United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MISS SARAH MOOR (of Counsel) Messrs Eversheds Solicitors 10 Newhall Street Birmingham B3 3LX
For the Respondent	MISS REBECCA TROWLER (of Counsel) Messrs Lawford & co. Solicitors 102-104 Sheen Road Richmond Surrey TW9 1UF


 


JUDGE J. ALTMAN: This is an appeal from the decision of the Industrial Tribunal sitting at Bedford on 13 March 1998, when compensation was assessed following an earlier finding of unfair dismissal. The issue raised on this appeal is one that has been rehearsed over the years on a number of occasions in the Appeal Tribunal and also in the Court of Appeal, namely the extent to which, in calculating the compensation from the date of dismissal to the date of the Tribunal hearing, account should be taken of losses arising from the Applicant's being out of work following the termination of a period of employment with another employer intervening between the date of dismissal with which the Tribunal is concerned and the date of the hearing for calculating the compensation.

In this case the Tribunal was dealing with just such a situation. After just under five years' employment the Applicant was dismissed with effect from 12 February 1996 and within two weeks he obtained what was initially called temporary employment with a firm called ERF. In May 1996, in a process of a fresh offer and acceptance, that job was made what was described as permanent employment, but as happens with permanent employment from time to time it was not so, and it was only some eight months later that his employment was terminated, or at least came to an end in a way in which the Industrial Tribunal found on the facts did not reflect adversely in any way on the Applicant himself.

There was considerable delay between then and the remedies hearing which brings this case into the category of those few cases where intervening employment has begun and ended at the time of calculation of loss, but it is unnecessary to explore the reasons for that delay at all.

When calculating the amount to be deducted from the calculation of loss, and setting the period for calculation of loss, the Tribunal took the period as ending for the purpose of mathematical calculation at the date of the assessment by the Tribunal. They took a period into the future by way of assessment and estimation rather than calculation.

On behalf of the Respondents who bring this appeal, the argument effectively is that the date of the calculation should not have been the date of assessment, but should have been the date when permanent employment began. Such a calculation can have an effect, of course, on the amount of compensation and did so in this particular case.

I turn now to the way in which this matter was dealt with in the Extended Reasons promulgated by the Industrial Tribunal. They had not to hear much argument about calculations about figures or heads of loss, subject to the one with which this appeal is concerned. The Tribunal set out facts, some of which I have already mentioned in this judgment, pointing out that the employment with ERF was initially on a temporary basis, and coming to the conclusion that the pay and general remuneration and benefits accruing from the new employment were, in the words of the Industrial Tribunal, "approximately the same as they have been with the Respondents". They then say this:

"The applicant's employment on ERF was originally going to be on a temporary basis; however this was changed during his employment there and he was offered and accepted employment on a permanent basis. This was by letter of 13 May 1996 and he signed a contract on that day. However, after some months of employment on this basis the company ERF was taken over by a Canadian concern and this stopped development which it was envisaged the applicant would participate in."

Accordingly, events occurred outside the control of the Applicant not anticipated by him or his employer at the outset of his employment with ERF which brought that employment to an end.

It is clear that he was then unemployed and began in due course to set up business of his own in a self employed capacity which was the position he was in at the time of the hearing before the Tribunal. Having considered the calculation of the basic award, the Tribunal turned to consider the compensatory award, and they first of all set aside claims which were not a proper head of compensation. In paragraph 9 of the decision they say that there is a matter of principle to be decided in connection with the compensatory award, and they go on in effect to refer to the intervening employment and to argue the question as to whether it should give rise to a nil award, there having in effect been only two weeks between the two periods of employment and presumably there being no loss attributable to that period. It was submitted to them, it appears, that this new employment was a factor which broke the chain of causation flowing from the unfair dismissal by the Respondents.

The Tribunal, then agreeing that there were attractions in that argument, considered the case of Courtaulds Northern Spinning Ltd -v- Moosa [1984] ICR 218 and also refer to the earlier case of Ging -v- Ellward Lancs Ltd [1978] 13 ITR 265, and they point out that the effect of Moosa's case is that the second employment had broken the chain of causation, but by specific reference in their words:

"....to the fact that in the second employment the employee had been in that employment for sufficient length of time to have protection against unfair dismissal. This is dealt with specifically by the Employment Appeal Tribunal. That does not apply here."

Pausing there for a moment, it seems to us that at that point, the Tribunal has said that the case of Moosa was advanced in support of the Respondent's argument of the "cut off date", but that there was a factual distinction between Moosa and the case the Tribunal had to deal with and that the factual situation did not apply in the case before the Tribunal with which we are concerned. At the time of dismissal by ERF, the Applicant had not gained the protection of statutory security, because not sufficient time had elapsed.

Then the Tribunal go on to deal with what appears to us to be another factor which is that the time span in the Moosa case was longer than that which is applied here. I pause to observe that the difference is one between 18 months in Moosa's case and 11 months in the case that the Tribunal had to deal with here.

