United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS NADIA MOTRAGHI (of Counsel) Instructed by: Messrs Denison Till Solicitors Stamford House Piccadilly York YO1 9PP
For the Respondent	No appearance or representation on behalf of the Respondent. Written submissions provided by Citizens Advice Bureau


 


SUMMARY

UNFAIR DISMISSAL: Mitigation of loss

The Tribunal incorrectly applied a percentage reduction to losses by reason of failure to mitigate. The Tribunal should have fixed a date when they believed the Claimant would have found employment and calculated losses accordingly.

HIS HONOUR JUDGE ANSELL

Introduction

1. This is the hearing of a full appeal from a remedies decision of a Sheffield Tribunal held on 20 February 2008, with reasons being delivered on 19 March 2008, awarding a total of some £34,614 compensation to Mr O'Keefe in respect of unfair dismissal.
2. That award had been the subject of what was said to be a 10 per cent reduction for failure to mitigate in terms of losses incurred up to the date of the hearing. There was also an award in respect of future losses. There was a 10 per cent Polkey reduction applied to all the losses and then a 50 per cent uplift as regards automatic unfair dismissal. This appeal concerns that 10 per cent reduction awarded by the Tribunal in respect of the failure to mitigate in relation to losses up to the date of the hearing which the Appellant contends was the wrong approach; the Tribunal should have fixed a date when work would have started, as indeed they did do, in respect of future losses and calculated losses accordingly.
3. The merits hearing had taken place on 30 November 2007 and reasons were sent out on 6 February 2008. The employee was aged 58. He had been employed since 6 August 2001 as a scaffolder. The company came to a decision that they did not want any longer to employ their own scaffolders and that decision was made in 2006. Prior to that date, the previous August, Mr O'Keefe had in fact suffered a heart attack and was off work. The issue is whether or not he should have been offered alternative work as a driver when a position became available in early 2007. That job was given to another employee and Mr O'Keefe was made redundant in March 2007. There was said by the Tribunal to be a complete failure to consult and also to proper consideration given to offering him that job as a driver, the Tribunal forming the view that it was 90 per cent likely he would have obtained that job.
4. The Tribunal's decision was split into past and future losses. In terms of past losses the section is actually headed, "Mitigation". The Tribunal noted that Mr O'Keefe had kept a log of jobs applied for and noted that a copy of that log appeared at page 2 in bundle B covering a period, the Tribunal said, from 16 March 2007 to 1 May 2007. The wing member today, Mr Evans, has noted that in fact the log is a two-page log and runs up to 28 May 2007 and that does appear to be an error on the part of the Tribunal.
5. The Claimant's evidence was that he had not been granted any interviews. Because of health problems he could not take on any jobs which required a significant manual effort. He said he bought the local newspaper when job adverts came out and attended the Job Centre. It also emerged that he had dyslexia.
6. The Tribunal said that they were not satisfied that he had done all that he could to mitigate his loss, namely those losses up to the date of the Tribunal hearing. They noted there were gaps in the job search and there was nothing recorded from May 2007. They noted in particular that he had not registered with any agency which might have provided him with driving or other suitable work. They did note his explanation that a few days' agency work would have needed him to come off benefits and then the problems in reapplying and form filling and delay that that would incur, leading to particular financial difficulties for Mr O'Keefe and his family.
7. The Tribunal's passage at this stage concluded as follows:

"Despite the claimant's explanation we feel that his failure to register with an agency was unreasonable and should therefore also be reflected in a reduction for his failure to fully mitigate his loss. We decided that a 10% reduction would be appropriate."

8. When one turns to future losses, however, the Tribunal made much clearer findings. They reiterated that registering with an agency or agencies would have been sensible and that if he had done so after six months he should have been able to get a job earning no less than £180 a week and, after a period of a further 26 weeks, he should have been able to work at the rate of £310 a week, which was the rate of the driving job that he was unsuccessful in obtaining. In terms of losses and in terms of the future, they awarded him six months at £310 per week and then a further six months at £130 per week.

The Appellant's Case

9. The Appellant before us, ably represented by Ms Motraghi, argued that in terms of the past losses the Tribunal's approach in simply applying a 10 per cent reduction was a wholly wrong approach and not in accordance with authorities.

The Claimant's Case

10. Mr O'Keefe is not here today nor is he represented. He was represented by the Citizens Advice Bureau below and they have put in written submissions on his behalf. Those written submissions concede that the percentage reduction is not the appropriate way to deal with the matter but they argue that the 10 per cent should be converted into effectively a factual finding that certainly in terms of past losses he would have only been able to find a small amount of work and therefore it should not affect the overall calculation. They do, at paragraph 7 of their submissions, agree that, if we accept that the 10 per cent reduction is a wrong approach, the case should be remitted back to the same Tribunal for further consideration.

