United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR PAUL CAPE (of Counsel) Instructed by: British Medical Association Bartree House 460 Palatine Road Northendon Manchester M22 4DJ
For the First Respondent For the Second Respondent	MR TIM SMITH (Solicitor) 35 Hampford Way Bedlington Northumberland NE22 5ET MR TIM SMITH (Solicitor) Instructed by: Messrs Crutes Solicitors 7 Osborne Terrace Jesmond Newcastle upon Tyne NE2 1RQ


 


HIS HONOUR JUDGE J McMULLEN QC

1. We will change the title of this case to Mrs O Harrison since she is now married.
2. This case is about the assessment of compensation for future losses following unfair dismissal and sex discrimination. The judgment represents the views of all three members. We will refer to the parties as Applicant and Respondents.

Introduction

3. It is an appeal by the Respondents in those proceedings against a reserved decision of an Employment Tribunal sitting over two days with two days' deliberations at Newcastle upon Tyne, Chairman Mr J R Barton, registered with Extended Reasons on 8 January 2003. The Applicant was represented by a barrister from the CAB and today by Mr Tim Smith, solicitor. The Respondents were represented there by an officer of the BMA and today by Mr Paul Cape of Counsel.
4. The Applicant claimed unfair dismissal and sex discrimination. The Respondents contended that she had retired on reaching the age of 60 and denied dismissal, whether unfair or not, and sex discrimination. A reserved decision in her favour on both complaints was registered with Extended Reasons on 27 December 2001. We will exercise our power to correct what is an agreed typographical error in attributing this to Mrs Gray, who was originally part of the proceedings, but the Respondents discontinued their appeal against the finding of sex discrimination and the award of compensation in her case.

The Issues

5. The essential issue defined by the Employment Tribunal at a Directions Hearing, insofar as it is relevant to the appeal today on compensation, was to determine the level of compensation to be awarded to her. The Tribunal awarded £61,605.
6. The Respondents appeal against part of that decision relating to the Applicant Mrs Harrison in respect of forward losses. There is no challenge to the decision on liability or to the findings made there which in part are relevant to the findings on compensation. There is no challenge to the unfair dismissal elements and part of the sex discrimination compensation relating to losses up to the date of the decision.
7. Directions sending this appeal to a full hearing were given at a Preliminary Hearing by Judge Burke QC and members. As a result, parts of the Notice of Appeal were dismissed and an amended Notice of Appeal on reduced grounds was approved and forms the basis of the appeal to us today.

The Legislation

8. The relevant provisions of the legislation are the Sex Discrimination Act 1975, sections 63 and 65:

"Jurisdiction of Employment Tribunals

63 (1) A complaint by any person ("the complainant") that another person ("the respondent") –

(a) has committed an act of discrimination against the complainant which is unlawful by virtue of Part II …

may be presented to an employment tribunal.

Remedies on Complaint under Section 63

65 (1) Where an employment tribunal finds that a complaint presented to it under section 63 is well-founded the tribunal shall make such of the following as it considers just and equitable –

(a) an order declaring the rights of the complainant and the respondent in relation to the act to which the complaint relates;

(b) an order requiring the respondent to pay to the complainant compensation of an amount corresponding to any damages he could have been ordered by a county court or by a sheriff court to pay to the complainant if the complaint had fallen to be dealt with under section 66 ..."

9. As respects compensation for unfair dismissal, section 123 (1) and (4) of the Employment Rights Act 1996 provide as follows:

123 (1) "Subject to the provisions of this section and sections 124 and 126, the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.

(4) In ascertaining the loss referred to in subsection (1) the tribunal shall apply the same rule concerning the duty of a person to mitigate his loss as applies to damages recoverable under the common law of England and Wales or (as the case may be) Scotland."

10. The Employment Tribunal did not refer to any of those provisions or to any authority.

The Facts

11. The Respondents are in partnership as medical practitioners in the North East. The Applicant was born on 26 May 1941 and began employment with them on 18 November 1985 as a medical secretary. She was issued, with other employees, a standard form of contract which defined the retirement age as 60 years. The Tribunal found that the Applicant always intended to work beyond the age of 60. The findings on that are clear: see paragraphs 4 (i) and 4 (m) of the liability decision. Although all employees appear to have had the same contracts, one male employee was allowed to continue working. As a result, claims of sex discrimination were made by the Applicant when she was required to retire on attaining the age of 60. The Tribunal in its conclusions said as follows:

11 "The Tribunal was satisfied that there had been a difference in treatment between female and male administrative staff and that indeed the provision of the retirement age of 60 in the employment contracts was something of a sham in the sense that it ha never been intended to apply to the only male member of administrative staff. The Tribunal was satisfied that Mr Fellowes-Prynne was for these purposes an appropriate comparator on the basis that all three employees had the same basic contract and the same provisions for retirement there inserted.

