United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR NICHOLAS SPROULL (of Counsel) Instructed by: South Gloucestershire County Council The Council Offices Castle Street Thornbury South Gloucestershire BS35 1HF
For the Respondent	MRS A J BENNETT (The Respondent in Person) MRS BIDWELL (Mother of Respondent)


 


SUMMARY

Unfair Dismissal – Compensation

The Tribunal's assessment of the compensation award was not perverse or wrong in law.


 


HIS HONOUR JUDGE RICHARDSON

1. This is an appeal by the South Gloucestershire Council ("the Council") against a Judgment of the Employment Tribunal sitting in Bristol dated 18 March 2006, following a hearing on 28 February 2006. By its Judgment the Tribunal awarded Mrs Amanda Bennett, a former employee of the Council, the sum of £50,019 by way of compensation for unfair dismissal. The Tribunal later reviewed and increased its Judgment to allow properly for taxation, but nothing turns on the review.
2. There is an appeal to this Appeal Tribunal only on a question of law. It is not said by the Council that any hard edged question of law arises from the Tribunal's decision. Rather the Council seeks to challenge a certain estimate that the Tribunal adopted when assessing future loss and its approach to compensation for loss of pension. In order to bring such a challenge home the Council must establish an error of law. As we shall see, so far as the assessments are concerned the challenge is, in essence, perversity. Therefore the Council must show that the estimates were ones which no reasonable Tribunal, properly directing itself in law and considering the facts before it, could possibly reach.

The facts

3. Mrs Bennett was a long-standing employee of the Council. She was a home carer. She had started work in 1992. She was well-regarded. By 2004 her basic hours of work were 14 hours per week, which she undertook from 6 to 10pm on a rotating shift pattern. In addition she also worked overtime and had some premium rate weekend working. She was married with three children, the youngest of which was, then, still below school age.
4. In 2004 Mrs Bennett became concerned that some other home carers were not attending the vulnerable elderly people whom they looked after for their full contractual hours. She voiced her concerns appropriately to a co-ordinator and to her immediate manager. They would do nothing unless the complaint was put in writing. Eventually Mrs Bennett decided that she needed to do so, using the Council's whistle-blower procedure. This procedure promised that any report of wrong-doing would be treated in confidence so that, if the employee wished, every effort would be made not to reveal an employee's identity. Mrs Bennett asked for her letter to be treated in the strictest confidence.
5. Unfortunately, in disregard of its own procedure, the Council revealed Mrs Bennett's identity almost straight away. It was not necessary to do so since the Council could and did use its own investigations and observations in order to discipline the people about whom she complained. The Council's mistake was not malicious but it was, nevertheless, a very serious error. Revealing Mrs Bennett's identity to people with whom she had to work led to a great deal of stress and difficulty for her. Moreover, as the Tribunal found, the Council compounded its error by a number of acts and omissions. It ignored a heart-felt plea for help which she made. It failed to respond promptly to her grievance. She became ill and resigned on 6 June 2005, shortly after the Council, without informing her, moved people whom she had reported back to the area where she worked. By its Judgment dated 16 November 2005 the Tribunal held that the Council had committed a fundamental breach of contract and that Mrs Bennett had been constructively dismissed, and unfairly so.
6. At the time of the Tribunal hearing concerning remedy Mrs Bennett was still unwell. The Tribunal had already directed a medical report, having no doubt that her ill health was due to the acts and omissions of the Council. The report confirmed that she was genuinely ill with an anxiety state; that she could not for the foreseeable future return to care work; that ending the proceedings would help her recovery, for she would then not have the constant reminder of what had happened to her; but that she would not be able to work for some time.

