United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR M HAY (of Counsel) Instructed by: Pollard Associates The Old Mill Reedness Road Swinefleet The East Riding of Yorkshire DN14 8EN
For the Respondent	MS P O'CONNOR (of Counsel) Instructed by: Louise Birmingham Sheppards Solicitors 86 -88 Regent Street Kingswood Bristol Avon BS15 8HY


 


SUMMARY

UNFAIR DISMISSAL: Compensation

1. The employee was unfairly dismissed. She did, not work everyday and was paid on a day worked basis; in some weeks she did not work at all because no work was offered. The Tribunal calculated the basic award by applying s224 of ERA and taking the average of the last 12 weeks in which she was paid for work done as the multiplicand. They then used that average figure for their calculation of the compensatory award.
2. The employers argued that the Tribunal should for the first calculation have taken the last week in which the employee was paid and taken the immediately preceding 11 weeks and divided the total by 12. This would have included weeks in which no sums were paid or payable and produced a figure much lower that that used by the Tribunal. They argued that that calculation should have formed the basis of the calculation of the compensatory award.
3. Held that the Tribunal were right to calculate as they did. By s224(3) weeks in which no remuneration was payable were to be excluded. The compensatory award was not necessarily linked to the calculation of the basic award and in this case it was based on the Tribunal's finding of fact as to the amount of future work.

Appeal dismissed and the Respondents ordered to pay costs.

HIS HONOUR JUDGE BURKE QC

4. This is an appeal from the judgment of the Employment Tribunal sitting at Bristol and chaired by Employment Judge Richardson, sent to the parties with written reasons on 12 June 2007. By that judgment, the Employment Tribunal ordered the Respondent employers, Wings Aeromedical Services (who we shall call "Wings") to pay to the Claimant, Mrs Alderson, a monetary award, subject to recoupment, of £17,065.94. That award was made up as follows:

"(1) a basic award for unfair dismissal £1,520.70

(2) compensatory award for unfair dismissal, £9,276.27

(3) uplift of 15 per cent for breach of statutory procedures, £1,619.55

(4) compensation for breach of contract, £4,649.42"

5. Wings now appeal against the Tribunal's calculation of the basic award and compensatory award. If the appeal succeeds, and different figures emerge, the uplift would presumably have to be the subject of a consequential adjustment.
6. Wings have been represented before us today by Mr Hay of Counsel who, and we say this in no critical way, has only just been instructed. Until very recently, the appeal had been pursued by an employment consultant, Mr Pollard, who appeared for Wings before the Tribunal.
7. Mrs Alderson has been represented before us, as before the Tribunal, by Miss O'Connor of Counsel.

The facts

8. Mrs Alderson was employed as a flight nurse by Wings from 1996 until she resigned with effect from 2 February 2006. Wings operated a recovery service for travellers who suffered ill health abroad and had to be repatriated to the UK. Mrs Alderson was available for work on a full-time basis and was to be allocated work first when it became available. The Tribunal found that, from 2002 to 2004, work was provided to her on six days per month.
9. In the first three months of 2005, for specific reasons which the Tribunal identified, the level of work provided to Mrs Alderson reduced, but the Tribunal found that, from the spring of 2005, she would, but for the events which we will describe briefly, have worked on average for four days per month and that she would have worked, had her employment not come to an end, for four days per month thereafter.
10. From June 2005, Wings ceased to provide work for Mrs Alderson. There appear to have been three reasons for this. First she was suspended without pay and without work because Wings believed that she had not sent them documents confirming her professional indemnity cover. It was subsequently accepted that she had not been at fault. Secondly, she was suspended or put at the bottom of the selection list because she had declined a particular assignment on safety grounds; the Tribunal found that she had the right so to decline. Thirdly, in August 2005, Wings sought to impose on Mrs Alderson a new contract pursuant to which she would have ceased to be an employee. She, and others similarly treated, instituted a grievance over this, which went to appeal. Wings admitted at the Tribunal hearing that, in breach of statutory procedures, they had failed to inform Mrs Alderson of the result of that appeal.
11. In October 2005, the Tribunal found, Wings wrote to Mrs Alderson offering to resume the allocation of work to her; but the Tribunal took the view, set out at paragraph 15 of their judgment, that the offer was not genuine, was hedged around with conditions and Mrs Alderson was entitled to reject it. Ultimately, in February 2006, she resigned and claimed that she had been constructively dismissed and that Wings had been in breach of contract in failing to provide work for her from the middle of 2005 onwards.
12. Wings resisted her claim on numerous grounds, including assertions that she had never been an employee and that she did not have a year's continuous services because of the intermittent nature of her work. There were various interim decisions which must have dealt with preliminary points as appropriate.
13. On the morning of the substantive hearing before the Tribunal, Wings, for the first time, conceded that Mrs Alderson had been unfairly dismissed. They must also have conceded that their failure to provide Mrs Alderson with work from mid 2005 onwards was in breach of contract; for it is common ground that, as a result of the concessions made by Wings that morning, for the lateness of which, the Tribunal commented, no explanation was given, the hearing proceeded on the basis that the Tribunal were to consider remedies only; and, in the context of this case, that meant that the Tribunal had to decide what awards were to be made to Mrs Alderson for unfair dismissal and for breach of contract.
14. During the course of the hearing, Mrs Alderson gave evidence and was cross-examined at length on the basis that she had failed properly to mitigate her loss. However, in his closing submissions, Mr Pollard conceded that she had not so failed. No evidence was called on behalf of Wings.

