United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR A A PATEL (The Appellant in Person)
For the Respondent	MR M WEST (Representative) Peninsula Business Services Ltd Riverside New Bailey Street MANCHESTER M3 5PB

SUMMARY

Unfair dismissal – Mitigation of loss – Polkey deduction

Employee challenged the assessment of compensation. He submitted that the Tribunal had erred in its assessment of the Polkey reduction and its approach to mitigation. Moreover, its reasons had been deficient.

EAT held that the Tribunal had not misdirected themselves in law, nor reached a perverse conclusion. The reasons were clear and adequate. Accordingly the appeal was dismissed.


 


THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)

1. This case has a somewhat chequered history. In November 2005 the Employment Tribunal found that the claim for unfair dismissal should be dismissed. On appeal to this Tribunal the EAT (His Honour Judge Ansell presiding) substituted a finding of fair dismissal and remitted the matter to the Employment Tribunal to assess compensation.
2. This appeal is now brought by the claimant (as he was below, and as we shall continue to call him), who contends that the Tribunal has erred in various ways in assessing that compensation. He represented himself and advanced his arguments attractively and courteously.
3. The Tribunal made an award of £11,222.00. The claimant submits that it ought to have been more.

The background

4. The claimant was dismissed by reason of redundancy. The Tribunal at the first hearing found that there had been procedural defects, both in the selection of the claimant and in an absence of consultation. However, they concluded that by virtue of section 98A(2) of the Employment Rights Act dismissal would have occurred in any event, even had fair procedures been complied with, and therefore they found the dismissal to be fair on that basis.
5. The Employment Appeal Tribunal concluded that on the facts of the case section 98A(2) did not apply to this particular dismissal because it occurred prior to that section coming into force. It was on that basis that they substituted a finding that the dismissal was unfair.
6. The case went back to the same Tribunal. In assessing compensation, it dealt with a number of issues. Two of them are the subject of appeal, and we will simply focus on those.
7. The first was whether there should be a reduction in compensation to take account of the risk that had a fair procedure been followed the dismissal would have occurred in any event. In other words, although section 98A(2) itself was not applicable to render the dismissal fair, the employers contended that the Polkey principle should reduce the amount of compensation awarded. The Tribunal agreed and reduced the compensation by 40%.
8. The second was whether the claimant had reasonably mitigated his loss. The Tribunal held that he had not and limited the compensation to twelve months from the date of dismissal.
9. There are two other related grounds of appeal. It is submitted that the Tribunal should not in any event both have limited the loss to twelve months and applied a Polkey reduction. Finally, it is said that the Tribunal has not given adequate reasons for its findings. In other words the decision is not "Meek compliant." (Meek v City of Birmingham Council [1987] IRLR 250).
10. We should mention an additional point which the claimant emphasised in his oral submissions. He criticised the Tribunal for failing to make any reference to the relevant statutory provisions or authorities. We explained to him that this is not an error of law. In fact there was a reference to section 123 of the Employment Rights Act. However, particularly when applying well established principles, as in this case, it is not necessary for Tribunals to refer to the relevant provisions or authorities. The only issue is whether the Tribunal have approached the issue properly in law and reached a decision which is sustainable on the evidence.

The Tribunal's findings.

11. The Tribunal considered a number of features when assessing the chance that dismissal would have occurred in any event. The claimant had strongly urged upon them that had proper consultation occurred, he would have been willing to have accepted a job at a lower status and lower salary, even to the extent of accepting employment at some two-thirds of his former salary.
12. The company witnesses accepted that they would have been keen to retain the services of the claimant and might have agreed to that proposal, although they contended that it was unlikely in fact that the claimant would have been willing to accept a lower status job. The Tribunal recognised that no job vacancies at subordinate positions were available, but the claimant had longer service than some of those more junior employees and they might have been selected for dismissal before him. There might have been what is sometimes termed a "bumping redundancy."
13. The Tribunal then expressed its conclusion as follows:

"On balance, we are satisfied that, had a fair procedure been operated by the Respondent, in particular, had a full consultation taken place, it is possible that the option of making a less qualified employee redundant in place of the employee might have arisen, that the Claimant might have been offered a subordinate position, and that he might have accepted it. However, in our view that this outcome must be regarded as somewhat speculative; it is possible that this possibility would not have occurred to either party, that the Respondent would not have been willing to offer redeployment to a junior position, or that, as Mr Grady considered, that the Claimant would not have wished to accept such a position. We consider that a Polkey reduction of 40% is appropriate on this basis."