The Tribunal's reasons

7. The Tribunal's award consisted, for the most part, of loss of earnings and loss of pension. As to loss of earnings we think we can summarise the Tribunal's reasoning briefly as follows:

(a) But for her dismissal and the Council's acts and omissions leading to it, Mrs Bennett would have continued to work for the Council in the short and long-term and would not have become ill as she did;

(b) Mrs Bennett would have maintained her current earnings derived from basic contractual hours with some overtime and premium-rate weekend work until September 2005;

(c) From September 2005 she would have increased her hours when her youngest child went to school;

(d) Doing the best it could, the Tribunal thought it appropriate to asses her earnings at 37 hours per week on normal rate from September 2005. It did not allow anything for overtime or premium rate work;

(e) The Tribunal made a reduction of £25 per week for childcare;

(f) The Tribunal took the higher estimate that the expert gave for fitness to return to work, namely 12 months;

(g) The Tribunal then allowed a period of retraining, since she could not return to care work. It considered that a change to horticulture was a realistic change in the area where she lived and allowed a further year for her to complete a course and find work. Once retrained she would be able to find work at a comparable pay level to the one she had;

(h) In the result the Tribunal allowed a total period of about two and a half years.

8. As we shall see that Council, by its Notice of Appeal, challenges in particular the Tribunal's finding that the assessment should have been on the basis of a 37 hour week, and the time estimated between becoming fit for work and obtaining work. The Council also says there was insufficient detail to see how the Tribunal reached its figures.
9. On the question of pension loss the Tribunal reasoned as follows:

(a) Although after two years Mrs Bennett would be able to achieve the same earnings in horticulture, this was not necessarily true of the pension;

(b) Mrs Bennett, in local government employment, could look forward to a final salary index-linked scheme. It was not easy to find such scheme's outside the public sector. They were an endangered species. It was "highly unlikely" that she would find a comparable pension scheme elsewhere;

(c) The Tribunal adopted the substantial loss approach set out in the booklet "Compensation for Loss of Pension Rights – Employment Tribunals". It took multipliers from that booklet. It allowed a 25% deduction for the possibility that Mrs Bennett might not have stayed with the Council until retirement age.

10. As we shall see, the Council, by its Notice of Appeal, challenges the assessment of pension loss

Cross appeal

11. Before we come to the appeal we should mention that Mrs Bennett has sought to put in, out of time, a cross appeal. In the Appeal Tribunal there is a 42 day time limit for appealing. If one party appeals any Respondent has a further opportunity to put in an appeal by way of cross appeal within the time appointed by the EAT for delivery of an answer: see EAT Rules, Rule 6(3). These time limits are strictly applied by the Employment Appeal Tribunal. If an appeal or cross appeal is late there must be an application for an extension of time with a good excuse for the lateness. In this case the time appointed for delivery of an answer was 16 August: see paragraph 5 of the order dated 2 August. The application to put in a cross appeal is dated 9 November 2006.
12. Mrs Bennett has sought to put in a cross appeal because, as she says in her letter, it has come to her attention that she could be entitled to compensation for injury to feelings and psychiatric damage. As her papers make plain, she has in mind the decision of the Court of Appeal in Dunnachie v Kingston Upon Hull City Council [2004] EWCA Civ 84. However, the decision of the Court of Appeal was further appealed to the House of Lords: see Dunnachie v Kingston Upon Hull CC [2004] ICR 1052. It was held there that an applicant could not recover, under section 123 of the Employment Rights Act, compensation for loss arising from the manner of dismissal, including humiliation, injuries to feeling and distress. There are, in this case, no good grounds for putting in a cross appeal out of time and the cross appeal cannot go forward. No extension of time is appropriate or will be granted.

Statutory provisions

13. Provisions relating to assessment of compensation for unfair dismissal are to be found in section 123 of the Employment Rights Act 1996:

"123 Compensatory award

(1) Subject to the provisions of this section and sections 124[, 124A 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 complaint in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.

(2) The loss referred to in subsection (1) shall be taken to include-

(a) any expenses reasonably incurred by the complainant in consequence of the dismissal, and

(b) subject to subsection (3), loss of any benefit which he might reasonably be expected to have had but for the dismissal.

(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."

Was the Tribunal acting punitively?

