United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR J MCMULLEN QC Hounslow Law Centre Ltd 51 Lampton Road Hounslow Middx TW3 1JG
For the Respondents	MR M DUGGAN (of Counsel) Instructed By: Messrs Langley & Co Sun Court 66 Cornhill London EC3V 3NB


 


JUDGE PETER CLARK: This is an appeal by the Applicant before an Employment Tribunal sitting at London (South) under the Chairmanship of Mr B A Kelly QC against that Tribunal's decision on remedies promulgated with extended reasons on 18^th September 1998.

Background

1. The Appellant first commenced employment with the Respondent, Korean Airlines Co Ltd in May 1986 as a Reservations Sales Officer. After a break in service she rejoined the Respondent as Cargo Sales Co-ordinator in May 1991 following approaches made to her by the Respondent. The then Cargo Sales Administration Manager, Mr Jung, told her when recruiting her that the company considered she had a lot of potential and indicated that she would eventually become Sales Manager. The then Sales Manager, Mr Frank Smith, was aged 56 and had 9 years to go to retirement. That indication was not put in writing and the Appellant accepted that she had no guarantee of the promotion.
2. In December 1996 the Appellant left on maternity leave. Just before doing so she was told by Mr Jung's successor, Mr Cho, "Anne-Marie, you do realise you will be Sales Manager one day."
3. Her son was born on 27^th January 1997. During her maternity leave, which ended on 18^th August 1997, she kept in contact with the Respondent.
4. On her return to work she was called in by Mr Cho and told in a round-about way that a male employee, Steve Tindale, was to be transferred into the Sales Department to be trained for the Sales Manager's position. Asked by the Appellant why she had been left out of the picture, Mr Cho said that when the decision had to be made she was on maternity leave. It had not been his decision but that of Mr Hahm, the Regional Manager.
5. On 14^th September 1997 the Appellant wrote a letter of complaint to Mr Hahm. Thereafter, she met with Mr Hahm on 19^th September.
6. There was a conflict of evidence as to what was said at that meeting. The Employment Tribunal preferred the Appellant's account.
7. Subsequently, the Appellant resigned herself to the fact that she was out of the running for the Sales Manager's job. Mr Tindale was now the heir apparent. She believed her career was over.
8. She did not resign from the employment immediately. She made enquiries of four airlines about alternative employment. All said they had no current vacancies for her, but would contact her if one became available. She did not pursue that avenue further.
9. She consulted her General Practitioner and went off sick. She then learnt that the London office, where Mr Hahm was based, was very annoyed with her for being off sick as she had already taken too long off for maternity leave. She decided that she had had enough and tendered her resignation by letter dated 19^th October 1997, to take effect on 28^th November.
10. Her hobby was painting and drawing. On about 20^th October 1997 she decided to embark on a Design Course at the Berkshire School of Art and Design. She was accepted for that course, which she commenced in December 1997, following expiry of her notice. She told the Tribunal at the remedies hearing held on 16^th July 1998 that she was enjoying the course and she said that even if an airline job came up, she thought she would rather stay as she was.

The Complaint

11. By an Originating Application presented to the Employment Tribunal on the 17^th November 1997 the Appellant complained of unfair constructive dismissal and sex discrimination. The nub of her case was that she had been forced to resign having been overlooked for promotion as a result of having been on maternity leave.

The Employment Tribunal Decisions

Liability

12. Following a liability hearing held on 22^nd April 1998 and a meeting in Chambers on the 26^th May, the Employment Tribunal found, in a reserved decision promulgated with extended reasons on 15^th June 1998 (the liability decision)

(i) That although no guarantee had been given to the Appellant that she would eventually be promoted to the Sales Manager position, the Respondent was in fundamental breach of the implied term of mutual trust and confidence when Mr Cho told her on 18^th August that was no longer in line for the Sales Manager post; alternatively, that was an anticipatory breach going to the root of the contract. She did not waive the breach. She resigned on 19th October 1997 in circumstances amounting to constructive dismissal.

(ii) In the absence of any potentially fair reason for dismissal advanced by the Respondent the dismissal was unfair.

(iii) The Respondent unlawfully discriminated against the Appellant on grounds of her sex, both by displacing her as a candidate for promotion to Sales Manager by a man due to her absence on maternity leave and by dismissing her.

13. Having so found, the Employment Tribunal adjourned the question of remedies to the 16^th July 1998.
14. An appeal by the Respondent against the liability decision (EAT/962/98) was dismissed for the reasons which I gave in a judgment delivered on behalf of the Employment Appeal Tribunal on 5^th November 1998.

