United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR FODDER (Of Counsel) Instructed by: Ms Charlotte Gillier EEF Broadway House Tothill Street London SW1H 9NQ
For the Respondent	THE RESPONDENT In Person


 


JUDGE BURKE

1. Mr Walshaw was employed by the Appellants Lancaster Fibre Technology Ltd, as group purchasing manager until he was dismissed for redundancy with effect from 31 December 2001. He claimed that he had been unfairly dismissed. The Employment Tribunal, sitting at Manchester and chaired by Miss Woolley, found at their first hearing of Mr Walshaw's complaint that the Appellants were in 2001 in increasing financial difficulties which were such that they had in December 2001 entered into a creditors voluntary arrangement and that they had had in 2001, to undertake 2 separate redundancy exercises before, in September 2001, when their straightened circumstances made it necessary, they decided to reallocate the duties of Mr Walshaw's job and of other jobs in management and administration so as to reduce the workforce further.
2. The Appellants undertook a selection exercise at the end of which Mr Walshaw was made redundant. The Tribunal found that the method by which the selection exercise was carried out had not given Mr Walshaw any real chance to make representations as to the process by which that exercise was carried or to enter into any consultations as to the scores which he achieved under the criteria for selection which the Appellants adopted. Accordingly, they found that the dismissal was unfair. The Tribunal then adjourned the assessment of compensation to a subsequent date about a month later and on that date they made a compensatory award to Mr Walshaw of £27,529.78, £7,529.78 of which was in respect of past loss of earnings and £20,000 of which was in respect of future loss of earnings and loss of statutory rights.
3. The Appellants now by this appeal attack the award of £20,000 for future loss of earnings and loss of statutory rights. We need to make it clear, so that Mr Walshaw can understand it fully that this appeal does not involve any attack on the Tribunal's decision that he was unfairly dismissed. That decision is not now the subject of any appeal and is unassailable. Further, we need to make it clear that this appeal relates only to the sum of £20,000 which we have identified. Mr Fodder, on behalf of the Appellants sought at one stage in the course of argument to suggest that the Appellants by this appeal were also attacking the award of £7,500.00 in respect of past loss of earnings, albeit we had not so understood his case; but, when confronted by a clear indication in the skeleton argument put before the Employment Appeal Tribunal at the preliminary hearing of this appeal that only the award of £20,000.00 for future loss of earnings and loss of statutory right was under attack, Mr Fodder accepted that the position today had to be as it was at the preliminary hearing and that the award in respect of past loss was not or was no longer the subject of this appeal.
4. Accordingly, just as Mr Walshaw's finding that he was unfairly dismissed is now set in stone, so is the award for past loss up to the date of the Tribunal's hearing in June 2002 and indeed at our request the Appellants have agreed to pay the sum of £7,529.78 which is clearly due to Mr Walshaw, with appropriate interest in 28 days from today.
5. The Tribunal found that Mr Walshaw was, at the time of their decision, nearly 60 years old. He had, since his dismissal some 6 months before the remedies hearing, made 270 job applications and had been offered 2 interviews, neither of which resulted in an offer of employment. He had, however, obtained some work of a temporary and casual nature; and the Tribunal found, in paragraph 7 of their remedies decision, that he was able to work in a broad spectrum of industries and had considerable skill and qualifications in the areas of purchasing and work management. He could, the Tribunal held, turn his hands to many things.
6. His income at the time of his dismissal was, so far as salary was concerned, agreed at £1787.60 per month net i.e. about £21,000.00 per year. In addition the Tribunal found that he had the benefit of a car and medical insurance for his family, the value of which the Tribunal assessed together at £5,000.00 per year and the benefit of £2,448.00 per year paid by the Appellants as their contributions to a pension scheme. Thus Mr Walshaw's total package, including his benefits, amounted to a sum in the region of £30,000.00 per year.
7. The Tribunal, having awarded the figure to which we have referred in respect of past loss of earnings, then had to assess compensation for future loss of earnings and for loss of statutory rights. They found as fact that the Appellants had been and were at the date of the hearing in considerable difficulties in continuing to trade. (We should interpose that we have been told today that they are still trading.) The Tribunal then set out 3 possibilities each of which, had it come to pass, would have resulted in Mr Walshaw's dismissal from his employment by the Appellant. The Tribunal said:

"We think it right that we have to reflect those possibilities by a percentage chance in relation to the losses which the applicant has. We therefore approach this case by awarding a figure for the applicant's losses based only on a percentage of a likely loss calculated without that possibility."