14. One ground of appeal put forward on the Council's behalf by Mr Sproull is an argument that it can be seen from the terms of the Tribunal's reasons that it had lost sight of its duty to provide compensation which was just and equitable and had rather in mind a desire to punish the Council for the circumstances in which Mrs Bennett was dismissed.
15. In our judgment the Tribunal's reasoning does not suggest that it was seeking to punish the Council. The Tribunal, whilst critical of the Council, had not found its actions malicious, and there is nothing in the reasoning to suggest any desire to mete out punishment. It is not difficult to see that the Tribunal was concerned about Mrs Bennett's state of health and sympathetic to the need she had to make a full recovery and find work in an area away from home caring. The Tribunal was, no doubt, anxious to ensure that it provided full compensation for the unfair dismissal, which was from a secure job, held for many years, with valuable pension rights. Justice and equity required full compensation. But we see nothing to suggest to us that the Tribunal was making its award in order to punish the Council.

37 hours per week

16. Mr Sproull's principal submission on behalf of the Council was that the Tribunal's assessment of compensation on the basis of 37 hours per week was perverse. He accepts that this is a high hurdle for an Appellant to surmount, but he submits that the Tribunal's finding flew in the face of evidence about Mrs Bennett's work and about her intentions.
17. He submitted that, on the evidence before the Tribunal, the whole focus of the Council's restructuring was to move away from 9 to 5 working and towards client-focused shift working, early in the morning and late in the evening. He pointed out that the normal shifts for home carers were 7am to 11am, and 6pm to 10pm. He submitted that it was impossible for Mrs Bennett simply to be given extra hours. Extra hours which became available would also have to have been shifts. Every employee would have been entitled to apply for them, and other employees were as highly rated as Mrs Bennett was. Therefore competition for the hours would have been stiff. Further Mr Sproull submitted that the only evidence that Mrs Bennett wanted to increase her hours at all, let alone to 37, was contained in written evidence at the remedy hearing and in her oral evidence. It was incumbent, he submits, on the Tribunal to treat that evidence with caution and test it against all the evidence which suggested otherwise.
18. He also submitted that it made no sense for Mrs Bennett to increase her working hours when most of the hours she would work would, in any event, be on earlier or late shifts, outside normal school hours. The Tribunal, he submitted, failed properly to consider her need, if she did work 37 hours per week, to pay for child care. We enquired of Mr Sproull what cross examination there had been on that issue. Mr Sproull told us that there had not been any extensive cross examination on that issue, not least because the suggestion of 37 hours came at the Tribunal. The Tribunal, he submitted, failed to take into account that to work 37 hours per week she would have had work seven nights, plus two or three mornings, which, for a mother of young children, would be very difficult.
19. Mrs Bennett represented herself before us today, but she was assisted by her mother, who took over the making of submissions on her behalf and helped her when she was distressed. She submitted that the Tribunal's conclusion was justified. She pointed to job advertisements which were before the Tribunal and which were for home care work in the Council's area, one indeed in precisely the area where she worked, which were for work of between 36 and 37.5 hours. This was work she could have done. She pointed out that she had always said she intended to increase her hours. She explained how her husband, who also worked for the Council, had the benefit of flexi-time, with core hours from 10am to 4pm. She explained that she lived a village life, where mothers helped each other out.
20. Our conclusions are as follows. As we have said and as we think is clear from Mr Sproull's submissions, this ground of appeal is essentially an appeal on perversity. There was evidence that Mrs Bennett would have worked 37 hours per week if it was available. There was evidence, in the form of job advertisements, that such work was available. The Tribunal was making an assessment of future loss, not finding past facts. If, and only if, the Tribunal's assessment was one which no reasonable Tribunal could properly make, directing itself correctly on the law and the evidence, can it be impugned before this Appeal Tribunal.
21. The first step in the Tribunal's assessment was to consider whether Mrs Bennett would have sought to work full-time. The Tribunal plainly heard and accepted her evidence on this issue. It is right to say that her intention to increase her hours when her younger child started school was contained in an appendix to her original ET1 statement, where she said:

"I have worked for a carer for 13 years and I wanted to do this work for the rest of my life. The office was aware that I intended to increase my hours this September, when my youngest child started school. To have a job you love and which gives great satisfaction is to be a lucky person."