Section 224 of the Employment Rights Act 1996

15. In his closing submissions, Mr Pollard raised section 224 of the Employment Rights Act 1996. That section is part of chapter 2 of part 14 of the Act, which part is headed "Interpretation". Chapter 2 is headed, "A week's pay". The first section in that chapter is section 220 which provides as follows:

"The amount of a week's pay of an employee shall be calculated for the purposes of this Act in accordance with this Chapter."

16. Sections 221 to 223 then set out how, for the purposes of the Act, a week's pay is to be calculated where the employee has or had normal working hours; and section 224 performs the same task when the employee has or had no normal working hours. Section 224 provides as follows:

"224. – (1) This section applies where there are no normal working hours for the employee when employed under the contract of employment in force on the calculation date.

(2) The amount of a week's pay is the amount of the employee's average weekly remuneration in the period of twelve weeks ending –

(a) where the calculation date is the last day of a week, with that week, and

(b) otherwise, with the last complete week before the calculation date.

(3) In arriving at the average weekly remuneration no account shall be taken of a week in which no remuneration was payable by the employer to the employee and remuneration in earlier weeks shall be brought in so as to bring up to twelve the number of weeks of which account is taken.

(4) This section is subject to sections 227 and 228."

17. The calculation date is, for the purposes of this case, agreed to be the effective date of termination of Mrs Alderson's contract of employment; see section 226(8).

The Tribunal's decision

18. We have already referred to the Tribunal's finding that, but for her dismissal, Mrs Alderson would have worked, from the middle of 2005, on average for four days per week. It was submitted by Mr Pollard that, for the purpose of calculating a week's pay pursuant to section 224, the Tribunal should take the last 12 weeks shown on a schedule which was before the Tribunal. We are told that he put a week's pay, as properly calculated pursuant to section 224, at the figure of £66.03. We have to say that, from our papers, it was not at all clear to us how Mr Pollard got to that figure; but Miss O'Connor has explained it; what she has told us was, to some extent, confirmed by what Mr Hay, who having picked this appeal up very late has done his best with scant material, has said. What Miss O'Connor tells us is that Mr Pollard looked at the last time when Mrs Alderson was paid or worked and thus was entitled to remuneration in June 2005 and then worked back 12 consecutive weeks from that point.
19. If that were the right approach, then it is common ground that the figure of £66.03 would have been correctly calculated. That can be seen from the document which is described by the Tribunal as page 71 before them, page 59 in our bundle, which, despite it being crucial to Mr Pollard's arguments, he actually failed to put into the appeal bundle; we did not have it until the EAT sent for it only a couple of days ago. That document sets out a schedule of the number of days worked by Mrs Alderson in each month from June 2005 back to January 2002; and it was that schedule on which Mr Pollard relied.
20. The Tribunal, however, having arrived, in the calculation of the basic award, at a multiplier of 10 which is not challenged, used a multiplicand of £152.07 per week. It is clear how they arrived at the figure, subject to some mathematical errors which are not important to which we will refer briefly later, from page 71 itself. In addition to setting out how many days Mrs Alderson worked in each month, that document also sets out what was the daily rate of pay; and the daily rate of pay was £148 from May 2004 until February 2005 it then increased to £152.44. Although the document has May 2005 as the date of increase, in fact that is obviously, which the parties accept, a typographical error for March 2005. The Tribunal have taken so many weeks at that higher rate and so many weeks at a slightly lesser rate and made an appropriate calculation. Thus they have reached the figure of £1,520.70. They have multiplied what they found to be the average weekly salary by 10.
21. As for the compensatory award, they firstly accepted Mrs Alderson's case that it should cover a period of 61 weeks from the date of termination. Having found the average weekly salary prior to termination to be £152.07 before termination, they continued to use that figure and multiplied it by 61, reaching the total which we have already set out. They used the same method for their calculation of compensation for breach of contract.