8. The Tribunal spelt out those 3 possibilities as (1) that the Appellants could have concluded that they would have to make Mr Walshaw redundant and would have fairly dismissed him for redundancy; whether this was a reference to the redundancy exercise at the end of which Mr Walshaw was made redundant or some other exercise which they thought might occur in the future is not clear; (2) the tribunal referred to the possibility that they might be forced into the position of making further reductions in the workforce and (3) to the possibility that the continuing financial difficulties might eventually force the Appellants into liquidation.
9. The Tribunal went on to find that the likelihood of Mr Walshaw being fairly dismissed at some stage in the relatively near future was high. Such a view was at least open to them on the evidence which it is not necessary, for present purposes to go into. In addition there was a further variable which the Tribunal had to take into account namely Mr Walshaw's prospect of obtaining work. The Tribunal in paragraph 8 expressed the view that his loss at the time of the hearing, at which point he was doing casual or temporary work, was running at about £12,500.00 per annum; whether that figure included the benefits to which he was entitled in addition to his salary is not clear. Each party before us has adopted an opposing stance to the meaning of that particular part of the Tribunal's decision.
10. The Tribunal did not seek, at least in what they set out in their decision to calculate Mr Walshaw's total loss to retirement on the basis that he did not obtain work and then deduct from it such sum or such proportion as they believed appropriate to take into account the possibility, however they valued that possibility, that he would find work so as to arrive at a figure for Mr Walshaw's loss of earnings taking into account the prospect of his obtaining work. Nor did the Tribunal give any indication in their decision as to what period they were considering as appropriate for the calculation of future loss or what if any multiplier in respect of future loss they had in mind.
11. Indeed they did not make any finding as to how long Mr Walshaw would have gone on in employment although it is right to say that if that was the only criticism of their decision we would not have regarded that as of itself a defect; for in the absence of any evidence that a man who had worked all his working life was not going to continue to the ordinary retiring age of 65, the Tribunal would have been entitled to take it and we would be entitled to assume that they had taken it that he would continue to work until that age. The Tribunal, having not set out what figure for loss of future earnings they had in mind before applying any reduction to that figure to represent the percentage chance of the 3 possibilities that Mr Walshaw would in any event some time had been fairly dismissed did not then not set out what discount they made from their figure for loss of earnings so as to represent those possibilities. Although they had said, as we have already indicated, that they had to reflect those possibilities by a percentage, they did not in their decision begin to explain what percentage discount they in fact used, if any.
12. Instead Tribunal, after discussing the possibilities to which we have referred, simply said this, at paragraph 9 of their decision:

"We think we have to come to a figure which is not a mathematical figure reflecting all those difficulties and the figure that we have come to for all those losses, trying to reflect as far as we can all those difficulties, is £20,000."

13. Mr Fodder attacks that award on 3 fronts. The least persuasive of his points is the inclusion within the £20,000.00 together with the award for future loss of earnings of an award for loss of statutory rights without the allocation to that latter award of a specific figure. If that point stood alone we would have no hesitation in rejecting this appeal. It is well known that the conventional sum under this head is £250.00 (or sometimes £300.00); and the Tribunal's failure to spell that out does not in our judgment in any way vitiate the Tribunal's decision or represent any error of law.
14. Mr Fodder's other 2 points are of more substance. They are, firstly, that the figure of £20,000.00 or £19,750.00 (if the award for loss of statutory rights is removed) is not explained or supported by any or any adequate reasoning and secondly that the award of that sum is perverse. We will address first the arguments as to lack of reasons. Mr Fodder submits that the Tribunal had failed to explain in any sense how the figure of £20,000.00 was arrived at. The Tribunal, he submits, did not set out what total figure for future loss they regarded as appropriate in the absence of the 3 possibilities which required a discount from that total figure nor how any such total figure was calculated and to what extent the total figure for future loss was reduced by Mr Walshaw's prospects of obtaining employment. Further he submitted, having failed to set out the total figure to which a discount had to be applied the Tribunal failed to set out in respect of the 3 possibilities which they had directed themselves to take into account, either separately or together, what discount they regarded as proper to apply.
15. Mr Walshaw, who has been unrepresented before us but has had some assistance at least in legal research from an unidentified but plainly diligent source, reminded us that we must not substitute any view of ours for the view taken by the Tribunal of an award which was one which the Tribunal had to make on the facts and on the basis of what appeared to the Tribunal to be just and equitable. He reminded us, too, that we can only intervene on appeal if the Tribunal has erred in law. We of course wholly accept that those familiar and entirely appropriate limitations on our powers. He referred us to authorities in support of those propositions but it is not necessary to go to those authorities because those propositions are familiar and are not in dispute.
16. Mr Walshaw has further reminded us of the well known and valuable dictum of the Employment Appeal Tribunal in the case of Fougere v Phoenix Motor Co Ltd [1976] IRLR 259 in which the Employment Appeal Tribunal, presided over by Phillips J near to the start of its existence, said this at paragraph 2:

"It is perhaps helpful to say a word about appeals where the only issue is as to the amount of compensation. There is, of course, only an appeal to this Appeal Tribunal on a question of law. Where it can be established that the Industrial Tribunal has misdirected itself in assessing compensation, that, no doubt, will or may constitute an arguable point of law. Nonetheless, having said that, and as a matter of practice it needs to be known that the Appeal Tribunal will not interfere with awards of compensation, unless the error is shown to be something which could be described as more than trifling. The reason for that is a practical one: Industrial Tribunals have to work in practical conditions and they are obliged to assess the amount of compensation quickly – and fairly, of course – but they are bound of necessity to operate in a somewhat rough and ready way, and to paint the picture with a broad brush. It is in everybody's interest that that should be the case. It may mean that sometimes an applicant will get a bit less than he might have expected; it may mean that sometimes an employer will have to pay a little more than he had expected. But, if the compensation were to be worked out accurately to the very last half-penny, it would require prolonged hearings elaborate interlocutory procedures and all sorts of refinements which would be wholly out of place in a procedure which is meant to be quick, open to the unrepresented, and simple. Of course, if there is a serious error and that can be shown, then the Appeal Tribunal will interfere. But it will not do so in respect of trifling amounts or unimportant errors."

17. We accept that the Tribunal is entitled to and, in practical terms, often has to apply a broad brush approach to the ascertainment of the amount of compensation which it is, in the circumstances of the individual case, just and equitable to award. However, in the excerpt from Fougere which we have just cited, the Employment Appeal Tribunal was principally directing its comments to the need for a Tribunal in assessing compensation to avoid having to enter into an examination of the figures in fine detail.
18. The amount which is at stake in this appeal of £20,000 is not trivial or trifling or unimportant but is manifestly a very substantial sum. Nothing in Fougere or in any other decision of which we are aware permits the Tribunal, in assessing compensation, to depart from their well established duty as to the giving of reasons for their conclusions. The Tribunal's duty in general has been set out in authorities which are very familiar. In Meek v City of Birmingham District Council [1987] IRLR 250 at paragraph 8 Bingham LJ said:

"It has on a number of occasions been made plain that the decision of an Industrial Tribunal is not required to be an elaborate formalistic product of refined legal draftsmanship, but it must contain an outline of the story which has given rise to the complaint and a summary of the Tribunal's basic factual conclusions and a statement of the reasons which have led them to reach the conclusion which they do on those basic facts. The parties are entitled to be told why they have won or lost. There should be sufficient account of the facts and of the reasoning to enable the EAT or, on further appeal, this court to see whether any question of law arises; and it is highly desirable that the decision of an Industrial Tribunal should give guidance both to employers and trade unions as to practices which should or should not be adopted."