14. We note that in fact this reduction was less than the Tribunal had assessed first time round. On that occasion it must have concluded that there was a greater than 50% chance that the claimant would have been dismissed, otherwise section 98A(2) would have not have been capable of rendering the dismissal fair. As Mr West, who appeared for the employers, pointed out, the reason may be that the possibility of employment continuing in a subordinate job does not appear to have been in the mind of the Tribunal at the original liability hearing.
15. The Tribunal then considered the question of mitigation. They noted that the claimant had registered with several employment agencies and had responded to a number of advertisements. He had also telephoned or sent his CV to more than 50 potential employers. He had not, however, broadened his job search beyond accountancy and he explained that he and his wife had explored the possibilities of setting up a business, including purchasing a petrol station. The Tribunal also noted the number of formal applications in relation to existing vacancies was quite limited.
16. Their conclusion with respect to this is contained in paragraph 12, as follows:

"We consider that compensation for loss of earnings should be awarded for a period of twelve months. First, by that time we consider that the claimant should have broadened his job search beyond accountancy in an effort to secure employment, or else have taken steps to increase his earnings from self-employment. It was not sufficient for him to consider setting up businesses, none of which have materialised. Second, had the claimant accepted redeployment to a subordinate position, we do not consider it likely that the claimant would have continued indefinitely in the respondent's employment in a junior capacity, and in our view is not unlikely that this arrangement would have come to an end within a year."

Analysis of the appeal.