They then, beginning the sentence with the word "Furthermore", go on to say:

"Furthermore, the qualification period is now two years and it was one year in Moosa's time. In the Moosa case the Employment Appeal Tribunal do pose the question of if the employee has been as insufficient qualifying service against his new employer he cannot claim unfair dismissal against them if he is to be dismissed.

It does seem to us interesting, if nothing else, to just allude for a moment to the point in time in the history of decisions on this topic that Moosa occurred. At the time that Moosa took place, the prevailing leading case, was the case of Ging to which I have referred. In that situation, the Employment Appeal Tribunal was seeking to establish a degree of certainty, as opposed to discretion, so it appears, in individual cases, by suggesting that the "cut off date", for the assessment of compensation is the date upon which that assessment takes place. They did this with an attractive argument, that once one embarks on an analysis of what is temporary and what is permanent employment, one ends up in an impossible situation when trying to apply that to the real world, and we have some sympathy with that point of view. The approach in Ging clearly had a flaw in it, even as it stood, which was what happens if at the cut off date, that calculation date being one of assessment, the intervening employment has come to an end at a time when the Applicant has gained statutory protection and rights with the intervening employer. There was obviously a practical difficulty it seems to us as to who would then be the appropriate Respondent for subsequent compensation, and we suspect that simply as a matter of history, that was the context in which Moosa took place.

Returning to the decision of the Industrial Tribunal, it seems to us that by the end of paragraph 10, the Tribunal, whilst analysing the arguments on behalf of the Respondents, have in a negative sense found certain ways in which the Moosa case was to be distinguished and having done that they go on in paragraph 11 to consider the practical effects of the arguments, and that is really the critical paragraph it seems to us, in their Decision.

"11. We appreciate that this can lead to the possible effect that if the applicant or indeed any employee in a comparable position is working in what is thought to be permanent employment at the time of a remedy hearing by a Tribunal they might well find the duration of the compensation limited by that new employment and then if the employee is dismissed from that employment his case would have been heard. However such an applicant might have an argument upon review."

That reference to review has been criticised, but we do not see a basis for this. It is qualified by the word "might", and of course, things would have to happen fairly quickly, but there are cases of review of exactly this kind reported over the years.

"We therefore have to consider whether or not the chain of causation was such that the Applicant was likely to have still been in employment with the Respondents subsequently if [he] had not been dismissed. There has been no suggestion that he would have been made redundant or indeed that his position would have otherwise been changed."

It is difficult to analyse literally what was in the mind of the Tribunal in that sentence, but it seems to us clear that the sense is that the Tribunal is saying in effect, if it had not been for the intervening period of employment, on looking to the period to apply, one of the factors to take into account is whether without the dismissal the employee would have continued in the original employment and effectively, if so, for what period or would there have been a risk in any event of termination. They then go on to say this:

"Therefore although we appreciate there are some anomalies following Moosa's case, we do not stop compensation because of the new employment."

Those anomalies we would pause to say, are implicit in all the reported cases which draw a distinction between situations where at the date of assessment, the intervening employment is still continuing and those where it has come to an end. They express themselves negatively, and we note that, when they simply say "we do not stop compensation because of the new employment". At that stage of their decision, it seems to us, the Tribunal has not yet reached a final affirmative decision, but is taking stock of the various arguments as the case proceeds. What the Tribunal is there saying is that just because of the new employment, they are not stopping compensation.

They go on to say "the loss after the ending of the ERF employment was attributable to the earlier dismissal by the Respondents", and they then go on to exonerate the Respondents from any direct responsibility in that respect.

Then in paragraph 12 they deal with the way in which employment came to an end to which I have already alluded, and end with the words:

"The loss subject to ERF was attributable to the dismissal rather than the applicant's own actions."

That appears to mean the loss to date as the Tribunal was saying "subject to deduction for the period during ERF was attributable to the dismissal rather than the Applicant's own actions" and that seems to us to be the final categoric expression of the Tribunal's judgment on this matter. Then they go on to deal with other matters and their calculations of loss about which there is no appeal and no question at all.

I turn now to the authorities to which we have been referred. In the case of Moosa to which reference has been made, the point is made in the case where new statutory rights have been acquired in the intervening employment, that there would be an end to the right to claim compensation beyond the beginning of the employment with the intervening employer, provided that it is of an equivalent or greater amount of pay.

Mr Justice Browne-Wilkinson as he then was, ends with the words:

"But if, which we profoundly hope is never the case, another case occurs in which the delay is so great that at the time of assessment it is clear that the new employment has endured long enough to be protected by the unfair dismissal legislation Industrial Tribunals should treat the loss flowing from the original dismissal as coming to an end at the start of the new employment"

But it should be borne in mind that those words are preceded in the judgment with these words,

"This decision should not be taken as requiring Industrial Tribunals in the ordinary case to change their normal method of assessing compensation which followings the Ging practice. The assessment of compensation in Industrial Tribunals cannot be as scrupulously accurate as say in an action for personal injuries in the High Court, the present practice has the merit of simplicity and produces a broadly just and equitable result."