The grounds of appeal

22. The Notice of Appeal attacked the Tribunal's finding that Mrs Alderson would have worked from June 2005, absent breach of contract, for an average of four days per month on the grounds of perversity. It also made allegations of bias on the part of the Tribunal. The bias allegations were rejected at the sift stage and have not been pursued further. The perversity grounds were dismissed by the Employment Appeal Tribunal at a preliminary hearing at which Wings were permitted to proceed to a full hearing of that appeal only on the grounds contained in paragraphs 12 to 18 of the Notice of Appeal which argued the Tribunal had misapplied section 224 in determining the correct figure for a week's pay.
23. The EAT, chaired on that occasion by HHJ Richardson, expressed doubts as to whether the criticism of that assessment had any bearing on the compensatory award but chose not to shut out any arguments relating to the Tribunal's use of section  224, which might have a knock on effect on the compensatory award.
24. The Employment Appeal Tribunal, at the preliminary hearing, said that it was not easy to see what calculation the Tribunal had performed and asked the Tribunal to clarify how they made their calculation. The Chairman responded by referring to page 71 and by setting out, in brief terms, to the best of his recollection, how the figure, subject again to a possible calculation error, was reached. He said that the Tribunal had counted back 12 weeks from June 2005.

The basic award submissions

25. Mr Pollard, in his Notice of Appeal and in a skeleton argument, submitted firstly that the Tribunal was bound to calculate the basic award in accordance with section 119 of the 1996 Act by ascertaining a week's pay in the case of Mrs Alderson, she having no normal working hours, in accordance with section 224. That, of course, was correct. Secondly, he submitted that the Tribunal were bound by section 224(3) to take the last available consecutive 12 weeks of Mrs Alderson's employment for the purpose of the calculation which section 224(3) required. In effect, he criticised the Tribunal for cherry-picking in Mrs Alderson's favour weeks which were to her advantage.
26. It is clear that Mr Pollard had come to believe that the right way to apply section 224(3) was for the Tribunal to find the point, prior to her dismissal, at which Mrs Alderson last worked and then to take the 12 weeks which immediately preceded that point.
27. Miss O'Connor submitted in her skeleton argument that the Tribunal had correctly discounted weeks in which no remuneration was payable to Mrs Alderson as they spelt out in their judgment at paragraph 22, had not cherry-picked to Mrs Alderson's advantage but had taken into account weeks that they were required by statute to take into account.
28. Mr Hay has found himself in a difficult position with instructions to put forward the appeal along the lines of Mr Pollard's submissions, but it seems to us without, at first albeit, any clear instructions as to how the figure of £66 had actually been arrived at by Mr Pollard. Once Miss O'Connor explained to us and, therefore, to him how Mr Pollard had put that figure before the Tribunal he, without making any formal concessions, appreciated the problems he faced.

Conclusions as to basic award

29. The position, in our judgment, is quite clear. We agree with the starting point that the Tribunal were bound to calculate a week's pay for the purpose of section 119 in accordance, in this case, with section 224. That is common ground. Contrary to Mr Pollard's submissions, that section, in our judgment, gives rise to no ambiguity and to no gap requiring interpretation. It is wholly clear in the case of an employee who does not have normal working hours under his or her contract of employment that the Tribunal is prima facie to calculate a week's pay by ascertaining the average weekly pay in the period of 12 weeks ending with the week in which the contract of employment terminates or, if that date was not the last day of the week, the last complete week before it.
30. If, in that period of 12 weeks, there are any weeks in which no remuneration was payable by the employer, conveniently described by Mr Hay as "zero weeks", then any such week must be disregarded and the Tribunal must look at earlier weeks in which remuneration was payable so as to bring up to 12 the number of weeks from which the average is to be calculated.
31. The statute does not require or enable the Tribunal to consider the reasons why, in any week, no remuneration was payable. The Tribunal has to decide only, in respect of each week which might be included in the 12 weeks, whether in that week remuneration was payable or not.
32. We have no doubt that, if there is not a series of 12 consecutive weeks ending with the effective date of termination, or the week before the effective date of termination, as appropriate, the Tribunal cannot pick any random week or weeks in the past when remuneration was payable. That is so because the Tribunal has to consider prima facie the period of 12 weeks ending with the appropriate date. If any weeks in that period are to be disregarded they must, logically and consistently with the statutory purpose of ascertaining average pay over the last relevant 12 weeks before the appropriate date, be replaced by the next preceding week or weeks in which remuneration was payable.
33. In so stating the effect of section 224, we are not filling in any gap in the statutory provisions, nor are we exercising any discretion. We are adopting what in our judgment is the only sensible construction of the statutory provisions.
34. It is quite clear, in our judgment that the Tribunal did not depart from the principle which we have set out. They assumed (actually in favour of Wings) that, on each occasion on which Mrs Alderson worked, that occasion occurred in a separate week; i.e. she was not working twice in any one week. They then looked to see, from page 71, how many weeks she had worked from June back to January 2005; and it can be seen that she had work in 11 weeks. One more week had to be taken which would have been from December 2004; and there are to be found the 12 weeks. Weeks in which she did not receive any pay must, pursuant to section 224(3), be disregarded; and that is what the Tribunal did.
35. In fact, the Tribunal got their sums slightly wrong because they counted 11 weeks at the higher rate and 1 week at the lower rate; they should have taken 7 weeks at the higher rate and otherwise at the lower rate. On the other hand, they got their maths wrong too because, if they had actually proceeded on the basis of 11 weeks at £152 and 1 week at £148, that would have given the Claimant a higher basic award than that which she was awarded. We have done the appropriate calculations. The adjustments, when you look at them together, bring the figure so close to £1520.70 that it is not worth looking at those adjustments any further, and we do not propose to do so.
36. Accordingly, the appeal against the basic award must fail.

