United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellants	MR SEAN JONES (of Counsel) Instructed by: Messrs Bond Pearce Incorporating Cartwrights Solicitors Marsh House 11 Marsh Street Bristol BS99 7BB
For the Respondent	MR ANDREW HOGARTH (of Counsel) Instructed by: Messrs Towns Needham & Co Solicitors Kingsgate 2nd Floor 51-53 South King Street Manchester M2 6DE


 


THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)

1. This is an appeal against the conclusion of the Employment Tribunal, sitting at Bedford, which had found that the Respondent succeeded in his claim for unfair dismissal by the Respondent, that it should award compensation in the total sum of £54,836.30. There was no challenge to the conclusion of unfair dismissal, or indeed, to a number of the heads of compensation, but the appeal has been limited to the sum awarded in respect of future loss. It is plain, as has been accepted indeed by Mr Hogarth, Counsel who appeared for the Respondent below, that the greater part of the efforts of both parties was dedicated towards disputing and resolving the issue of liability, and the only written submissions related to liability.
2. As is very often the case, the question of compensation, perhaps, attracted less consideration. That may well have been understandable in the days prior to 1999, when the compensatory award was regularly not a large one. With the limit now so substantially increased since 1999, that makes less sense, and, of course, parties, particularly where compensation only is at issue, can, and do, dedicate considerable efforts towards arguing compensation, and in this case although Mr Hogarth tells us that there were oral submissions dedicated towards compensation, it is apparent that not every point was taken below, by either side, which might have been taken. But the outcome now is that, in relation to two important aspects, the Appellant, for whom Mr Sean Jones appears, has taken two substantial points of criticism of the Tribunal's Decision.
3. The Tribunal's Decision, in material part, is set out as follows, in paragraph 13; the Tribunal began by considering the question of mitigation of loss in the ten month or so period prior to the date in October 2001, when the Tribunal reached its conclusion, subsequent to the constructive dismissal of the Respondent some ten months earlier. The Tribunal concluded as follows:

"We have heard from Mr Burke (who was 57 when he resigned) that he has co-operated fully with the Employment Service. He started off trying to get jobs at the same income as he received previously and hopefully in a training role without success. Subsequently, he has been able to get work through an employment agency who have placed him in a factory called G E Lighting. This is insecure unpensionable employment. Therefore the Tribunal is of the view that Mr Burke has tried as hard as he can and has mitigated his losses and should not therefore be penalised on the basis that he has not done so."

4. That, as Mr Sean Jones rightly points out, indicates that the Tribunal accepted that mitigation was what he called "a dynamic process", and recognised that in respect of the first period immediately after employment, it was appropriate for him to have remained out of employment entirely, while he sought to do his best to get a more appropriate job, but that there came a time when it was appropriate for him to take the less well paid job, which he did.
5. In those circumstances, although, taking into account the entire period of that ten months, he did not average a high sum in respect of mitigated alternative earnings, it was appropriate for that to be the case, so that a larger sum was awardable in respect of that past loss than would be justifiable in respect of future loss, on the assumption that he continued in such alternative employment.
6. Mr Hogarth has submitted that, in some way, the Tribunal was being favourable to the Appellant in taking, as its starting point for the future, the wage that the Appellant was now receiving with the agency, as opposed to a wage which had been averaged over the ten month period, but we do not conclude that is arguable, and we accept the submissions of Mr Jones that the figure must, inevitably, differ, where it has been considered appropriate that there should have been no earnings at all for a period in the circumstances which we have described. There is, therefore, in our judgment, no element of balance or compromise in relation to taking as the starting point, as the Tribunal did for its future loss, the fact that the Appellant was then in this part-paid, in the sense of lesser-paid, employment at the start of the period of calculation of future loss, as opposed to taking an average sum over the previous ten months.
7. The Tribunal calculated the difference, so far as continuing loss is concerned, between his earnings had he still been in employment with the Appellants, and his earnings as at the date of the hearing, with G E Lighting, and in what they described as "Part B Future Losses…. (i)" the calculation, accordingly, reads as follows:

"(i) Annual loss of salary if continues in current
job and at current rate £3796.00 per annum"

By the time that fringe benefits, none being payable in the current employment, and the employer pension contribution, his new job not being pensionable, were added to that sum, his total loss per annum, taken as at the date of the hearing, on those assumptions, was £6,070.00.