Authorities

11. In terms of the correct approach, we need only briefly refer to two main authorities in this area; firstly, Gardiner-Hill v Roland Berger Technics Limited [1982] IRLR 498, where at paragraph 12 in the decision given by Brown-Wilkinson J he said:

"Moreover, although it is not necessary for us to go into it in great detail, it is well-established that it is inappropriate in dealing with failure to mitigate damages to reduce the amount of the compensation by a percentage. In order to show a failure to mitigate, it has to be shown that if a particular step had been taken Mr Gardiner-Hill would, after a particular time, on balance of probabilities have gained employment; from then onwards the loss flowing from the unfair dismissal would have been extinguished or reduced by his income from that other source. In fixing the amount to be deducted for failure to mitigate, it is necessary for the Tribunal to identify what steps should have been taken; the date on which that step would have produced an alternative income and, thereafter, to reduce the amount of compensation by the amount of the alternative income which would have been earned. Since that is the principal of mitigation, a reduction of a percentage of the total sum representing compensation for the whole period is inappropriate. Therefore, in our view, the Industrial Tribunal erred in the basis on which they have approached the compensation in this case."

We note within the following paragraph the Employment Appeal Tribunal then sought to carry out a recalculation expressing the view that:

"We can see little virtue in referring this matter back to an industrial Tribunal to compute the compensation on the basis that we have indicated is correct."

12. That case was followed in Savage v Saxena [1998] IRLR 182 where at paragraph 23 in a decision given by Judge Hargrove QC, he said the following:

"In accordance with Gardiner-Hill v Roland Berger Technics Limited [1982] IRLR 498, the Tribunal ought to have carried out the following analysis:

(1) Identify what steps should have been taken by the Appellant to mitigate his loss;

(2) Find the date upon which such steps would have produced an alternative income;

(3) Thereafter reduce the amount of compensation by the amount of income which would have been earned."

13. That of course is the approach that the Tribunal took in terms of future losses. The Appellant argued that it is a straightforward exercise to, as it were, bring forward from the future losses that exercise and to apply it to losses, as it were, in the past. We agree that this method should have been applied to all losses.

The Appeal

14. The task therefore for us, first of all, is to decide whether or not in reaching a view, as we clearly do that the Tribunal's approach in simply calculating a figure of a 10 per cent reduction was wholly impermissible, whether we should carry out a recalculation ourselves or send it back to the original Tribunal for a recalculation.
15. We note of course that the Respondent is not here nor represented. He had of course the opportunity of being here and we are reminded by Ms Motraghi that the Citizens Advice Bureau, who have advised him, are at an address in Pentonville Road, not a great distance away from this court.
16. If we are to recalculate ourselves, there are or have been four possibilities aired in the course of argument. In her written submissions Mrs Motraghi argued that one approach would simply be to give a period up to the end of the log which she put at the beginning of May, although it seems that it should be the end of May, and then simply to suggest that for the next six months there is the reduced figure of £130 net loss per week for those six months before he would have been able to achieve earnings of £310. This in fact is, as it were, a stricter approach from that which the Tribunal adopted in the second part of that decision as regards future losses. It is not one that we find attractive and Ms Motraghi does not press it upon us.
17. Her preferred approach is to bring forward the timetable of six months to find a job and then six months reduced salary, but starting at the date of the dismissal, 2 March 2007. Her argument is that immediately thereafter, as part of a reasonable mitigation, Mr O'Keefe should have enlisted the help of an agency which would have then produced the results that the Tribunal found would have taken place in their findings in terms of future losses.
18. A third approach, which we canvassed at the outset of this hearing, was to adopt that approach but to say that the date of registration at an agency should not be until the beginning of May when the Tribunal found that his log and his efforts to find a job were no longer properly documented. In other words, that for the first few weeks it was reasonable to adopt the approach which Mr O'Keefe did in terms of following up advertisements and going for interviews but certainly by the beginning of May reasonable mitigation would have been to then register with an agency.
19. The last approach has emerged as a result of the fact that it has emerged that the log recorded on the Tribunal papers in fact goes up to 28 May 2007, that is to say that it should only be at that date that a view should be taken that thereafter he should have registered with an agency.
20. Our approach to this case is, firstly, that we are prepared to carry out a recalculation here. We see no sense in sending it back to the Tribunal in the light of the fact that they have been able to make clear findings in terms of what effect registration with an agency would have had in terms of job search and job availability. We are concerned of course that the Respondent is not here but he had an opportunity of being here and there has always been an option that we would recalculate rather than send it back. It seems to us, adopting the words of Brown-Wilkinson J that indeed there is little virtue in referring the matter back.
21. On the other hand, however, it does seem to us that in carrying out the re-calculation we should err on the side of the employee. The Tribunal took the view that this was a very clear-cut case of unfair dismissal, that there was a 90 per cent possibility that he would have obtained the driving job, and although the 10 per cent reduction is an impermissible approach, it clearly reflects a degree of sympathy with the employee's difficulties, his health difficulties, which we believe we should also try and reflect.

Conclusions

22. Accordingly, we are going to recalculate on the basis of option 4, first of all noting that from the Tribunal papers the employment log ends not at the beginning of May but on 28 May 2007, and take this as the date when it would then be reasonable for Mr O'Keefe to have registered with an agency, thereafter producing the results that the Tribunal found would have followed. The net effect on the calculation that Ms Motraghi kindly presented to us is that there should be added a further 13 weeks at £310 per week. That will obviously have to be subject to the Polkey deduction but then the 50 per cent uplift at the end. We would invite Ms Motraghi to do that calculation and provide us with the figure. The recalculated schedule should be attached to our judgment.
23. Accordingly the Tribunal's award is set aside and is replaced by an award of £21,221.50. A schedule of loss is attached to the order and there will be a transcript as the Respondent is not present. The prescribed element is the same because that is what is recouped but the monetary award which will be reduced should be specified.