United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR DAVID READE (of Counsel) Instructed by: Messrs Boyes Turner Solicitors Abbott House Abbey Street Reading Berkshire RG1 3BD
For the Respondent	MR PAUL SPENCER (of Counsel) Instructed by: Messrs Abbott Lloyd Howorth Solicitors Minster Court 22-30 York Road Maidenhead Berkshire SL6 1SF


 


HIS HONOUR JUDGE PETER CLARK

1. This is an appeal by Onyx UK Ltd ("Onyx") against a decision of the Reading Employment Tribunal's assessment of compensation for unfair dismissal made in favour of the Applicant, Mr Russell. That decision was promulgated with Extended Reasons on 17 May 2002, following a hearing on 29 April.

Background

2. The Applicant was born on 17 September 1940. On 31 August 1967 he commenced employment with the Royal Borough of Windsor and Maidenhead ("the Council") as an HGV driver, engaged in refuse collection. On 26 March 1995 his employment was transferred from the Council to Onyx when the refuse collection service was contracted out to that company. He was then a charge hand.
3. In November 1999 he experienced problems with swelling of his right knee. He was off work until March 2000. He then returned to work but went off work again on 13 June 2000 with swelling of the knee, never to return.
4. On 15 September 2000 he was interviewed by his line manager, Mr Vickers, who wished to know when he would be fit to return to work. The Applicant said that he did not know.
5. He continued to submit medical certificates and received contractual sick pay; that was full pay for the first six months and half pay for the next six months, expiring June 2001. Following expiry of his contractual entitlement to sick pay Onyx continued to make monthly 50 percent payments through to September 2001, although the Applicant thinks that was probably by mistake.
6. In September 2001 he noticed a payment into his bank account of £3,417.01 from Onyx. On enquiry of the company what that payment represented he was told that it was his 'finish up money', that is, three months' pay in lieu of notice and 13 days holiday pay. That was followed by a letter from the company dated 28 September 2001 which stated that "it was mutually agreed" that the Applicant was unable to carry out his duties. In fact no such agreement had been reached and, although the Applicant had given his written consent to the release of his medical records, the company had not sought any medical opinion on his condition.
7. The Applicant then consulted solicitors and an Originating Application complaining of unfair dismissal and wrongful dismissal, dated 29 November 2001, was presented to the Employment Tribunal. The claim was resisted and came on for hearing before the Reading Employment Tribunal on 29 April 2002.
8. On that occasion Onyx conceded that the Applicant's dismissal was unfair and the only issue remaining for the Employment Tribunal was the assessment of compensation.
9. Section 123 (1) of the Employment Rights Act 1996, to which the Employment Tribunal directed themselves at paragraph 7 of their Extended Reasons provides, so far as is material, that

123 (1) "…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."

10. Section 123 (4) applies the common law duty of a complainant to mitigate his loss to the calculation under section 123 (1).
11. As to the correct approach to section 123 (1) of the Act, we have been referred to an unreported decision of the EAT, 177/01, Glass Systems (UK) Ltd v Allsopp, judgment delivered by Mr Commissioner Howell QC on 10 April 2002. At paragraph 15 the learned Judge identified three questions arising under section 123 (1). They were:

(1) "What loss is shown to have been sustained by the complainant in consequence of his dismissal?

(2) How far is it shown that that loss was attributable to action taken by the employer?

(3) What amount of compensation does the Employment Tribunal consider it just and equitable to award having regard to those two factors, and in all the circumstances?"

12. Although liability was conceded, compensation remained a live issue before the Tribunal. In their amended form IT3, at paragraph 16.1 of the Respondent's grounds for resistance, it is said:

16.1 "The Applicant's medical history was such that he could not be expected to return to work. He had exhausted his sick pay entitlement and so has no effective claim for loss of earnings."

13. That argument was maintained before the Tribunal by Mr Anstis, then appearing on behalf of Onyx.
14. At paragraph 1 of the Tribunal's reasons they record in summary Mr Anstis's closing submissions, including the submission that because the Applicant had been away continuously for 15 months and his sick pay entitlement had expired, he had suffered no loss. That submission is also helpfully encapsulated in a witness statement which is before us from Mr Werrell, the solicitor then acting for the Applicant, who was present at the Tribunal hearing. At paragraph 12 of that witness statement he summarises Mr Anstis's submission in this way:

12 "Mr Anstis said the Tribunal should not be influenced by either sympathy for Mr Russell or disapproval of the way Onyx had acted. Their purpose was to compensate Mr Russell for his financial loss. He asked the Tribunal to compare Mr Russell's current situation with the position had he not been dismissed. Mr Russell had been off work for fifteen months. His entitlement to sick pay had expired and he could not have done his former job. If Mr Russell had not been dismissed, he would have stayed on the books of Onyx without receiving any sick pay. Mr Russell had said that Onyx expected too much of him (I understood this to refer to Mr Russell's evidence that he was required to help load as well as drive the lorry). He was entitled to go back to his job but accepted that he was unable to do this. There was no duty on Onyx to adjust the job to enable Mr Russell to carry it out. In fact, Mr Russell was now better off because he could claim retirement pension. The Tribunal should therefore think carefully before making any compensatory award because the dismissal had made Mr Russell better off."

15. Thus the issues for the Employment Tribunal were:

(i) bearing in mind his entitlement to sick pay had ended, had the Applicant suffered any, and if so what, financial loss as a result of his unfair dismissal; and

(ii) had he failed to mitigate his loss by seeking alternative employment, the onus of showing a failure to mitigate lying on the Respondent?

16. The Employment Tribunal found that there had been no failure on the part of the Applicant to mitigate his loss. No issue arises on that finding in this appeal.
17. The real question, posed by Mr Reade with his usual economy, is whether the Tribunal answered the first question, making the necessary findings of fact and explaining the reasoning which led the their conclusion: see Meek v City of Birmingham District Council [1987] IRLR 250; and more recently, the observations of Sedley LJ in Tran v Greenwich Vietnam Community [2002] IRLR 735, at paragraph 17.
18. The Tribunal's findings are set out at paragraph 7 of their reasons. They make no reference at all to the fact that the Applicant was on sick pay, reduced to 50 percent of basic pay, and that his contractual entitlement to sick pay expired in June 2001. They make no findings as to when, if at all, he was fit to return to the job he was doing prior to going off sick in June 2000. It appears to have been common ground that he never regained that level of fitness. They make no findings as to whether alternative employment with Onyx was available for him and suitable for him, although they heard evidence on the point both from the Applicant and Mr Johnson, Onyx's contract manager. We take this from Mr Werrell's helpful witness statement.
19. Instead, they proceeded on the basis that the Applicant had lost income with Onyx and then proceeded to compensate him on that basis for the period June 2001 until the end of 12 months after date of the hearing, when they held he would have found alternative employment (despite their findings as to his age and medical condition).
20. Bravely though Mr Spencer has sought to support the Tribunal's reasoning, his task is, in our judgment, an impossible one. It is plain, on the face of the Employment Tribunal's reasons, that the first question posed by Mr Commissioner Howell in Glass Systems simply has not been properly addressed. If there was a loss then plainly it was attributable to the dismissal. The question is whether the Applicant suffered any, and if so what, loss. That question has not been but ought to have been clearly resolved by reference to the necessary findings of fact and reasoning leading to a conclusion. Instead, the Tribunal proceeded on the assumption that for the relevant period the Applicant suffered loss at the rate of his ordinary earnings with Onyx.
21. In these circumstances, with regret because it means the parties will be put to further expense, delay and anxiety in the case of the Applicant particularly, we must allow the appeal and remit the question of compensation for unfair dismissal to a fresh Tribunal for rehearing. We stress that all matters relating to quantum will be in issue, subject to one matter to which I shall return. It is a full rehearing. The parties may call such evidence, including medical evidence, at the next hearing as they are advised, not limited to the evidence called on the last occasion, but plainly only evidence that is relevant to the issue before the Tribunal. Only then will the new Employment Tribunal be in a position to decide the questions posed under section 123 (1). On the facts of this case, without in any way limiting the Tribunal's approach, those questions include:

(i) whether the Applicant was entitled to any, and if so what, sick pay after June 2001;

(ii) whether he would have returned to some, and if so what, work with Onyx and when, if at all, that would have happened;

(iii) whether a time might have arisen when Onyx could have fairly dismissed the Applicant on ill-health capability grounds, and if so when (the Polkey question);

(iv) when, if at all, he might have obtained fresh employment elsewhere and at what rate of pay;

(v) what pension loss he suffered in these circumstances;

(vi) what award of compensation is just and equitable in all these circumstances.

22. Finally, there being no appeal on the mitigation of loss point, it is not now open to Onyx to argue that up until the date of the last E``mployment Tribunal hearing, but no later, the Applicant failed to mitigate his loss.