8. The passage which is criticised by Mr Jones is a very short one indeed, which follows immediately after that calculation, and it reads as follows:

"The next job the Tribunal therefore has to do, using its own knowledge of prevailing conditions and taking into account the employee's age, is to calculate what it considers to be just and equitable in terms of the period of future loss. We are of the unanimous opinion that Mr Burke will have difficulty getting back into secure employment and at the same kind of salary as he previously enjoyed with the Respondents. On the other hand, and given his length of service, he could have expected to remain with the Respondents until 65. The Tribunal therefore considers that it would be just and equitable in these circumstances to award the continuing loss on that basis up to the normal retirement age of 65, in this case, 3^rd June 2008, making 6 years and 8 months at that differential of £6070 per annum."

On that basis, multiplying £6,070 by six years eight months, they arrived at the figure of £40,426.00, which added to the other losses, resulted in the figure going over the present cap on the compensatory award of £50,000 by some £828 and thus the compensatory sum was reduced to that amount, and the total figure, including the basic award, was as we have indicted, £54,83.30.

9. Mr Jones's attack is twofold: first, he submits that the Tribunal has found that the Respondent will have difficulty getting back into secure employment, and at the same kind of salary as he previously enjoyed with the Appellants. That carries with it the necessary obverse that there was a chance of his getting back into secure employment at the same kind of salary as he had previously enjoyed with the Appellants; it does not rule that out.
10. He also submits that it does not address at all the chance of his getting back into secure employment at a lesser salary than he was previously enjoying with the Respondents, but one higher than the salary that he was then obtaining at G E Lighting. It also does not take into account the chance that he would get into more secure employment, but nevertheless paid at a lesser salary, one perhaps which, therefore, would pay either fringe benefits or employer pension contributions, both of which have been disallowed entirely in calculating the future loss.
11. What, therefore, Mr Jones submits is that there has simply been a pure mathematical calculation of six years eight months, which is the total period that is outstanding up till the date upon which the Tribunal has unchallengably found that he would otherwise have retired, and then multiplied that by the £6,060, making no deduction or allowance for vicissitudes, as he puts it, by reference to Sutherland -v- Hatton [2002] ICR 613, or options or possibilities which are left open by their own findings of fact.
12. Insofar as the lacuna is made good by the words of the Tribunal, that if "using its own knowledge of prevailing conditions, and taking into account the employee's age is to calculate what it considers to be just and equitable", that, he says, if it is intended to be a replacement for evidence, falls foul of the discouragement of an expert Employment Tribunal, acting as industrial jury, using knowledge, particularly without disclosing it and giving the parties the opportunity to comment on or deal with it, in lieu of evidence, which is illustrated, for example, in the judgment of the Employment Appeal Tribunal given by a panel chaired by Talbot J in Hammington -v- Berker Sportcraft Ltd 24 September 1979, unreported.
13. Mr Hogarth does not suggest that that sentence could make good any absence of evidence, or rationale. He submits that the Employment Tribunal is entitled to use its general knowledge, and does not accept that in this case, any special expertise or facts were injected by the use of that sentence. As we understand it, he does not suggest that there is any specific evidence about knowledge of the availability of jobs in the distribution or warehouse industry, the Respondent being a warehouseman, which was sought to be injected by those words. He does not rely on them to make good any failing, which he does not accept there to be, in the Tribunal's Decision. He submits that the Tribunal's Decision in this regard can be justified because he says they did, indeed, carry out the balancing exercise, taking into account all factors, and he submits that that can be seen from various words used in the course of the Decision. He points out, as a starting point, that the agency job is described as "insecure, unpensionable employment"; that, he says, carries with it the possibility that things might go worse, namely that the Respondent might lose even that job which he has. The Tribunal does not spell that out, but he says that must have been in their mind.
14. Then, he says, although accepting that they found that the Respondent would have difficulty getting back into secure employment, rather than such being impossible, he submits that they must have not only addressed that possibility and found it to be too small to measure, but also, notwithstanding their failure, on the face of it, to address the possibility that he might get a job which had a higher salary than the agency, albeit less than the old employment, that that must have been taken into account, because of the words used in its conclusion. "The Tribunal therefore considers" is a reference back to all the words used by the Tribunal, that it would be just and equitable in the circumstances to award the continuing loss on that basis; and he submits that such an approach takes into account the uncertainty of the agency job and the uncertainty of the risks of the future, and, although we have already indicated we do not accept his logic in this regard, that there would have been an element of taking into account that the base figure for the agency wage was already higher than it might have been, if they had taken the average over the previous ten months. Therefore, submits Mr Hogarth, the Tribunal made an industrial jury decision which took into account the various uncertainties both ways.
