United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Mr D Tatton Brown (of Counsel) Instructed by: Messrs Collins Benson Goldhill Solicitors 26/28 Great Portland Street London W1N 5AD
For the Respondent	Mr M K Galberg (of Counsel)


 


JUDGE COLLINS:

1. This is an appeal against the decision of an employment tribunal sitting at London North. Their extended reasons were promulgated on 10 March 1999. The appellants had conceded earlier that the respondent was unfairly dismissed and the tribunal was concerned with the quantum of compensation only. They awarded the respondent a total of £12,549.42 made up as itemised in a schedule annexed to their reasons.
2. The employers have taken a number of points on appeal. Originally there were four, but that relating to clawback of salary has not been proceeded with. Of the three remaining points one relates to what I refer to as the "Polkey" reduction, one to contributory fault and one to the amount of future loss.
3. When the matter came on before this tribunal for preliminary hearing on 7 July the appellants indicated that they admitted owing £4,000 to the respondent, which had been paid. Delivering the judgment of this tribunal, Judge Levy QC expressed concern that the matter should come on to a full hearing because of the legal costs. We have been told today that the costs of each side for the whole of these proceedings amount to £4,000. The costs equal the amount in dispute. Since the hearing before this tribunal, the appellants have incurred about another £900 of costs and the respondents have incurred about another £1500 of costs. So that the incidence of costs in this case having regard to the amount in dispute is substantial and we regret that it was not possible for the parties to take Judge Levy's observations to heart and resolve their differences without the need for a full hearing.
4. The essential facts are that the respondent was a recruitment consultant employed by the appellants from 4 January 1994 until 28 August 1998. He had a basic salary of £20,000 and a bonus of 27% of commission earned on behalf of the appellants calculated in a way which is not necessary to explore. He was based at Southampton which was his second posting. While there he appears to have earned reasonably adequate commissions although he did receive two warnings during his time, possibly related to the suggestion made by the tribunal that he had been resting on his laurels. In April 1998, he was moved to the London office where things were not so easy. To recognise the fact that he would have difficulty in adjustment he was given a guaranteed bonus. Thereafter, up until the time that he was dismissed, he did not in fact earn any commissions which were entered into the appellants' commission payment system although, as the tribunal noted, had he stayed on for a comparatively short time a commission of 20% of £24,000 in relation to a Mr Jones would have come into account.
5. On 4 August 1998 the respondent received a warning that if he did not achieve billings of £22,000 by the end of August he would be regarded as having failed; he was dismissed on 27 August. The concession that he was unfairly dismissed arose because the dismissal was on any view in clear breach of the appellants' own procedures. If those procedures had been carried out correctly he should have been given at least 3 months in order to prove himself before he was dismissed. The tribunal decided having heard all the evidence that given that 3 months he would have been earning enough money to satisfy the appellants.
6. Mr Tatton Brown has attacked the findings of fact as perverse. I shall have to say more about that in a moment. The tribunal held that there was no question of making a Polkey reduction. They concluded that if the respondent had been given the opportunity that the appellants' procedures laid down he would in fact have retained his job. It follows almost inevitably that they concluded in those circumstances that he had not contributed to his dismissal so as to warrant any reduction in the compensation that was awarded. They proceeded to award him compensation in addition to the basic award, which they broke down by way of the actual loss sustained by him proved up until to the date of the hearing and future loss from the date of the hearing, 9 February 1999, until 31 July.
7. It is pointed out quite correctly that at paragraph 5 of the tribunal's reasons when they state the law, they say:

."In deciding the level of compensation we did so on the balance of probabilities."

And Mr Tatton Brown then asks us to look at paragraph 6 (c) containing the conclusions:

"We have considered whether there should be a reduction of the award because of the "Polkey effect". In view of our findings above, we concluded that Mr. Daly would have been able to generate sufficient billings so as to satisfy the Respondent. Accordingly, we do not consider that the decision in Polkey v A E Dayton Services Ltd (1998) ICR 142 applies in this case and there should be no reduction."

8. Mr Tatton Brown argues that the tribunal approached the matter in the wrong way. By way of illustration, he refers us to a decision of this tribunal, Wolesley Centres Ltd v Simmons [1994] ICR 503. In that case the decision of the industrial tribunal was to the effect that they were unable to find on the balance of probabilities that the employee would have been dismissed in any event and accordingly they made no deduction from their award on "Polkey" grounds. Judge Hague QC reviews the authorities and at page 508F says:

"The assessment of the compensatory award in this kind of case involves a two stage process. First, the Tribunal must ask itself whether if the employer had followed the proper procedures and acted fairly, the employee would not have been dismissed. If the answer to that question is reasonably clear, one way or the other, there is no difficulty. But in many cases, the answer will be uncertain, in which situation in order to give proper effect to section 74 (1) of the Act of 1978 and the dictum of Browne- Wilkinson J set out above, the Tribunal must as the second stage of the process make a percentage assessment of the likely hood of the employee being retained which must be then reflected in the compensatory award."

9. In the end both counsel agreed that the proper approach the tribunal should have adopted was to evaluate the respondent's prospect of remaining in the appellants' employment after November 1998 had he been given the full benefit of the dismissal procedure. Mr Tatton Brown sought to advance an argument of some technicality on the difference between assessing that prospect on the balance of probabilities and evaluating the chance. I do not think it is necessary to do anything more than say that we adopt the approach of Browne-Wilkinson J. in Sillafant v Powell Duffrin Timber Ltd [1983] IRLR 91 which was approved by the House of Lords in the "Polkey" case. Browne-Wilkinson J. said:

"There is no need for an all or nothing decision. If the Industrial Tribunal thinks there is a doubt whether or not the employee would have been dismissed, this element can be reflected by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment".