12 As there was a difference in sex the Tribunal felt it appropriate to draw inferences and took into account in particular the comments made by Mr Fellowes-Prynne as to what might have been in his mind in inserting that age in the contracts when they were drafted and Dr Silva's admission that the reason for that age being inserted in the contract may have been to do with what was then considered to be women's normal retirement age.

13 In effect the contractual age was not the same whether the employee holding that position was a man or a woman and accordingly the normal retirement age under section 109 [of the Employment Rights Act 1996] becomes the fallback age of age 65. There having been no potentially fair reason shown for dismissal by the employer in this case the dismissal of Ms Noble was therefore unfair."

12. Thus the Tribunal descended upon the calculation of compensation. It awarded the sum above, having considered a report by an expert, Dr Papps. It appears to have relied upon Dr Papps' report for certain key elements in the awards of compensation.
13. As to unfair dismissal and sex discrimination, losses up to the date of the hearing are not in dispute and these amount to £21,933.67. Such figure includes compensation and basic award for unfair dismissal; and injury to feelings, together with interest in respect of sex discrimination.
14. As to future losses, the Tribunal calculated the weekly loss of £177.03 from the date of assessment (that is, 8 January 2003) until putative retirement date on 26 May 2006, i.e. 176 weeks, less "percentage chance that she could not carry on until 65 @ 2.5%". It then went on to award loss of a pension lump sum of £2,157.18, again less a 2.5% discount and £7190 in total for a period of ten years being the difference in pension received after the age of 65.
15. Those figures form the basis of the forward losses in this case.

The Respondents' Case

16. The Respondents submitted that the Employment Tribunal had erred in law in that insufficient reasons had been given for the decisions; that the Tribunal had failed to reach decisions on points at issue in the case and had made a decision which was perverse in one respect. In detailed submissions in writing and orally, made on behalf of the Respondents, it was contended that the Tribunal had made the following substantive errors:

(1) The Tribunal had failed to account for its reasoning when it discounted by 2.5%. That represents a very small figure for the vicissitudes of life and the Tribunal failed to give any reason for it.

(2) The Tribunal had erred when it excluded from consideration incoming pension benefits from state and occupational sources.

(3) The Tribunal had failed to provide any reduction in respect of the minimum admitted mitigation of £49 a week or alternatively £60 a week, depending on which aspect of the consultant's report was taken to be the guiding principle.

(4) No account had been taken of a discount for accelerated payment.

17. It was submitted that the EAT should use its industrial experience in deciding at least one issue here, that is, pension loss. The principle involved, Mr Cape argued, was that the Applicant should not be entitled to leave out of account the pension payments which she would have received by reason of her retirement and at the same time be compensated for loss of earnings thereon. Further, it was illogical for there to be a double taxation as it were of this figure by the award of the Tribunal's sums for pension and difference in pension losses which we have set out above.
18. There is no explanation for certain aspects of the Tribunal's decision. As for the failure to consider accelerated pay, Mr Cape accepted that this matter was not put before the Employment Tribunal and acknowledged that the general rule is that cases not argued below may not be advanced here: see Kumchyk v Derby City Council [1978] ICR 1116.
19. In reply he contended that the judgment of the House of Lords in Smoker v London Fire and Civil Defence Authority [1991] IRLR 271 did not apply to the calculation of compensation in respect of the statutory tort of sex discrimination.

The Applicant's Case

20. On behalf of the Applicant it is contended that there is a firm finding that the date of retirement of the Applicant was at her 65^th birthday. There is no evidence that the statement of the Applicant to this effect was challenged. The principal argument in the case was upon the mitigation and not upon the future losses. The Tribunal heard evidence and could have heard evidence if led by the Respondent in respect of what are generally described as the vicissitudes of life.
21. As to future earnings, it was conceded engagingly by Mr Smith that this might be the Respondent's best point, since there did appear to be a discrepancy between the two figures for mitigation provided by the expert. The Tribunal had used its knowledge of the local labour market in respect of its finding on Mrs Gray and obviously was doing so in respect of the current Applicant.
22. As to the occupational pensions point, it was contended that Smoker regulated this decision and any pension achieved through the pension scheme, which in this case is the NHS, should not be brought into account.
23. As to accelerated receipt, the point was not taken except in the amended Notice of Appeal. Judge Burke QC's EAT gave permission without hearing the Respondents on that matter. It was open to the Applicant to take the point of jurisdiction under Kumchyk which she did and the point may not be raised. In any event, the discount would be taking a broad approach; roughly 2%.
24. As to the 2.5% discount, again Mr Smith acknowledged that he was struggling to justify this in the Tribunal's decision and simply contended that there had been no evidence of the other vicissitudes that might come into place such as restructuring, shorter hours and so on. The 2.5% possibly represented the discount for death, although neither party put the Ogden tables before the Employment Tribunal or us.