As we have said the Tribunal saw and heard her give evidence. It is common for mothers who have worked part-time while their children are young to seek full-time work when their children reach school age. In our judgment the Tribunal was fully entitled to reach the assessment it did.

22. The next question for the Tribunal to assess was whether such work would in fact have been available. We accept that the Tribunal had in mind work with the Council as a home carer. They did not necessarily only have in mind a shift pattern of the kind which Mr Sproull explained to us; they were entitled also to have in mind the job advertisements which were in the bundle.
23. In our judgment they had before them evidence on which they were entitled to conclude that she could have worked 37 hours. Firstly there were the job advertisements themselves which were for work at between 36 and 37.5 hours per week. Mr Sproull sought to argue that these were really different jobs. He submitted that Mrs Bennett would have had to resign and apply for them in order to get them. But they are quite plainly advertisements for home carer jobs and no sharp distinction in our judgment can be drawn between them and the kind of work which Mrs Bennett was doing.
24. Secondly the Tribunal found that the Council was, as it put it, desperate to cover the kind of work which Mrs Bennett was undertaking. Mr Sproull in his Skeleton Argument said, and confirmed in his oral submissions, that there were shortages of home care workers. He also submitted that these shortages were covered by overtime and by outsourcing. That may be so, but as job advertisements indicate, there were advertisements for home care workers to work with the Council.
25. We have carefully considered Mr Sproull's submissions on behalf of the Council concerning this aspect of the case. We repeat that the Tribunal was undertaking an assessment. It is not a precise exercise. It is an exercise for which a Tribunal, with its lay involvement, is particularly well suited. The Tribunal appreciated that it was making an assessment. Thus it made no allowance for premium-rate working or overtime over 37 hours per week, rather fixed upon 37 hours per week, as in practice it needed to do in order to make a calculation.
26. We think that 37 hours per week was right at the top of the range of permissible assessment but it was not, to our mind, perverse. In our judgment the Council has not shown that the Tribunal erred in law.

12 months retraining

27. Mr Sproull next criticised the Tribunal for allowing 12 months to Mrs Bennett after the time when, according to medical evidence, she would be fit to return to work. He pointed out that her earnings were £8 per hour, not a high level of earnings. She only had to replace earnings of £8 per hour. There was, he submitted, no sufficient reason for allowing 12 months for her to do so. The Tribunal, he submitted, may impermissibly have allowed a longer period than was appropriate because it was concerned that medical expert assessment of her recovery was too optimistic.
28. We do not think the Tribunal erred in law in this way. Mrs Bennett had no skills or training except in the area of home care work, where she had great experience. She could no longer, for medical reasons, work as a home carer and had lost a secure career in local government. Although £8 per week is not a high wage, it is significantly above the minimum wage. The Tribunal was entitled to say:

"It seems to us apparent that the Claimant, in setting out on a new career and looking for work, is not going to jump into a job at £8 per hour with any ease. It is always difficult trying to guess what is going to happen in the future but we have to do our best, bearing in mind the "just and equitable" provisions of the Act."

This, we have no doubt, is what the Tribunal was seeking to do.

29. Mr Sproull referred to reasons given by the Tribunal for declining the Council's application for review. In those reasons the Tribunal said:

"We are still concerned that our estimate of the time before she gets back to full employment may prove to be an underestimate."

We do not think that the Tribunal, in its original reasons, was taking into account impermissibly its concerns that the medical evidence may have underestimated the time for her recovery. It is true that the Tribunal expressed that view in paragraph 5 of its reasons, but the Tribunal expressly allowed 12 months for recovery and then went on, for different reasons, to allow the second period of 12 months. We do not think, in its review reasons, that it was doing any more than commenting on the position, at the date when it was considering the application for a review, and saying that it was concerned that its estimate of time might just as well be an under-estimate as an over-estimate.