19. Those well-known principles were elaborated upon by Sedley LJ in the recent case of Tran v Greenwich Vietnam Community [2002] IRLR 735 in paragraph 17 of his judgment; but we do not regard it as necessary for us to set out the relevant passage in the circumstances of this case.
20. In the context of compensation specifically the The National Industrial Relations Court in Norton Tool Co Ltd v Tewson [1972] IRLR 86 said, at paragraph 7, that tribunals must set out their reasoning in sufficient detail to show the principles upon which they have proceeded. No great elaboration is required and the task should not constitute a burden. Indeed the need to give reasons may well assist in the process of properly making the discretionary assessment of damages. In our judgment despite the able argument of Mr Walshaw for whom we have considerable sympathy - for the shortcomings of the Tribunal's decision as we see them are in no way to be laid at his door - the Tribunal's decision as to future loss of earnings in this case is seriously defective. The figure of £20,000.00, to use an expression which is hackneyed but which is perhaps particularly appropriate in this case, appears to have been plucked out of the air. The parties simply cannot tell from the Tribunal's decision how that figure was reached and cannot tell, subject to the perversity point to which we will return shortly, whether it was right or wrong. It could for example represent an application of a discount of 80% to 5 years loss of earnings at £20,000.00 per year, in which case the Appellant would wish to argue that insufficient allowance had been made for Mr Walshaw's employment prospects and Mr Walshaw would wish to argue that the discount for the possibilities that he would have been fairly dismissed in any event was too great; or it could represent the application of a discount of 50% to 4 years loss of earnings at £10,000.00 per year in which case the parties' arguments would be the obverse.
21. Other combinations of figures are, of course, possible. This is so because neither the parties nor we know on what basis if any figure of £20,000.00 was reached. The parties simply do not know and cannot know even the most basic elements of the Tribunal's approach to the task which confronted them which led them to that figure. We do not suggest that the Tribunal had to carry out a detailed examination of future loss of earnings and attach a separate discount figure for each of the 3 possibilities to which they referred. Mr Walshaw's own industry or that of his assistant unearthed a decision of the Employment Appeal Tribunal, Cartiers Superfoods Ltd v Laws [1978] IRLR 315, in which the Tribunal assessed future loss of earnings at £3,744. They did so by first of all calculating what the weekly and thus the annual loss of earnings for the future was going to be and then representing the future possibilities and uncertainties which they had to take into account by, instead of applying the maximum multiplier which could have been appropriate in the circumstances of 4 in 5, applying a multiplier of only 3. The Employment Appeal Tribunal, again presided over by Phillips J, described that method of proceeding which involved reducing all the uncertainties to and rolling them up into the choice of a single figure for the multiplier as one which was appropriate; and it could have been adopted in this case. But in order to satisfy even those basic requirements the Tribunal needed to ascertain what was the annual loss of earnings; taking into account the prospects of future employment and what multiplier they were going to apply, taking into account the possibilities that Mr Walshaw would in any event have been dismissed or representing a discount in respect of those possibilities by a reduction from a full multiplier.
22. The Tribunal have not expressed how they reached their figure,;and we do not know whether they have used neither of those routes or no route at all in coming to their conclusion. We therefore see no alternative but to conclude that the Tribunal here have fallen into error in failing to set out any reasons for their decision that future loss of earnings, including loss of statutory rights, should be calculated at £20,000.00. That decision in our judgment cannot stand.
23. We turn to perversity very quickly. Mr Foder did not seek, in argument, to develop this criticism of the Tribunal's decision at any length or indeed with much vigour; for, entirely fairly, he recognised that the decision of the Tribunal under attack was so lacking in reasons that it was difficult to say and indeed impossible to say whether it was or was not perverse. Since we do not know what the Tribunal had in mind and why they reached their figure for future loss of earnings, it appears to us simply not to be possible to say that that figure was or was not a figure which was plainly wrong or fell within any of the other descriptions which are used when perversity arguments are put forward at the appellate level. We therefore reject the argument based on perversity.
24. However for the reasons we have already set out, the Tribunal's award for future loss of earnings and loss of statutory rights cannot stand.
25. We perhaps should also mention and we do so now that it is not at all clear that the Tribunal, in considering future loss of earnings also considered future loss of pension. That is a head of claim which, on the face of it, it would appear that they should have taken into account and which they would have had to approach in accordance with the various authorities which provide guidance to Tribunals so as to enable them to achieve a fair result in what is, of course in calculation terms a difficult area.
26. Having reached the decision that we have, the appeal is allowed to the extent that the award of £20,000 in respect of future loss of earnings and loss of statutory rights is set aside and the calculation of the award under those two heads must be remitted to the Employment Tribunal. We have considered with care whether it would be possible to remit to the same Tribunal but have concluded, having regard to what we have said about the defects in this decision, that that course would not be right or fair. The remission must be to a differently constituted Tribunal.
27. We reach this decision not without a great deal of sympathy for Mr Walshaw. Apart from anything else, any further delay in achieving finality to his undoubted entitlement to appropriate compensation may if the company's fortunes were not to improve reduce the chance that he will ever get any money at all although we have done our best to secure for him the £7,500.00 odd which is no longer in dispute. We cannot direct that this matter should be given priority in term of a hearing date by the Tribunal; but we express the strong hope that the Tribunal will be able to assist Mr Walshaw in enabling this matter to be disposed of finally as soon as possible.