United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR KENNETH FARROW (Representative) Southampton & District Unemployed Centre 11 Portchester Road Woolston Southampton SO19 2JB
For the Respondent	DR ANNETTE PRAND (Of Counsel) Messrs Bates Wells & Braithwaite Solicitors Cheapside House 138 Cheapside London EC2 6BB


 


HIS HONOUR JUDGE D SEROTA QC

1. This is an appeal brought by Mrs Irene Witt in relation to a decision of an Employment Tribunal sitting in Southampton on 21 March 2000. Mrs Witt had been employed by the Respondent as a shop manager at their premises, 52 Bedford Place, Southampton. A time came when the Respondent decided to dispose of the lease of the premises and accordingly determined that it would make Mrs Witt redundant. Mrs Witt was concerned about the circumstances leading up to the redundancy and she therefore presented a complaint, on 21 November 1999, seeking a redundancy payment and claiming that she was unfairly dismissed.
2. We should note that on 30 July 1999, her solicitors had written to the employer asking for confirmation that she would receive a redundancy payment. As a matter of fact the employer wrote on 10 August 1999 to the effect that her last working day would be 29 September 1999 and that she would be repaid her redundancy payment calculated on the basis of 10½ weeks at £204.75 in the sum of £2,150. She was also entitled to her outstanding holiday entitlement which she was told would be paid when her final salary was paid.
3. Mrs Witt as we have already mentioned was of the opinion that the manner in which she was made redundant gave rise to a claim for unfair dismissal. On 24 September 1999 her solicitors, Christopher Green & Partners, wrote to the employer to the effect that their client was entitled to a redundancy payment contrary to the stance previously taken by the employer. She also sought to claim for unfair dismissal based on unreasonable behaviour and the failure to consult adequately or at all. The letter concludes as follows:

"We have advised out client that in the circumstances she has a clear case for unfair dismissal. Our client has not been able to find alternative employment and will therefore be claiming her wages until such time as she is able to find another job as well as other losses including wages for the correct period of consultation."

We should note that the last date of her employment in fact, that is the last day she worked, was
24 September 1999. However, as is apparent from the award of the Employment Tribunal, her wage payments continued to be made. I now quote the finding of the Employment Tribunal at paragraph 11:

"Owing to an administrative error, salary payments to the Applicant, which were paid direct to her bank, did not cease as anticipated by the parties at the effective date of termination of employment in September. Salary payments continued to be paid until the end of December when the error came to light. When the redundancy payment was paid to the Applicant, the Respondent took the opportunity to recoup the over-payments made to the Applicant between September and December. A letter dated 24 December sent to the Applicant by the Respondent shows the amount deducted from the payments in respect of redundancy pay and holiday pay."

We have ascertained that the payments that were made purported to be payments of salary; tax and National Insurance were deducted.

4. On 5 November 1999 (to return to the chronology) solicitors acting for the employer, Messrs Bates Wells & Braithwaite, wrote rejecting the allegations in the letter of Christopher Green & Partners and said that any claim for unfair dismissal would be strenuously defended. On 24 December 1999 the employer wrote directly to Mrs Witt referring to their letter of
   10 August 1999 and calculating the amount of redundancy payment as £2,150, outstanding holiday entitlement of £946.32, total amount £3,096.32 from which they deducted the salary payments that had been made in the sum of £2,070.77 leaving an outstanding amount of £1,025.55. The letter includes the following:

"As a result of the fact that the Society continued to pay your salary in error until the 31^st December 1999, we are in the process of reclaiming the National Insurance and Income Tax contributions that have been incorrectly debited to you, for the period of 30^th September 1999 to 31^st December 1999. Please accept my apologies for the delay in this redundancy payment being sent to you and any inconvenience that this might have caused you."

5. The hearing took place, as we have mentioned, in the Tribunal in Southampton, on
   21 March 2000. Mrs Witt was not represented. The employer was represented by its solicitor, Mr Bunch. The Tribunal rejected the claim of unfair dismissal; that is not an issue before us today and we say no more about it. However, we are told that, although perhaps no evidence was given of this point, Mrs Witt complained that it was unfair to deduct from the redundancy award the amounts that had been paid to her in error as wages. She maintained, although this does not appear in the Reasons of the Tribunal, that she was prejudiced because as a result of receiving what appeared to be salary she was unable to obtain the Unemployment Benefits to which she would otherwise have been entitled. She maintained that the Employment Tribunal should not have characterised, as it did, the payments that she had received by way of salary, paid in mistake, as interim payments of her redundancy award.
6. When this matter came on a Preliminary Hearing before this Appeal Tribunal on
   1 November 2000, His Honour Judge Wilson, who gave the judgment of the Tribunal, took the view that there was a matter which should proceed to full argument, namely whether or not it was appropriate for the Tribunal effectively to 'set off' monies paid by way of salary against the redundancy payment. Before His Honour Judge Wilson and his colleagues it was submitted that there were negotiations in hand between solicitors on behalf of the parties and that the employer had acceded to a suggestion that they should continue to pay Mrs Witt pending a satisfactory conclusion of the negotiations. We have not seen any evidence to support this, although we note the letter of 24 September, to which we have already referred, in which her solicitors made it clear that she was claiming her wages until such time as she was able to find another job.
7. The Employment Tribunal dealt with the matter in this way. We have already referred to paragraph 11 in which they refer to the administrative error of the continuation of salary payments. They came to the conclusion that although there are restrictions in the Employment Rights Act Sections 13, 14 and 27 which relate to permitted or unlawful deductions from wages, a redundancy payment is outside the definition of wages in Section 27(2). The Tribunal were satisfied that Mrs Witt was entitled to a redundancy payment. They accepted the calculations and indeed there is no challenge to those calculations by reference to Mrs Witt's length of service and age. They then went on to say this:

"We are also satisfied that the redundancy payment has been made to the Applicant. Admittedly it has not been paid as she would have preferred in a lump sum payment made at or about the effective date of termination. We are satisfied that partially by instalments and then by a balancing lump sum in December, the Applicant has received her full redundancy payment."

8. There appears to be no statutory provision relating to the date of payment of a redundancy payment although good practise, in our opinion, requires it should be paid at the time of redundancy. It seems to us impossible to characterise, as the Employment Tribunal did, payments of wages made in error as being in fact instalment payments of a redundancy payment. The question that arises is whether, when calculating the amount of a redundancy payment, an Employment Tribunal is entitled effectively to 'set off' monies which may be owed by the employee to the employer. The Appellant submits that one can not. The employer submits that one can.
9. One starts with Section 135 of the Employment Rights Act which provides for redundancy payments but does not provide as to the date of payment. The manner in which redundancy payments are to be calculated is set out in Section 162. Section 162(6) provides that:

"Subsections (1) to (5) apply for the purposes of any provision of this Part by virtue of which an [employment tribunal] may determine that an employer is liable to pay to an employee -

(a) the whole of the redundancy payment to which the employee would have had a right apart from some other provision, or

(b) such part of the redundancy payment to which the employee would have had a right apart from some other provision as the tribunal thinks fit,

as if any reference to the amount of a redundancy payment were to the amount of the redundancy payment to which the employee would have been entitled apart from that other provision."

10. There are other provisions in the Act that do permit deduction from a redundancy payment. For example, Section 122(4) provides that a basic award in respect of unfair dismissal may be reduced by a redundancy payment. Section 123(7) provides that in certain circumstances a compensatory award may also be reduced. Section 140(3) provides for deduction in the case of summary dismissal. We would also make reference to Section 142 and Section 162(8) which permits deduction under Section 158, that relates to pension rights.
11. We are unable to find any justification for the principle put forward by Miss Prand that because there is nothing to prevent a general right of 'set off', the general right of 'set off' must exist. As it seems to us the function of the Employment Tribunal in cases of redundancy payments is to determine, firstly, whether the employee is entitled to a redundancy payment and secondly, to determine what the amount of that payment should be. The Employment Tribunal is not concerned with the enforcement of its award. Questions of enforcement are for the County Court. Section 15 of the Employment Tribunals Act 1996 provides that:

"(1) Any sum payable in pursuance of a decision of an [employment tribunal] in England and Wales which has been registered in accordance with [employment tribunal] procedure regulations shall, if a county court so orders, be recoverable by execution issued from the county court or otherwise as if it were payable under an order of that court."

The procedure in the County Court is in Schedule 2 of the Civil Procedure Rules, the old County Court Order 25 Rule 12.

12. It seems to us that if there is an issue between the parties as to the state of account between them that is a matter not to be determined in the Employment Tribunal but to be determined in the County Court. If an employer takes the view that the balance of account reduces the amount of an award, for whatever reason, that is a matter to be raised in the County Court before the award is enforced. The position might be different if either party had raised contract issues before the Tribunal. This was not the case.
13. It seems to us that what has happened in this case is unfortunate as it has apparently deprived Mrs Witt of the opportunity to receive benefits to which she would otherwise have been entitled. Even were the monies to have been paid to her under a mistake of fact, she may well have a defence, we do not say whether she has or has not, it is not a matter for us to determine, but she may have a defence based on change of circumstance or estoppel. In our opinion, an Employment Tribunal, when considering questions relating to redundancy payment may only make deductions in the cases specified under the Act. It has a general jurisdiction to take into account other sums that may be relevant to a balance of account between the parties.
14. In our opinion therefore the appeal stands to be allowed. In our opinion Mrs Witt is entitled to an award in the sum of £2,150 but she must give credit for the sum that she has been paid qua redundancy payment. The total amount of her award together with the outstanding holiday payment was £3,096.32. The amount that is in issue is £2,070.77 and in our opinion that should be the amount of the award which has not as yet been paid. If Mrs Witt is not paid, and if she is unable to reach a satisfactory agreement with the employer, she will be entitled to seek to enforce the award by registering it at the County Court and at that point in time any rights of 'set off' can be adjudicated upon should either party raise them.