15. It may be that after a full consideration, a figure might come out which perhaps approaches the sum of £6,070 per year for six years eight months, on some basis or other, but we are entirely satisfied that this Tribunal either did not address, or, if it did address, did not begin to set out its reasons in respect of dealing with, all the arguments which plainly are available to elucidate those factors and uncertainties.
16. There must be a finding and an allowance, if appropriate, in respect of whether the Appellant, having used his best efforts in a relatively short time to find the relatively less well paid job on an agency basis that he did find, would be able to find a better job on more secure terms at some stage, notwithstanding his age, over the following six years and eight months. No finding in that regard appears to have been made, and we do not accept Mr Hogarth's submission that it is somehow implicit in what was said. The vicissitudes have not been approached and have not been measured, and the chances of improvement have not been approached and have not been measured.
17. Of course, we accept, as Mr Hogarth submits, that, given the insecure and unpensionable nature of the agency job, a possible conclusion might have been that that would not have remained, and yet the Tribunal made the assumption that he would continue in the current job at the current rate. But there is no addressing at all of the question as to whether in fact it was likely, and if not, why not, that he would better himself both in respect of job and in respect of current rate. This Appeal Tribunal is quite plain that the matter must be remitted, so that a proper decision can be made as to whether it is indeed appropriate to foresee a loss of £6,070 per annum for every year until retirement.
18. The second challenge that Mr Jones makes is to there being no discount made for accelerated payment of that sum of £6,070 per annum, or indeed whatever sum might turn out to be the right figure, if a different figure, after proper analysis of the actual continuing annual loss. Mr Sean Jones submits that it is almost an automatic matter to make a discount for accelerated payment, where a claimant in proceedings, be they in the High Court or in the Employment Tribunal, is having put in his hand at once a sum which, otherwise, would not be paid to him except by instalments over the next six or seven years, and that there must, in those circumstances, on any tortious basis, be a discount for accelerated payment. None was made; the Tribunal has not even, apparently considered the point, by simply arriving at a mathematical formula.
19. It appears from what Mr Hogarth tells us that the reason the Tribunal did not consider that was because they were not addressed on it. It certainly is obviously the case that it is only in the last two years, as awards have got larger in the circumstances we have indicated, that this kind of issue would become at all significant. Old fashioned industrial awards in unfair dismissal claims would have been limited to two or three years, as they tend to be in the High Court, much of which would have elapsed before a hearing, and so the discount for accelerated payment would not ordinarily have been considered until very recently, and submits Mr Jones, accelerated payment and discount is automatic in the High Court, and ought to be similarly automatic in the Employment Tribunal. Thus, even though the matter was not argued, he has had permission to argue this on appeal; it is an obvious point of law and causes no prejudice to the Respondent, who needs to deal with the point in any event. The way that the Respondent deals with the argument, although making it clear that the point was not run below, is to put his case on the basis that had the position been dealt with properly by the Employment Tribunal, the same result would have occurred.
20. Of course, in any event, Mr Hogarth was arguing that the matter should not be remitted, but we propose, as we have indicated, to remit the matter, in any event, on the first ground that has been submitted by Mr Jones, and therefore any argument of prejudice is, in any event, eliminated by the fact that this will have to be re-argued in any event; so we do allow the argument to be put forward, indeed it has already been allowed on the preliminary hearing, and we do therefore take the matter so far as to accept Mr Hogarth's effective implicit submission that the Tribunal ought to have at least considered the question as to whether an accelerated discount should be made.
21. He says, however, that had the Tribunal addressed the question and, therefore by a natural consequence, when a fresh Tribunal, as it now will on remission, unless there is agreement between the parties in the meanwhile, comes to consider the position, it will not be a question of the automatic operation of a discount. He points to Wells v Wells in which the question of a discount for accelerated receipt has most recently arisen in the House of Lords, 1999 AC 345, and points out that the bulk of the sums awarded by way of damages for personal injury in that case were for sums that were not loss of earnings, though so far as they were nursing and care costs, they would have included a substantial element relevant to wages costs. In Wells -v- Wells, the discount rate arrived at was calculated by subtracting from the actual likely investment return the increase in the Retail Price Index, in order to arrive at a real return, and the real return, by dint of having the sums early, was then subtracted from the amount of capital because, of course, the sum paid would be expected to meet the loss, by dint of a combination of expenditure of capital over a fixed period, coupled with the interest deemed to be received in respect of that same period.