10. It is not necessary in our judgment to make the test any more technical or difficult for a tribunal to employ. We would deprecate any submissions made to tribunals in relation to what are essentially practical questions of judgment to be couched in more legalistic terms than Browne-Wilkinson J. thought were necessary. Although it is perfectly correct that in paragraph 5 of their reasons the tribunal referred to the balance of probabilities, the question for us is whether on a fair reading of the reasons they did in fact act in accordance with Browne-Wilkinson J's prescription.
11. We look first at paragraph 2(I) of the tribunal's reasons: -

"Having considered the testimony from Mr. Daly and that of the Respondent's witnesses, together with our own experience and judgment of normal working conditions, we find that Mr. Daly would have been able to have generated further billings if he had been allowed to continue employment under reasonable conditions. In particular, we take account of the fact that when Mr. Daly was working in Southampton his performance was deemed to be acceptable."

We refer again to paragraph 6(c) which I have already read out. And it seems to us that looking at those passages in relation to the dictum of Browne-Wilkinson J., the tribunal having decided that the respondent should not have been dismissed and should have had a chance of proving himself over a 3 month period, they went on to decide in all the circumstances that he would have retained his position. It would have been open to them to say that they were not satisfied that he would have retained his position and make an appropriate deduction, but the language used by them makes it clear that they had no doubt about it. Although it has been submitted that it was irrational for them to have no doubt, since the decision being made was essentially a speculative one, it seems to us that it would be inappropriate for us to interfere with a judgment which they made after having seen the witnesses and examined the whole history.

12. Turning to the question of contribution the decision of the tribunal almost inevitably follows. It is accepted that a reduction in compensation can only be made if the conduct of the employee contributing towards his dismissal was blameworthy or culpable. It seems to us that once the tribunal had decided that the respondent was unfairly dismissed and that had he not been he would have complied with the employer's requirements, it is idle for the employers to argue that he contributed to his own dismissal in a way which was blameworthy or culpable.
13. The remaining matter to be considered is the assessment of future loss. The tribunal separated loss up until the date of the hearing from future loss. By the hearing the respondent had obtained employment with another firm of consultants. But his remuneration package, particularly in relation to bonuses, was differently structured. Mr Tatton Brown has accepted that it was impossible for the tribunal by comparing the two packages to work out how much money he might have earned in his new job had he been as successful as they thought he would have been in his old job. What the tribunal said was, at 3(f):

"Mr. Daly was offered employment with Alderwick Consulting in a similar capacity to that carried out with the Respondent on 19 October. He took up this offer and presently is paid £26,000 per annum. This will be reviewed on 31 July 1999. We find that his new salary is less than that which he would have enjoyed with the Respondent had they not dismissed him. We are determined that his loss should be calculated up to 31 July 1999 based, as before, on his earnings for the tax year 1997/8."

14. Is there is any material on which we can go behind that finding of fact? Since Mr Tatton Brown concedes that at the time of the hearing the respondent had not in fact earned any bonus in his new job and since he was not able to identify any evidence pointing irresistibly to the conclusion that he was likely to earn significant bonus in his new job between 2 February 1999 and 31 July 1999, it seems to us that the tribunal were entitled to come to the conclusion which they did.
15. All the points of appeal here relate to findings of fact made by the tribunal and not points of law. There was material on which the tribunal was entitled to come to the conclusions of fact, which they did and this appeal will consequently be dismissed.

COSTS

16. On 7 July Judge Levy QC drew the parties' attention to the appeal tribunal's concern that the costs would be substantial by comparison with the amount in dispute. Neither party can be taken by surprise by our concern about the same matters. Rule 34 of the Employment Appeal Tribunal Rules 1993 restricts us to awarding costs to where the proceedings were unnecessary, improper or vexatious, or there has been unreasonable delay or other unreasonable conduct in bringing or conducting the proceedings. And we note that in a case referred to in Harvey on Industrial Relations & Employment Law, Redland Roof Tiles Ltd v Evling [1979] IRLR 11, this tribunal presided over by Bristow J. awarded costs where a substantive appeal failed because no point of law which had the remotest hope of success could be raised.
17. We have considered carefully the application made to us for costs by Mr Galberg, bearing in mind we have decided that all the points raised by Mr Tatton Brown are points of fact. In the end there are two points which present themselves to us as obstacles to making an order for costs - the first is not insuperable and is the fact that at the preliminary hearing this tribunal decided that the case was sufficiently arguable to proceed. It would be wrong for that be regarded in every case as a bar to this tribunal making an order for costs, although it is obviously a factor to which the appeal tribunal will pay regard. At the preliminary hearing the case is limited to a ½ hour or thereabouts. The court does not as a rule look at authorities and hears only one side. But as Mr Galberg has very fairly been prepared to concede, there was a serious argument on the "Polkey" point and although Mr Tatton Brown failed in his argument, he put it forward in a tenacious and reasoned way. With some reluctance we do not feel that we can say that the case was presented so unreasonably that an order for costs ought to be visited on the appellants.