United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR B WOLFF (The Appellant in Person)
For the Respondents	MR C BRANCHFLOWER (Of Counsel) Instructed by: Kingston Upon Hull City Council Legal Services Chief Executive's Department The Guildhall Alfred Gelder Street Kingston Upon Hull HU1 2AA


 


SUMMARY

Practice and Procedure: Costs

1. Employment Tribunal entitled to make award of costs where Claimant persisted unreasonably in pursuing his claim for re-engagement.

2. The conventional award for loss of protection may be awarded even though, in the meantime, the Claimant has obtained employment and accrued service to obtain new protection for employment rights.


 


THE HONOURABLE MR JUSTICE WILKIE

1. This is the hearing of an appeal by Mr Wolff and a cross-appeal by the Respondents in the claim by Mr Wolff, namely Kingston upon Hull City Council and The Governors of Pickering High School Sports College, against decisions made by the Employment Tribunal sitting at Hull, in respect of a remedies hearing which took place on 15 August 2006, and sent to the parties on 4 September 2006. The subject of Mr Wolff's appeal is an order made by the Tribunal that he pay £1,721 to the Respondents by way of costs. The subject of the cross-appeal is an element in the compensatory award of £670, namely the conventional sum of £250 in respect of compensation for loss of statutory rights. We deal first with the appeal.
2. Mr Wolff had been employed by the City Council and in practice was employed at the Pickering High School by reason of decisions taken by the governing body, between 1 April 2004 and 3 April 2005. He resigned his employment and claimed to have been constructively and unfairly dismissed. In his claim form he indicated that the remedy which he was seeking was reengagement. He did not indicate that he was seeking either reinstatement or compensation only. The Employment Tribunal, by a decision promulgated on 8 February, concluded, amongst other things, that he had been constructively and unfairly dismissed and at the end of that decision indicated that a hearing would be convened to deal with issues regarding remedy. Following upon that decision on liability, on 3 March 2006 the Respondents, acting by the City Council's Chief Legal Officer, wrote to ACAS with a view to seeking settlement. In that letter, they dealt with reengagement in the following terms:

"Mr Wolff has requested reengagement with Hull City Council. I believe he recognises that reengagement to Pickering School would not be practical. The City Council does not appoint teachers to schools. This is done by governors for each school and it is not possible for the Council to direct governors to make a particular appointment. I am told that, in any event, there are no vacancies at present for Mathematics teachers of Mr Wolff's level. Even if there was an appropriate vacancy, Mr Wolff could do no other than apply to the relevant school governors and go through a selection process."

3. In our judgment that was a very clear and cogent statement of the impracticality of the remedy of reengagement which, as the Respondents then understood it, was being claimed by Mr Wolff. Happily, Mr Wolff, very shortly after he had resigned, had obtained employment at an equivalent earnings level. Turning to the question of compensatory award, as a precursor to making an offer to settle, the City Council wrote in this letter as follows:

"Mr Wolff would be entitled to a basic award, he was employed by Hull City Council for twelve months. His contract of employment provided continuity of employment for the purposes of any redundancy payment, and for superannuation purposes back to 1 September 1993. It does not, however, provide continuity in relation to dismissal. Continuity for redundancy purposes is provided by the redundancy payments, continuity of employment in local government etc, or modification order 1999.

The calculation of the basic award, following a finding of unfair dismissal is purely a statutory concept. The parties to a contract of employment cannot contract to bestow or remove the conditions for the calculation contained in the Employment Rights Act. Therefore Mr Wolff's previous employment with Humberside and East Riding of Yorkshire County Councils cannot be taken into account as part of his years of service. It follows that the calculation for the basic award is one and a half weeks' pay, statutory rate then applicable i.e. £280 per week, producing a figure of £420. I suggest the usual figure for loss of statutory rights compensation should apply, namely £250."

4. The Council then went on to make an offer of settlement in the sum of £1,000. It appears that this letter was either sent to, or discussed by ACAS with, Mr Wolff, who indicated that he wasn't interested in any monetary settlement. He wanted reengagement which was what he had sought from the off. It does appear, however, that there may well have been some discussion with ACAS, in the course of which Mr Wolff indicated that he thought that the basic award should be based on continuity of service from 1993, and that there should be an uplift in respect of failure to comply with statutory grievance procedures on behalf of the Respondent. At any rate, however it came about, it is clear that ACAS communicated with the City Council and informed it that the figure which they had discussed with Mr Wolff was of the order of £10,000. This gave rise to the Respondent writing a letter of 8 May 2007 to Mr Wolff. In that letter they reiterated the points they had made in the letter to ACAS in relation to the impracticality of any suggestion that an order be made that the Council reengage Mr Wolff, whether at the Pickering High School or at any other maintained school. They also repeated the point which they had made in the previous letter in relation to the basic award, namely that it could only be based upon twelve months service. They then went on to indicate that the offer of settlement of £1,000 was a fair and reasonable one. They concluded that letter by saying as follows:

"The Respondents wish to make it clear that if you continue to seek reengagement, reinstatement or, alternatively, substantial compensation resulting in this matter going to a remedy hearing, the Respondents will produce this letter to the Tribunal at the conclusion of the hearing and will ask the Tribunal to make a costs order against you. This will be on the basis that following the judgment dated 8 February 2006, you conducted the claim unreasonably and have continued to pursue remedies that are unmeritorious and misconceived. As a result, the Respondents will have to call witnesses to deal with these issues and the remedy hearing will be prolonged. Indeed, it is the Respondents' case that there is no need for a remedy hearing in the light of the offer that has been made to you."

5. Mr Wolff has acted on his own behalf throughout, though it appears that he has taken some advice at certain junctures, but as a layperson he construed this letter as intimidatory, and he complained about it to the Tribunal. We should say that on the contrary, far from being intimidatory, this letter is a perfectly standard type of letter written with a view to warning the recipient that a costs order may be made in the event that the offer to settle is, at the end of the Tribunal hearing, found to be an appropriate one, and thereby putting him on notice of the intention so to do. In terms of the advancement of the remedies hearing, the Respondents had, on 7 March, written to the Tribunal seeking an order that Mr Wolff update his schedule of loss and provide a Skeleton Argument. On 17 March the Tribunal wrote to the parties refusing to make any such order, though indicating that Mr Wolff might feel it helpful to update the schedule of loss which had previously been submitted by him pursuant to a previous order of the Tribunal. On 8 June, there was scheduled a remedies hearing. Unhappily, Mr Wolff's mother died on 5 June and, unsurprisingly, he sought an adjournment of the remedies hearing, and equally unsurprisingly, the Tribunal acceded to it. It sought to make use of the time on 8 June by convening a telephone case management discussion with an agenda which was set out in a letter on 6 June. Following that telephone case management discussion, an order was made on 8 June, and it included the following orders:

1) The date for the remedy hearing in the case was fixed for 15 August 2006

2) "The Claimant has sought reengagement as a remedy. The Claimant wishes to take advice in relation to that, given the Respondents' submissions. The Claimant is to therefore indicate to the Respondent and to the Tribunal by 4.30pm on Tuesday 1 August 2006 if he continues to seek reengagement as the primary remedy in these proceedings."

3) It also by order 3 required the Claimant to serve on the Respondent in the Tribunal by 7 July a schedule of loss limited to the claim in respect of which it was successful, that is to say, constructive unfair dismissal.

4) Order 5 gave the Respondent leave to serve witness statements of certain named witnesses on the Claimant and gave the Claimant leave to respond and to produce a witness statement for use on the remedy hearing by 14 July.

6. The Respondents' submissions referred to in paragraph 2 of the order of 8 June comprised the correspondence, to which we have already referred, in which the Respondents set out on two separate occasions its arguments both in respect of reengagement and the size of the basic award. Pursuant to the order made by the Tribunal, the Claimant in July 2006 submitted an updated schedule of loss. That amounted in total to just over £7,000 but in a note to that schedule he indicated that he had requested an uplift. The £7,000 was made up of a basic award, based on more than twenty years continuous service, of £6,720 and a sum for loss of statutory rights of £350. The Respondent on 18 July provided a Skeleton Argument and a counter-schedule for loss. Once again, in respect of the basic award, that set out in some detail the reason why it was said that the basic award would only be awarded in respect of twelve months continuity of service, notwithstanding the fact that contractually, service with other local education authorities stretching back a number of years was to be regarded as continuous for the purposes of any redundancy payment to which Mr Wolff might have been entitled. Mr Wolff did not directly indicate whether or not he was pursuing the remedy of reengagement. He had, he says, taken advice on it and intended to pursue it and, indeed, at the outset of the remedies hearing, he indicated that he did intend to pursue it. Although given leave to do so, he had not submitted a written witness statement for use at the remedies hearing but he did give evidence at the hearing and did so based on a document which the Tribunal sought, and he agreed, to be introduced as a document and to form part of the record. In that document, dealing with the question of reengagement, he said, at paragraph 4:

"Reengagement does not have to be at Pickering School. The Council is the ultimate employer. Although it does not have right over the governing bodies of other schools, it does work closely with them, and can exert influence. There is an agreed policy on redeployment. The Council is also a large employer outside schools. There is no reason why the Council could not engage me directly, for example, as an adviser."