22. Mr Hogarth submits that where a claim is entirely one of wages, it is not appropriate to consider the Retail Price Index, at least without injecting into it the Wages Index, and if the Wages Index has risen at a faster rate than the RPI, then the loss suffered by the claimant is the loss of the opportunity to increase his wage by the amount that the Wage Index outpaces the Retail Price Index, and that loss must be offset against the gain otherwise acquired by receiving the money early; and, he submits, by looking at the standard generalised Wages Index, which he sought to put before this Tribunal, although, of course, it was not in evidence before the Tribunal below, and thus would have been received by us de bene esse on the basis of what would be likely to be put before a Tribunal on a remission, it could be seen that wages had increased faster than the RPI by about the amount that would otherwise be offsetable in respect of accelerated discount.
23. The likely result if the matter were remitted would be, he submits, that, for a completely different reason, there would be no discount, and thus the figure of nought, at the moment explained away by the fact that the Tribunal did not address its mind to the question, would be arrived at by subtracting or setting off the increased return, by virtue of accelerated payment, against the loss of the opportunity for the claimant to receive the increase of the Wages Index over the Retail Price Index, during a relevant period.
24. Mr Jones does not, in principle, oppose the prospect that, before an Employment Tribunal, those kind of questions would be relevant, included, of course, in relevant evidence, not only as to both the relevant indices, to which we shall return, but also, no doubt, some specific evidence in relation to likely increases in wages for the Respondent or his fellow employees, at the hand of this particular Appellant, either by reference to what has occurred to date, or what may occur in the near future.
25. It is plain that if Mr Hogarth is right, life is going to become very much more complicated for Employment Tribunals than it has been thought to be to date. It would seem that most Employment Tribunals have followed the High Court and allowed for accelerated discounts, although plainly, there will have been Tribunals such as this, who made no accelerated payment discount; but if Mr Hogarth be right, the right course is not to take such a blanket approach, but to address the questions to which we have already referred, by reference to RPI and Wages Index as well as real return.
26. That is going to need a certain amount of evidence, presumably by way of tables, produced at the Employment Tribunal. There is, of course, the extremely useful document produced by the Professional Negligence Bar Association, some use of which has been made before us today, and which is certainly regularly used in the High Court, and it may now become a bible in the Employment Tribunals also, but there may be other ways of adducing the evidence.
27. Mr Hogarth sought to say, as we have indicated earlier, that the right approach, just as the RPI should be the approach for ordinary peoples' expected costs of living expenses, would be to use a generalised standardised Wage Index across the entirety of business and industry, in order to measure wage inflation. We are certainly not persuaded by that, although, no doubt, the Employment Tribunal to which this will be remitted, can look at this again. Our provisional view would be that the right index to adopt would be an index which related to the particular job done by a particular claimant. If he is saying that "I, personally", [the applicant] have suffered loss because I would have been in a job where there would have been wage inflation running over the RPI, which I have lost out on" then it would appear, at any rate provisionally, that the right index, if there be one, would be one which related to that particular job or particular industry.
28. Mr Hogarth has frankly told us that if the relevant index would be that pertaining to a distribution industry, the Respondent being a warehouseman, then at least, in relation to the years 2000 and 2001, wage inflation in that industry has considerably fallen below the increase in the RPI, such that it would not be arguable that there should be no accelerated discount payment, or that it would be, at all, set off; that remains to be seen.
29. We are entirely satisfied that it cannot be right for there to be no consideration of the issue, and that this Tribunal, once the matter is remitted to it, should decide whether is a case where there should be an automatic discount, or whether it is appropriate to take into account indices or any other evidence which direct the Tribunal towards questions of wage inflation or the differential between wage inflation and increase in the cost of living, whether as submitted by Mr Hogarth or otherwise.
30. In those circumstances, we allow this appeal in respect of both aspects of the appeal, and remit the matter to the Employment Tribunal. This is a case in which there was, as we have indicated, very little consideration by the Employment Tribunal of these issues, and there will need to be a fresh look at the case. It has nothing whatever to do with the issue of liability, which was carefully and fully adjudicated upon by this Tribunal. There are some important questions of law and practice, which will need to be looked at by the Employment Tribunal, and might possibly even return on appeal, unless otherwise disposed of, and it may be that this will be concluded to be a case which is not appropriate or convenient to be heard by the same Employment Tribunal.
31. It may be that the Regional Chairman may wish to hear it; it may be that other Chairmen may be free; it may be this Chairman may be free, but not the same members. We give no direction that the matter must be heard by a different Tribunal, but we do direct that it should not necessarily be heard by the same Tribunal when it is returned, and a date convenient to the Tribunal and the parties should be found, irrespective of whether the same membership can be constituted. In those circumstances, this appeal is allowed.