressed to us an argument on mitigation of loss based on the Employment Appeal Tribunal decision in Simrad Ltd v Scott [1997] IRLR 147, although he accepted that if it be right that the Applicant was incapable of work during the period of loss taken by the Industrial Tribunal, then no question of failure to mitigate could arise.

In response, Mr Walker submits that the Tribunal decision and reasons should not be subject to fine toothcombing, as Lord Denning MR pointed out in Hollister v National Farmers Union [1979] ICR 542, 552H-553C; and that an appeal based on perversity will not succeed in the absence of the Chairman's notes of evidence, which are not before us, see Piggott Brothers v Jackson [1992] ICR 85.

He contends that although there may be apparent inconsistencies within the Tribunal's finding, the Tribunal was addressed on the Polkey principle and decided, on the facts, that the Applicant had lost his full potential earnings throughout the relevant period following dismissal as a result of UPS's action in failing to consult with him, obtain medical evidence and thus allow him the opportunity to return to work rather than to be dismissed. In these circumstances, submits Mr Walker, his loss of earnings was properly attributed to the unfair dismissal.

In our judgment the submissions advanced by Mr Nicolle are plainly correct. This Industrial Tribunal fell into error, not on the ground of perversity, but in its approach to s.123(1) as explained in Polkey and later cases, see particularly the judgment of Judge Hague QC in Wolesley Centres Ltd v Simmons [1994] ICR 503, 508B-G.

On this Industrial Tribunal's findings it could not have awarded full compensation without deduction if it had properly applied the Polkey principle. In these circumstances we shall allow the appeal and remit the case to a fresh Industrial Tribunal for re-assessment of the compensatory award. In carrying out that assessment the next industrial tribunal may wish to consider the following questions, among others:

(1) Had UPS obtained medical evidence and consulted with the Applicant prior to dismissal, would a fair dismissal have followed? The fact that he remained on incapacity benefit throughout and the substance of Mr da Costa's report of 6 March 1997 are relevant factors in answering this question.

(2) If not, what was the percentage chance of his returning to some, and if so, what work with UPS? The evidence as to available alternative employment following closure of the Isleworth depot is relevant to this question.

(3) If he would have been fairly dismissed in any event, but later than 3 February 1997, would he have received any pay from UPS during the time notionally attributable to the consultation process? If not, he has suffered no loss of earnings attributable to the unfair dismissal.

(4) If there was a percentage chance of his retaining employment, the loss of that chance, based on monies he would have earned had he returned to work, will represent his recoverable loss under this head.

(5) Has he suffered any loss in respect of loss of statutory rights?

(6) Ought he to be compensated for UPS's failure to make a payment in lieu of notice, bearing in mind the provisions of s.86-91 of the Employment Rights Acts; the Court of Appeal decision in Notcutt v Universal Equipment [1986] ICR 414 and the principle of good industrial relations practice referred to by Sir John Donaldson in Norton Tool Company v Tewson [1972] ICR 501, 505G-506B.

(7) Finally, is the fact that the Applicant is claiming damages for loss of earnings in respect of the same period in a personal injury action against the third party employer following his industrial accident material to the question of attributability under s.123(1)?

We think that these issues may form part of the Industrial Tribunal's consideration on remission.