7. This is the first occasion that anyone had any notice of this particular aspect of his claim for reengagement. The Employment Tribunal in its written reasons, divided their reasons into three segments. The first concerned reengagement. It rejected his claim for reengagement. It repeated, in effect, the two major points which the Respondents had put forward in their correspondence, namely that there was no question of his being reinstated or reengaged at the school from which he had resigned. Secondly, his potential employment at other schools was not in the gift of the City Council, but had to be decided on by the governing body of other schools. They did make reference to the claim that there was a possibility of him being employed as an adviser working with the first Respondent. They did not consider that that was practicable. It is right to say that their reasoning becomes a little confused as between the first and second Respondent. For the purposes of this appeal it matters not because Mr Wolff has accepted the Tribunal's decision in respect of reengagement and has not sought to appeal it. As far as remedy was concerned, they concluded that the Respondent was correct as a matter of law, that the basic award had to be limited to the twelve months service which he had with the first Respondent and which did not extend to service with other local authorities. They awarded him the £420 basic award plus the £250 in respect of loss of statutory industrial rights, thereby giving a total of £670. They then turned to the question of costs. In paragraph 15, they say this:

15.

It became apparent from production of correspondence by the Respondents that the Respondents had been offering a sum of £1,000 in settlement of the Claimant's claim from 3 March 2006. The Claimant had failed to accept that sum and had persisted in his contention, pursuing a claim for reengagement and for a remedy in the region of £10,000. The Claimant says that this is an overstatement that its schedule of loss in the Tribunal was in excess of £7,000. We considered that the Claimant's conduct in pursuing this case to a conclusion in relation to remedy was unreasonable in the sense that he was guided to take advice at a case management discussion in June.

16.

Although the Claimant says he has taken advice following that case management discussion, the advice was clearly unsatisfactory or ignored by the Claimant as he pursued his claim for reengagement. In relation to the Claimant's claim for compensation, it is a relatively straightforward legal exercise to establish that his basic award, (there had been no claim for a compensatory award,) would be computed solely in relation to his year of service with the Respondents. We therefore considered that the Claimant should have accepted the Respondents' offer of £1,000. It is almost twice what he has achieved in the Tribunal as a compensatory award. It follows from that fact, and from the fact that the Claimant failed, despite guidance by the Tribunal, to indicate to the Respondent that he intended to pursue reengagement, and also failed to provide a witness statement, but we considered that the Claimant had behaved unreasonably in his conduct of this litigation.