The Legal Principles

25. The legal principles which appear to be applied in this case are as follows:

(1) An Employment Tribunal must give reasons for its decision on all of the issues which are critical for the determination of the case: Meek v City of Birmingham District Council [1987] IRLR 250, per Bingham LJ.

(2) No new point may be taken on appeal except in exceptional circumstances: Kumchyk (above).

(3) In the calculation of damages for, for example, an industrial injury caused by a tortfeasor, the principles of assessment were set out by Lord Diplock in Mallett v Monagle [1970] AC 166 at page 176E-H as follows:

"But this still leaves the court with the task with which it has been confronted since the first Fatal Accidents Act was passed of estimating how long the dependents would have continued to benefit from the dependency, had the deceased not been killed, and what the amount of the dependency would have been in each year of that period.

The role of the court in making an assessment of damages which depends upon its view as to what will be and what would have been is to be contrasted with its ordinary function in civil actions of determining what was. In determining what did happen in the past a court decides on the balance of probabilities. Anything that is more probable than not it treats as certain. But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future if something had not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages which it awards.

The starting point in any estimate of the number of years between the date that a dependency would have endured is the number of years between the date of the deceased's death and that at which he would have reached normal retiring age. That falls to be reduced to take account of the chance, not only that he might not have lived until retiring age, but also the chance that by illness or injury he might have been disabled from gainful occupation. The former risk can be calculated from the available actuarial tables."

(4) In considering a case where the tortfeasor is also the payer of a pension, no account should be taken of a pension for disablement arising from the same source: see Smoker (above).

(5) There may be doubt as to whether or not a Tribunal is required as a matter of law to consider accelerated payment: see Les Ambassedeurs Club v Bainda [1982] IRLR 5.

Conclusions

26. Applying those principles to the decision in front of us, we accept the arguments of the Respondents and have decided that the appeal should be allowed. There are difficult issues arising out of the judgment of the Employment Tribunal in this case. We number them as follows:

(1) Why did the Employment Tribunal make a 2.5% discount?

(2) Why is the figure different for weekly wages pre and post the date of the decision, i.e. £188 and as against £177?

(3) On what basis did the Employment Tribunal decide to exclude occupational pensions? It is common ground that state pensions should be excluded but it is not clear to us upon what basis the calculation left out of account occupational pension from the NHS. For after all, if the Applicant had continued to work as we find was her choice until 65, she would not be earning money from the Respondent and drawing an occupational pension in respect of that service. It may be that the principle in Smoker was what the Tribunal was applying, but we do not know.

(4) Why did the Employment Tribunal not make a deduction for the mitigation pursuant to the report which it accepted; and if so, which figure: £49 or £60?

27. As to the failure to deal with an accelerated payment, the Tribunal cannot be faulted as it was not argued before it. The Court of Appeal has recently considered this matter afresh. Since we have decided this matter is to be remitted it will be open to the Respondents to research and if so advised argue that point.
28. Sadly we are unable to supply the answers to the questions and thus to fill in the missing pieces. The Tribunal obviously had a lot to think about, for it took two days in Chambers; but its reasoning is jejune and imperfect and cannot stand.
29. Having discussed with Counsel the disposal, we will send this matter back to the same Tribunal. It cannot be said that the parties have lost confidence in it given that there is no appeal against the liability decision, no appeal against the decision in respect of Mrs Gray and no appeal in respect of substantial parts of the compensation decision. It is accepted by both counsel that this matter should go back to the same Tribunal for rehearing with evidence, if the Tribunal chooses to hear it. The agreed estimate is one day. The Respondents will apply for a one-day hearing before the same Tribunal unless the Regional Chairman holds that it is impracticable to reconstitute this Tribunal, in which case it will go to a fresh Tribunal on the basis of the findings already made, except in respect of those matters which we have decided, there should be a rehearing.
30. The parties have 14 days from the seal date of this Order to exchange any evidence or calculations. We are concerned there has been quite a lot of time since this case was on so we will do our bit to speed it up. Some parts of this award have already been paid over. We see no reason why the whole of that figure which has not been disputed should not be made available to the Applicant forthwith. The appeal is allowed in part.