Compensatory award submissions

37. Although it might be thought from the terms of the Notice of Appeal that Wings' case was that the alleged error of law in the calculation of the basic award applied with equal force to the compensatory award, in his skeleton argument Mr Pollard accepted, and, to a degree, Mr Hay, taking over the role of advocate on behalf of Wings, has done the same, that the Tribunal were bound by section 123(1) of the 1996 Act to assess the compensatory award on the basis of what they considered just and equitable. However, it is submitted on behalf of Wings that the correct calculation of an average week's pay pursuant to the section 224 formula is central to the assessment of an award of future loss of earnings, or loss of earnings from the effective date of termination, by way of compensatory award.
38. Mr Hay concedes that, once we have come to the conclusion that the correct figure for the basic award was that taken by the Tribunal that criticism of their compensatory award falls away. The criticism of the compensatory award was based on the assertion that the £66 figure, which Mr Pollard preferred, was the correct starting point for the calculation of the compensatory award. Since we have rejected that view, for the reasons we have set out, it is perhaps unnecessary to take the compensatory award appeal any further; but we need to say a few words because of the way in which the matter is being put by Mr Hay and indeed Mr Pollard.
39. In the normal case, as a matter of routine, where the employee has earned money right up to the point of the termination of the contract of employment, the Tribunal, in looking to assess the compensatory award for loss of earnings immediately following that termination, will, as the starting point, use what was the earning figure immediately prior to the termination. That is just common sense.
40. But there may be many situations in which the basic award figure for a week's pay is not the correct figure for the calculation of the compensatory award. It is easy to think of examples. One may be, for instance, a case in which it is proved to the Tribunal that, on the Monday after the effective date of termination, a general increase in pay would have accrued to the employee, had he or she not been dismissed. Plainly, the Tribunal would be entitled to, and would probably be wrong if they did not, take that increase into account. In the other direction, one might have a case in which the Respondents proved that, over the weekend, between the effective date of termination and the beginning of the period of a compensatory award for loss of earnings, they had suffered a drastic loss of a customer, thereafter had to work short time and earnings would as a result have been reduced. That, too, the Tribunal would have to take into account. There is no legal link, in our judgment, between the amount of a week's pay as determined for statutory purposes pursuant to the provisions of chapter 2 of part 14 of the 1996 Act and the task which the Tribunal has to carry out under section 123 of the 1996 Act of ascertaining what is the amount which the Tribunal considers just and equitable in all the circumstances, having regard to the loss sustained by the complainant in consequence of the dismissal.
41. In this case, the position was indeed unusual. Mrs Alderson had not done any work since June 2005, over six months before her dismissal, for the reasons that the Tribunal explained and to which we have referred. Prior to June 2005, she had worked much less than she had done up until the end of 2004 and, as the Tribunal found, she would have done if (a) work had been provided to her between June 2005 and February 2006, the period of her breach of contract claim, and between February 2006 and the 61 week period for which the Tribunal awarded her loss of earnings.
42. The Tribunal found, and that finding is now unimpeachable, that during those periods she would have worked for four days per month, roughly equal to one day per week. They were, therefore, wholly entitled to take the daily rate which the evidence told them was £152.44, to treat that as the weekly rate on the basis that she would have worked but for the dismissal for one day each week and to multiply that by the multiplier of 61 which they had found to represent the appropriate period. Thus their assessment of compensatory loss was faultless and not subject to error; and the appeal against that too must fail.
43. For those reasons, this appeal is dismissed.
44. There is one further point with which we must deal. Mr Hay brought to our attention the fact that, in making their compensatory award, the Tribunal did not deduct from the figure which they reached whatever would have been the appropriate sums to represent tax and national insurance. In other words, they awarded the figures gross and not nett.
45. Miss O'Connor pointed out to us that this point had not been taken in the notice of appeal and consequently it did not go through a preliminary hearing and that, even if it might be right that the Tribunal may have made a mistake in that respect, it was too late now for Wing to seek to mount an appeal on that point.
46. Mr Hay submitted, while agreeing that the point was not in the Notice of Appeal, that the netting of the gross award was all part and parcel of the proper calculation of such an award as set out in Norton Tool v Tewson and in another authority of the Employment Appeal Tribunal, Paggetti v Cobb [2002] IRLR 861.
47. While we agree that the netting exercise is part of the general assessment of an award of loss of earnings by way of compensatory award for unfair dismissal, the fact remains that this particular criticism of the Tribunal's decision was not in the Notice of Appeal. We did suggest to Mr Hay that the Notice of Appeal might now need to be amended. He has made no application to amend; and, for that reason alone, it seems to us that the point is not before us; but even if he had made application to amend, we would have not allowed it for two reasons. Firstly, it is made very late; and, secondly, the amount involved here is, frankly, trivial and, in pursuance of the overriding objective, we should not take any more time on it. It has to be remembered that Mrs Alderson was only working, or rather receiving compensation for not working, for one day a week. Earning £150 once a week would have brought her a gross of £7,500 a year. The tax on that, if anything, would have been very small indeed. The figures involved here are so minimal that we do not propose to say anymore about them.