8. They then refer to rule 40 of the Tribunal rules which entitled them to consider a costs order in the event of unreasonable conduct, and they decided to make an award for costs.
9. Mr Wolff seeks to argue that this decision in principle on the question of costs, was an unlawful exercise by the Tribunal of its discretion. He says that as a Claimant who had succeeded in establishing that he had been unfairly constructively dismissed, and who had only ever sought reengagement as a remedy, he was entitled to pursue that remedy to a remedies hearing, apparently notwithstanding the cogent arguments of which he had been made aware on two separate occasions by the Respondent in advance of the management hearing on 8 June, despite having indicated to the Tribunal on 8 June that he would take advice on their submissions. Despite having failed, in accordance with the order, to notify the Tribunal that he was intending to pursue his remedy of reengagement, and despite having failed to take advantage of the leave that he had been given to produce a witness statement, and having chosen to give evidence without such a witness statement having been produced in advance, but basing it on a document which he had produced at the Tribunal hearing and to which the Respondent had to respond without any notice whatsoever. We perfectly accept that Mr Wolff has throughout acted in good faith, in the sense that he has been honestly pursuing the remedy which he had sought from the outset, and in a consistent manner. He has not been deliberately trying to up the level of costs which the Respondents would have to spend in order to meet his claims. However, we reject his contention that merely because he has claimed reengagement as the remedy for unfair dismissal and has succeeded in obtaining a finding of unfair dismissal, this entitles him, whatever the circumstances, to pursue a remedy of reengagement long after it has become blindingly obvious that no such remedy was remotely practicable for reasons properly articulated by the Respondent. Furthermore, although once again we accept his good faith, and we understand that the notion that the basic award for an unfair dismissal be significantly less than a redundancy payment in the event of a redundancy situation is not the most straightforward of legal concepts, the fact is that the Respondent had, on two separate occasions, spelt out why it was that his entitlement to a basic award was limited to twelve months in correspondence prior to 8 June, and their Skeleton Argument on 18 July further spelt it out, in terms which Mr Wolff, a highly educated and intelligent man, must have read and should have understood. In those circumstances we can perfectly understand the Employment Tribunal concluding that Mr Wolff, by insisting on pursuing these twin tracks, where there was really no remote prospect of him succeeding on either, had to that extent, conducted the litigation unreasonably, and they were therefore entitled to exercise their discretion in awarding costs. In order for Mr Wolff to establish that the exercise by them of their discretion was unlawful, he has to surmount a high hurdle. It is not enough to persuade this Tribunal that it might have done something different. What he has to do is to establish that the Employment Tribunal was unreasonable in exercising its discretion in the way that it did. Despite his arguments, genuinely expressed and with some skill and persistence, we are unable to accede to his argument that the Tribunal, in awarding costs against him, acted unlawfully and therefore his appeal fails.
10. We now turn to the cross-appeal. The cross-appeal is limited to the award of £250 in respect of loss of statutory rights, and the argument arises in this way. The period between his cessation of employment, giving rise to the claim for unfair dismissal, and the remedies hearing on 15 August 2006, was sufficient time for Mr Wolff to have obtained alternative employment and to have remained in that employment for a year, thereby accruing certain statutory protections against unfair dismissal. In those circumstances, the Respondent argued before the Employment Tribunal and argues before us, that loss of statutory protection has ceased to be a head of actual demonstrable loss for Mr Wolff. On the contrary, it can be demonstrated that he has suffered no loss at all, as he has succeeded in re-establishing the statutory protection. There is no direct authority on this point, but Mr Branchflower has drawn our attention to a number of cases in which the concept of the compensation for loss of statutory protection has been the subject of statements by the higher appellant court. The first was by the National Industrial Relations Court (NIRC) in 1972, in the case of Norton Tool Co Ltd v Tewson [1972] ICR 501 p506. In this case under the heading of 'loss of protection in respect of unfair dismissal or dismissal by reason of redundancy', the NIRC says as follows:

"These losses may be more serious, so long as the employee remained an employee of the employers, he was entitled to protection in respect of unfair dismissal. He will acquire no such rights against his new employers until he has worked for them for two years. Accordingly, if he is unfairly dismissed during that period, his remedy will be limited to claiming damages for wrongful dismissal which are unlikely to exceed six weeks wages and maybe less. Furthermore, upon obtaining further employment he will be faced with starting a fresh two year period. This process could be repeated indefinitely so that he was never again protected in respect of unfair dismissal. Whilst it is impossible for us to quantify this loss, which must be much affected by local conditions, we think that we shall do the employee no injustice if we include £20 in our assessment on account of it."

In Daley v AE Dorsett (Almar Dolls Ltd) [1981] IRLR 385, at paragraph 9, the claim for loss of statutory protection was described by the EAT in the following terms:

"It is a claim for compensation for the loss of an intangible benefit, namely that of being entitled in the course of one's employment, to a longer notice than might otherwise be the case."

Reference was then made to Hilti (Great Britain) Ltd v Windridge [1974] IRLR 53 and a citation of Lord Justice Griffiths, who said:

"This is a very speculative matter and as we say it is a novel one. But it appears to us to be a principle permissible as a head of damage although we would not expect it to attract other than a very small award in the average case."

And then resuming the judgment in Daley v Dorsett:

"Looked at in that way, as the loss of an intangible benefit, rather than the loss of actual remuneration, we think it is clear that the Industrial Tribunal erred in law in this case and ought to have made an award in respect of this particular loss to whatever extent they consider to be appropriate."

That was a case concerning loss in respect of notice entitlement rather than loss of statutory protection strictly so-called.

11. The third case to which we were referred was the case of S H Muffet Ltd v Head [1986] IRLR 488. That was a case in which the Employment Appeal Tribunal dealt with both loss of statutory protection and also loss of notice period. Loss of statutory protection is dealt with initially at paragraph 2, in which the Tribunal said:

"The first is what is generally called loss of statutory industrial rights which was originally introduced by Sir John Donaldson as loss of protection in the case of Norton Tool. This refers to the qualifying period of one year out of two years in other employment before acquiring the statutory protection against unfair dismissal. Because the question of reemployment and the length of that reemployment is an uncertain and imponderable matter, it is impossible to quantify such loss. As a result, it was then, and ever since has been, met by the award of a token or conventional sum which was £20 in 1972 and has apparently stayed at that figure ever since, notwithstanding the subsequent considerable devaluation of the pound."