17. The claimant takes issue with both these findings. He was dismissed as long ago as 4 January 2005. He submits that since then he has suffered losses in excess of £60,000 and that the conclusions of the Tribunal provide no justice at all and fail to reward him properly for the consequences of his dismissal.
18. With regard to Polkey, he submits that the finding that there was a 40% chance that he might have been dismissed was simply not justified. That does not, in fact, seem to be one of the grounds of appeal put in the amended ground. Be that as it may, we have to say that this ground of appeal cannot succeed. The Tribunal properly weighed up the competing factors here.
19. Of the particular pool of persons to be made redundant – there were three who were in the same position as the claimant – the claimant had the shortest period of continuous employment, so his selection amongst that group was perfectly proper. The only question was whether he might accept a subordinate job. Mr Patel put significant weight on the fact that he had given evidence that he had some ten years earlier accepted lower paid work when he had obtained an accountancy qualification. This ought to have shown his willingness to do the subordinate job.
20. However, that was by no means self-evident. As the Tribunal pointed out, there were a number of features which they had to take into account, including whether at the time either party would have thought about a lower paid job as a possibility and whether the company would have been willing to offer it, or the claimant to accept it. As Mr West pointed out, it was a considerable step down, both in status and pay, for a qualified man.
21. We have no doubt that the finding of 40% is well within the remit of this Tribunal.
22. There is also a suggestion that this aspect of the judgment is not "Meek compliant"; that is, there are insufficient reasons for the Tribunal's conclusion. Again we reject that. This is a difficult and inevitably, quite speculative exercise for a tribunal. They carefully considered the relevant matters and set out in broad terms the reasons why they had doubts as to whether Mr Patel would have done the subordinate job. Reading this decision, one has a clear impression of why it is that the Tribunal felt there was a real risk - assessed at 40% - that the claimant would have been dismissed in any event, even had fair procedures been complied with.
23. The claimant also challenges the conclusion that compensation should be limited to a twelve-month period. He points out that the onus is on the employer to demonstrate a failure to mitigate, a fact not specifically relied upon by the Tribunal, and that the essential question is whether the employee has acted reasonably: see Gardiner-Hill v Roland Berger Technics Limited [1982] IRLR 498. He submits that the Tribunal should not expect too much of a party that has been treated unlawfully; his conduct should not "be weighted in nice scales" at the instance of the wrongdoing party: see the observations of Lord McMillan (in a very different context) in Banco de Portugal v Waterlow and Sons Ltd [1932] AC 452, 506. Here, he submits, the Tribunal has not given enough weight to the difficulty he was facing in seeking to obtain alternative employment. Moreover, it ought to have accepted that he was entitled to seek to deal with the problems of unemployment by considering setting up his own business. The fact that these possibilities had not materialised did not render it unreasonable for him to spend time on looking into potential possibilities.
24. We have, in fact, seen the employment judge's notes of evidence about this. The claimant noted that he had looked at a couple of business opportunities, including buying a filling station. Again, this is a notoriously difficult area for a tribunal to have to deal with. They were not, as the claimant appears to believe, obliged simply to assess the losses up to the date of the hearing and thereafter. That will often in practice be what a tribunal will have to do because the time between dismissal and the Tribunal hearing is frequently relatively short and the employee will not necessarily be open to criticism for failing to obtain another job by then. Here the Tribunal were in an unusual situation in that they were assessing compensation a long time after the original dismissal. They had to determine whether the claimant had acted reasonably in mitigating his loss by not getting a job before the Tribunal hearing. They weighed up various conflicting factors and concluded that he ought to have been able to obtain such employment within twelve months of the dismissal.
25. We accept that it is unfortunate that the Tribunal did not in terms identify wherein the burden of proof lay, but we are satisfied that this made no difference to their analysis in this case. They gave reasons why they thought that the mitigation had been inadequate, in particular the failure to consider jobs outside accountancy or to seek to maximise self employed earnings. Other tribunals might have fixed a longer period, but that does not make the decision in this case so perverse as to constitute an error of law. We remind ourselves that the test for perversity is a very high one, as the Court of Appeal emphasised in Yeboah v Crofton [2002] IRLR 634, and we are satisfied that it is not crossed here.
26. Furthermore, the finding of unfair dismissal was premised on the assumption that it was more likely than not that the claimant would have accepted a subordinate, lower paid position. One of the grounds for the limitation to twelve months was that the Tribunal felt that it was unlikely that the claimant would have stayed beyond twelve months in a subordinate position in any event. That is an independent finding, open to the Tribunal, which of itself justifies the limitation to twelve months' salary. Indeed, strictly the Tribunal could have calculated the compensation by reference to the lower salary that the claimant would have received in the subordinate job rather than by reference to the salary he was in fact receiving in the higher paid post he occupied at the date of dismissal.
27. The claimant again contends that this aspect of the decision is not "Meek compliant", but we reject that. The Tribunal recounted the evidence as to what steps had been taken to obtain employment, and in paragraph 12 they set out their conclusions as to what more might have been done. Fixing on twelve months is indeed a fairly arbitrary figure, but as Mr West pointed out, it is widely recognised in this context that, as the first President of the EAT, Mr Justice Phillips, put it in Fougere v Phoenix Motor Co [1976] IRLR 259, para 2, the employment tribunal has to work in "practical conditions" and is "bound of necessity to operate in a somewhat rough and ready way, and to paint the picture with a broad brush."
28. Finally, there is the contention that the Tribunal erred in applying both the twelve month period and the Polkey reduction to the compensation. With respect, that is entirely misconceived. The Tribunal has first of all to determine what loss is sustained in consequence of the dismissal. They estimated that loss in this case by saying that it is the loss of earnings for the period of twelve months (after giving credit for certain self-employed earnings received by the claimant in that period). Had there been no chance that the claimant would have been dismissed in any event, even had fair procedures been followed, that would be the amount of compensation. But they found that there was a 40% chance that he would have been dismissed anyway, and therefore had to apply the 40% reduction to that figure.
29. It is an error to believe that the Tribunal had either to apply a 40% reduction or to limit the compensation to twelve months without any such reduction. The twelve month limit identifies the loss; a 40% reduction reflects the chance that there would have been no loss. As Mummery P, giving the judgment of the EAT, put it in the case of Digital Equipment Co.Ltd v Clements (No.2) [1996] IRLR 513 para 18, the application of the Polkey principle determines the proportion of the loss for which the employer is responsible.

Disposal

30. In our judgment the conclusions reached by the Tribunal on both the Polkey and mitigation questions were open to the Tribunal on the evidence. We see no error of law in their approach, and they have perfectly adequately explained their reasons for reaching these conclusions. Accordingly, the appeal fails.