Costs

48. After we had given our judgment in dismissing this appeal, Miss O'Connor, on behalf of the Respondent, has asked us to make an award of costs under rule 34(a) of the Employment Appeal Tribunal Rules 1993 on the grounds that the appeal was unnecessary, improper, vexatious and unreasonably brought and pursued. Mr Hay, on behalf of the appellants, has resisted that. The Notice of Appeal canvassed, as we have described in the course of our judgment, a number of heads of appeal. Bias and perversity never got "off the ground" and should not have been raised. What was regarded as possibly having some substance at the preliminary hearing was the suggestion that, in some way, the Tribunal had got the calculation wrong in terms of the basic award and that that might, although at the preliminary hearing it was obviously thought that it was highly unlikely to have some knock-on effect on the compensatory award. At that stage, it may not have been clear to the division of the Employment Appeal Tribunal which heard the preliminary hearing what was the basis on which Mr Pollard put forward the figure of £66 per week as the correct figure for a week's pay. In the course of the appeal before us, it clearly emerged that that figure was based on a entire misconception as to how section 224(3) operates; and that misconception has been at the heart of this appeal, insofar as it survived its early stages, together with a further misconception that, in some way, there was a degree of link between the statutory calculation of a week's pay and the wholly different form of calculation required for section 123.
49. In our judgment, this appeal never had any merit and never had any chance of success. It was misconceived, it was unreasonably started and has been unreasonably pursued. Without needing to go into words such as improper or unnecessary, (a) the grounds for a cost order to be considered are made out, and (b) in the exercise of our discretion, it would be correct, proper and just between the parties to make a costs order. We see no reason to award costs only from, for example, when the basis of the calculation was explained by the Tribunal because the basic error, which has led to this appeal, arose from the misconception we have described as to what the proper figure for a week's pay was.
50. We have not received any considerable amount of detail or breakdown of the schedule of Mrs Alderson's costs. Mr Hay had not seen it until the application for costs was made, although we do not understand why that is so (we mean no criticism of Miss O'Connor in saying that). What Mr Hay has suggested is that we should make an order for costs on the basis that the parties should agree what the amount is within a specified period of time and, in default, the matter should be restored before us or should go for an assessment in the High Court pursuant to rule 34(b)(1)(c). Miss O'Connor says this has been going on long enough and it should be dealt with now; the Appeal Tribunal should specify the sum which must be paid pursuant to section 34(b)(1)(a).
51. We agree with her submission. We propose to make a rough and ready assessment of the appropriate costs. We do not regard it as having been necessary to use a grade A fee earner at £135 per hour throughout the handling of this case on Mrs Alderson's behalf. The figure, therefore, for solicitor's costs needs to be discounted. Looking at the position overall, the amount of costs we allow is one of £2,500.