It seems to us that the decision in Moosa was intended to be as it were a gloss on Ging . Provided that the "magic" date was the date of assessment and if intervening employment had come to an end, Ging said that the amount during the period simply fell to be deducted from the whole and the case of Moosa seemed to be dealing with one problem that had arisen as a result. One should not forget, it seems to us, the thinking behind these decisions. After all when an employee is dismissed, he has an opportunity to mitigate his loss, and those that strive hard and succeed through their efforts in getting and maintaining other work, are they to be in a worse position than a person who has not bothered between then and the date of the assessment of compensation?

When unhappily those efforts that an employee has made to mitigate his loss have not led to the permanent employment for which he had hoped, there is a risk of injustice to which the court was referring it seems to us, in the case of Dench -v- Flynn & Partners [1998] IRLR 653. The law seems to have taken a twist after Moosa as exemplified by the case of Whelan -v- Richardson [1998] IRLR 114 E.A.T. which went to the extent of suggesting that as soon as someone got work which could be regarded as permanent and was at equivalent or more pay, that was a cut off point for the calculation of loss. That would elevate new employment at an equivalent or greater salary to a status above that of employment at lesser pay, without there being any difference in principle that we can discern. There again, the person who is very successful and gets a good job after dismissal is likely to be in a worse position than a person who only gets more modest employment.

These illogicalities and differences of situations, it seems to us, all underlie, if I may say so, with the greatest respect the helpfulness of the judgement of the Court of Appeal in Dench, the most authoritative judgment on this whole topic. The main judgment was given by Lord Justice Beldam in which in paragraph 28 he used the word "causation" as the test in the case. The Learned Lord Justice says:

"Causes, in my view, are not simply beads on a string or links in a chain, but, as was said many years ago, they are influences or forces which may combine to bring about a result. A tribunal of fact has to consider the appropriate effect of the wrongful or unfair dismissal and the effect of the termination of any employment which is subsequently obtained. That is a function which an industrial tribunal is called upon frequently to perform and, provided it does not regard itself as rigidly bound in every case to take the view that a subsequent employment will terminate the period of loss, it seems to me that it will be able, fairly and equitably, to attribute to the unfair dismissal the loss which has been sustained."

To summarise the line of authority therefore, it starts with Ging saying that the intervening employment should never terminate the calculation of loss if that employment ends before the calculation date, through Moosa that says that that should not apply where the intervening employment has been long enough for the employee to regain statutory rights, to a complete reversal of that which is that the cut off date is when the intervening employment begins, to the current position which essentially establishes that to which is perhaps implicit in the variations of earlier authorities, that what is important is that the Tribunal should look, at the date of calculation, at all the facts in deciding the effect that intervening employment should have where it has come to an end before the calculation date, and even where the remuneration is as great or greater than that enjoyed in the employment under consideration.

On behalf of the Appellant in this case, Miss Moor has argued, very forcefully, that on reading this decision the reality of the Tribunal's thinking is to really simply apply the test as to whether the intervening employment was long enough for statutory rights to be reacquired. She puts forward a subsidiary argument, that insofar as the Tribunal may have glanced in effect at other reasons, there was such a perverse emphasis on that "Rule" that the Tribunal's decision should be reversed. But whilst Miss Moor advanced that argument, we suspect she did so with the knowledge that there were not the factual material before us to find that there was such perversity. Essentially, this appeal, has hinged upon our reading of the decision of the Industrial Tribunal.

In paragraph 10, the Tribunal identify, as a separate matter, the fact that in the Moosa case where there was held to be the cut off of intervening employment that the time span that is the length of employment with the intervening employer was substantially longer. They follow that sentence with the word, "Furthermore", so it seems to us that it must be regarded as a free-standing finding of fact, which amongst others the Tribunal was taking into account. That is the only interpretation it seems to be applied to the fact that they go on by the use of the word, "Furthermore" to put it as a separate matter from the qualification of the statutory right, because they go on to point out, that that period has now changed.

Furthermore, they have considered and in a sense made neutral the way in which the Applicant left ERF, as was pointed out in paragraph 12, and they have also, as I have already identified in paragraph 11 put their minds to the question as to whether without the particular dismissal, there is evidence that the Applicant would have continued in his original employment. We are driven to the conclusion that a proper construction of this decision cannot lead to the conclusion that the Tribunal applied only the one test, as if it were a binding test, namely whether or not statutory rights have been acquired in the intervening employment.

The Tribunal did refer to this issue. It was clearly an important part of their decision. It has been an important part of the case law over the years. After all, it was the sole reason for Moosa establishing a different result to the pre-existing law. If one is trying, as a Tribunal must, to assess the difference between temporary and permanent employment, those with practical knowledge of the world of employment will know that up until the time when an employee reaches that threshold of acquiring statutory rights, he is liable to be at much greater risk of losing his job than once he has acquired them.

In all those circumstances therefore, we find that there is no error in law in the decision of the Industrial Tribunal and accordingly whilst we pay considerable tribute to the arguments that have been advanced before us, on both sides, we conclude that this appeal must be dismissed.