Later on in that judgment at paragraph 6, the question of the amount of the conventional award was returned to and the Tribunal said this:

"In our judgment, and we have consulted the President of the Employment Appeal Tribunal on this matter, the nominal conventional sum of £20 should now be the sum of £100. It may be that in three or four years time this figure will require further consideration, but for the time being it should be regarded as appropriate. We interpolate that by today's date, £250 appears to be the appropriate conventional sum being awarded in respect of this head of compensation."

12. Finally, Mr Branchflower drew our attention to Puglia v C James & Sons [1996] IRLR 70 at paragraph 45, in which under the rubric 'loss of statutory rights', the Tribunal said as follows:

"Mr Puglia's amended Notice of Appeal alleges a misdirection by the Tribunal in failing to make an award for loss of statutory rights. In its full reasons the industrial Tribunal made it clear that it was assuming a fair dismissal at a date later than the effective date of termination. In those circumstances we agree that it was not appropriate for the Tribunal to make an award for loss of statutory rights. The purpose of an award for loss of statutory rights is to reflect the fact that the applicant will have to work for two years in fresh employment before reaching the qualifying threshold for unfair dismissal rights."

13. In S H Muffet Ltd v Head, the Tribunal's finding that Mr Puglia would have been fairly dismissed, at sometime later in any event, means that even if there had been no unfairness he would have found himself in a position where he was looking for a new job with no statutory protection for two years. Each of these cases was, of course, decided in the context of the statutory provisions relating to a compensatory award, presently contained in section 123 of the Employment Rights Act 1996. That reads as follows insofar as it is relevant:

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 circumstances, having regard to the loss sustained by the Complainant, in consequence of the dismissal, insofar as that loss is attributable to action taken by the employer.

14. We need not read further into the detailed provisions. Mr Branchflower essentially says that, properly analysed, the head of award for loss of statutory rights is, strictly speaking, in respect of a contingent loss in respect of a risk that the employee who has been unfairly dismissed runs for a period of time starting with the date of his dismissal and continuing until such time, whenever that may be, if ever, he succeeds in obtaining further employment and retains that employment sufficiently long to accrue protection from unfair dismissal. The reason why it is a conventional sum always awarded simply reflects the fact that it is extremely difficult, if not impossible, ever to carry out any form of any proper assessment of what that risk may amount to, and therefore how much compensation should be paid in respect of it. Therefore, he says, that where, as here, it is known with a certainty that the Claimant has in fact succeeded both in getting employment, and retaining it so as to accrue sufficient length of service to obtain statutory protection and has not in the meantime been dismissed without statutory recourse, then he has not suffered any loss at all under this head. In our judgment, that is to view the matter in too simplistic a fashion. First, the compensatory award is to be such sum as the Tribunal considers just and equitable in all circumstances. It has to have regard to the loss sustained by the Complainant but it is by no means limited to that which can be demonstrated to be financial loss. Indeed, the conventional award of a relatively modest sum in respect of this particular head of compensation rather reflects the fact that it is not necessarily the result of any precise arithmetical calculation.
15. The second point is this. The mere fact that Mr Wolff has obtained employment and retained it for a period of twelve months so as to restore his statutory protection does not necessarily mean that he has suffered no loss in the meantime. As one of the lay members pointed out in argument, the fact that he has been under the shadow of being dismissed without statutory protection for a period of twelve months might have been reflected by his attitude towards his employment, his attitude towards incidents that occurred during his employment, and so on. Of course, no-one knows, or is likely to be in a position to know, which is why the conventional award is as appropriate in this case as it was in the other cases to which we have referred. In addition, and as has been apparent in this case, the amount of statutory protection in terms of the calculation of the basic award, is very much a reflection of the period of time spent in the employment from which the employee was dismissed unfairly. Accordingly, there will always be a deficit, at any rate for many years to come, in relation to the calculation of the basic award which would accrue in the event of a subsequent unfair dismissal, from a subsequent period of employment, and therefore, in our judgement, there is no reason why conceptually and in accordance with section 123 of the 1996 Act in this case, the Tribunal erred in law in making the conventional £250 award of compensation in respect of loss of statutory rights to Mr Wolff, notwithstanding the passage of time and the events which occurred between the dismissal and the remedy hearing. Accordingly, we dismiss the cross-appeal.
16. We will not award costs. We think that the point on the appeal was arguable and was certainly well argued by Mr Wolff who, in any event, succeeded on the cross-appeal.