Remedies

15. At the remedies hearing held on 16^th July 1998 the Respondent's arguments were directed to the issue of mitigation of loss. However, the Tribunal raised the question of causation, and it was argued that by opting to study design the chain of causation was broken. Her losses after the decision to change careers were too remote. Alternatively, it was argued that she had failed to mitigate her loss by embarking on her design course instead of seeking alternative employment in the airline industry. It was the Respondent's evidence through Mr Cho, which the Tribunal accepted, that she would have found another job with an airline 6 months after leaving the Respondent, and that in the meantime, she might have obtained agency work in the airline industry.
16. The Appellant claimed compensation for the loss of the chance of being promoted to Cargo Sales Manager with the Respondent and disputed the contention that by embarking on the design course she had broken the chain of causation or that her losses post-termination were too remote.
17. The Employment Tribunal directing themselves in accordance with the Scottish EAT decision in Simrad Ltd -v- Scott [1997] IRLR 147, held that for the purposes both of the unfair dismissal and sex discrimination claims, although the actions taken by the Respondent were the causa sine qua non of her subsequent losses, the immediate cause, or causa causans, was her decision to embark on a new career. The connection between her taking the course and the actions of the Respondent was too remote and that the chain of causation was broken by the Appellant's decision to retrain as a designer.
18. In these circumstances no award was made by the Employment Tribunal for loss of earnings post-termination. The Employment Tribunal restricted its award to compensation for injury to feelings under the Sex Discrimination Act 1975 in the sum of £3,500 plus interest and a basic award under the Employment Rights Act 1996 (£1,260) together with an award under that 1996 Act for loss of statutory rights in the sum of £250. The total award was £5,294.60.
19. It is clear that the Tribunal would in the alternative have found that the Appellant had failed to mitigate her loss by not seeking work in the airline industry. However, it was not strictly necessary for the Tribunal to make any finding on mitigation in view of their conclusions on causation and remoteness. Nor did the Tribunal make any finding on the Appellant's contention that she had suffered a 90% loss of the chance of achieving promotion to Sales Manager with the Respondent.

This Appeal

20. Mr McMullen QC attacks the Employment Tribunal's reliance on the approach to causation, based as it was on the Employment Appeal Tribunal decision in Simrad, a case involving compensation for unfair dismissal only.
21. In that case Lord Johnston said this in relation to the proper approach to the construction of Section 123 of the 1996 Act at paragraph 6:

"The process is a three-stage one requiring initially factual quantification of loss as claimed: secondly, that equally importantly, the extent to which any or all of those losses are attributable to the dismissal or action taken by the employer, which is usually the same thing, the word "attributable" implying that there has to be a direct and natural link between the losses claimed and the conduct of the employer in dismissing, on the basis that the dismissal is the causa causans of the particular loss and not that it simply arises by reason of a causa sine qua non, ie but for the dismissal the loss would not have arisen. If that is the only connection the loss is too remote. The third part of the assessment in terms of the reference to the phrase "just inequitable" [in Section 123(1)] requires a Tribunal to look at the conclusions they draw from the first two questions and determine whether, in all the circumstances, it remains reasonable to make the relevant award. It must again be emphasised, however, that what is to be considered under the third test already has to have passed the second. Finally, it has to be observed that while the facts relating to a question of mitigation will frequently bear upon the question of causative link, mitigation is essentially an equitable plea to be judged in the context of reasonableness at common law and thus on not too fine a balance. Accordingly, the issue of mitigation will feature in the application of the third test rather than the second, and sub-section (4) of the Section merely directs the Tribunals to the proper approach to mitigation if that is what has been considered."

22. Mr McMullen has drawn our attention to the observations made on that approach by the Inner House of the Court of Session in Leonard -v- Strathclyde Buses Ltd [1998] IRLR 693.
23. In giving the judgment of the Court Lord Coulsfield referred to Simrad and the judgment of Sir John Donaldson P in Norton Tool Co -v- Tewson [1972] IRLR 86 and concluded that it was inconsistent with the latter case to introduce principles of foreseeability or remoteness in the technical sense in which those concepts apply in other legal contexts when considering what is just and equitable under Section 123(1) of the 1996 Act.
24. Mr Duggan submits that the Tribunal was correct to apply the three-stage test set out in Simrad. The Appellant's decision to change careers rendered the losses sustained after termination of her employment with the Respondent too remote.

Conclusion

25. We prefer the submissions of Mr McMullen, supported by the approach of the Court of Session in Leonard.
26. In our judgment it is plain on the facts of this case that but for the discriminatory acts of the Respondent, leading to the Appellant's constructive unfair dismissal, the Appellant would have remained in the Respondent's employment and not embarked on her design course. The losses flowing from those discriminatory acts and her unfair dismissal are recoverable by the Appellant under the Sex Discrimination or Unfair Dismissal claims (but not both), subject to her duty to mitigate.
27. It follows that she was entitled to recover her loss of earnings following termination until such time as she ought to have found alternative employment in the airline industry, on the basis of the Employment Tribunal's finding that by taking herself out of that labour market and embarking on the design course, she failed to mitigate her loss.
28. Further, she was arguably entitled to an award in respect of the loss of a chance of gaining promotion to Sales Manager with the Respondent caused by the discriminatory dismissal.
29. These are questions of fact for the Employment Tribunal. Accordingly, we shall allow the appeal and remit the case to the same Employment Tribunal, if practicable, for determination of these two questions.