Pension loss

30. On behalf of the Council, Mr Sproull takes two points. Firstly he submits that when the Tribunal made its assessment of pension loss it did not have regard to the overall picture and did not compare like with like. Mrs Bennett might, in future, work for businesses which had packages which would make up for pension loss. The Tribunal needed to consider the kind of job which Mrs Bennett might do and the rates of pay and benefits for such jobs.
31. We consider that argument to be unrealistic. The Tribunal was compensating Mrs Bennett for the loss of a secure job with a good pension. It had estimated that she might find a career in horticulture. We do not accept that it failed to take into account the possible fringe benefits of such a career. We asked Mr Sproull what specifically he might have in mind. He suggested the possibility of a tied house or some such benefit of that kind. We think, in practical terms, that there is no substance in the argument.
32. Mr Sproull's second point was that the Tribunal erred in adopting the substantial loss method. The substantial loss method is set out in a booklet entitled "Compensation for Loss of Pension Rights – Employment Tribunals". It is described as guidelines prepared by a committee of Chairmen of Employment Tribunals by the Government Actuary and by a member of his Department. The committee includes, among its number, Mr Sara, the Chairman of the Employment Tribunals chairing this Tribunal. It is sufficient, in order to indicate when and where the substantial loss approach is recommended, to quote three paragraphs of the booklet:

"4.12 The substantial loss approach, by contrast, uses actuarial tables comparable to the Ogden Tables to assess the current capitalised value of the pension rights which would have accrued up to retirement. There may be cases where the tribunal decided that a person will return to a job at a comparable salary; but will never get a comparable pension. See Bentwood Bros. (Manchester) Ltd. v Shepherd [2003] IRLR 364. In such cases the substantial loss approach may be needed even where the future loss of earnings is for a short period. But it must be remembered that loss of pension rights is the loss of a fringe benefit and may be compensated by an increase in salary in new employment.

4.13 Experience suggests that the simplified approach will be appropriate in most cases. Tribunals have been reluctant to embark on assessment of whole career loss because of the uncertainties of employment in modern economic conditions. In general terms the substantial loss approach may be chosen in cases where the person dismissed has been in the respondent's employment for a considerable time, where the employment was of a stable nature and unlikely to be affected by the economic cycle and where the person dismissed has reached an age where he is less likely to be looking for new pastures. The decision will, however, always depend on the particular facts of the case.

4.14 More particularly, we suggest that the substantial loss approach is appropriate in the following circumstances:

(c) when the applicant has not found new employment but the tribunal is satisfied that the applicant will find alternative employment (which it values, for example, with the help of employment consultants) and is required then to value all losses to retirement and beyond before reducing the total loss by the percentage chance that the applicant would not have continued to retirement in the lost career. See Ministry of Defence v Cannock and Others [1994] ICR 918 et al. subject to our comment below."

33. The Chairman was asked to give details of the Tribunal's reasoning for adopting the substantial loss approach. In giving his reasons he referred to paragraph 4.14(b). We are satisfied that that was a slip and that he intended to refer to paragraph 4.14(c) which sets out, in essence, the exercise which the Tribunal undertook.
34. It is, in our judgment, plain to see from the passages in the booklet which we have quoted why the substantial loss method was used in this case. A final salary scheme in local government is a rare species. As the Tribunal found, it was highly unlikely that Mrs Bennett would find any such scheme elsewhere. On the Tribunal's assessment she was not going to be compensated by any increase in salary in new employment: see paragraph 4.12 of the guidelines. In those circumstances there was no error of law in choosing the substantial loss approach. On the contrary, it seems the right approach to take.
35. In summary we would say this. The award of compensation the Tribunal made was a high award, but Mrs Bennett had lost a great deal. She had lost a secure job, held for many years, with valuable pension rights, and was thrown into the labour market in circumstances of ill health. High though the award was, we consider that it contained no error of law within it. The appeal is dismissed.