United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MR P MARTIN (of Counsel) Instructed by: Messrs Lyons Davidson Solicitors Park House 87 Burlington Road New Malden Surrey KT3 4QP
For the Respondent	Written submissions


 


SUMMARY

UNFAIR DISMISSAL: Compensation

The Employment Tribunal made no error in assessing pension loss by reference to the Ogden Tables. The Employment Appeal Tribunal will not readily interfere with the assessment of compensation.


 


HIS HONOUR JUDGE MCMULLEN QC

1. This case is about the assessment of pension loss following unfair dismissal. It also concerns Employment Tribunal procedure in the handling of Counsel's submissions.
2. This is the judgment of the Court to which all members, appointed by statute for their diverse specialist experience, have contributed. We will refer to the parties as the Claimant and the Respondent.

Introduction

3. It is an appeal by the Claimant in those proceedings against a judgment of an Employment Tribunal, chaired by Employment Judge Davidson, sitting over five days at Brighton, registered with reasons in December 2008. The Claimant was represented by Mr Martin of Counsel. The Respondent was represented by Mr Boddy of Counsel,. The Claimant claimed constructive unfair dismissal. The Respondent contended he was not dismissed and took issues on the merits. The Employment Tribunal decided in the Claimant's favour on unfair dismissal, awarding him almost £36,000, of which £20,448 is in respect of pension loss.
4. The Claimant appeals against the pension loss assessment. There is no appeal by the Respondent. Directions were given in chambers by Silber J, sending this to a preliminary hearing, indicating that there appeared to be some issues to be decided at a preliminary hearing, for he opined that some grounds should go to a full hearing. He said a skeleton argument from the Respondent will enable the matter to be sorted out. He did not indicate which matter should go to a full hearing. He ordered that written submissions be produced by the Respondent and we are grateful to Mr Boddy for them.

The legislation

5. The legislation is not in dispute. Section 123 of the Employment Rights Act 1996 is as follows:

"(1) … 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 complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer."

The facts

6. On the very narrow issue on appeal, the dispute was as to how to value the loss when the Claimant lost a final salary scheme pension, which he had at Barclays Bank until his unfair dismissal. He found work at Handelsbanken where a money purchase scheme was in place based upon defined contributions. The Tribunal held this:

"48. The real focus of that debate was the extent, if any, to which the Claimant's pension entitlement with Handelsbanken could be brought into account against the loss of the pension under the final salary scheme with Barclays. Mr Martin's opening position was that the pension with Handelsbanken could not be taken into account at all and he relied upon paragraphs 8.3 - 8.11 of the booklet entitled "Compensation for Loss of Pension Rights", 3rd Ed, (2003) published by a committee of Chairman of Employment Tribunals with assistance from the government actuary. These paragraphs do indeed say that a Claimant's rights under a money purchase scheme in new employment are not to be taken into account as against loss of pension but only, if at all, against the Claimant's loss of earnings claim. In the case of Network Rail Infrastructure Ltd v Ms L Booth [2006] UK EAT/0071/06/ZT the President of the Employment Appeal Tribunal, Elias J, observed that the approach in that paragraph of the booklet could not be right and would be inconsistent with the basic objective of compensating the employee for the loss suffered. That case was remitted to the Employment Tribunal to decide precisely how the pension in new employment was to be qualified and brought into account against the loss of pension from the dismissing employer.

49. Mr Martin and Mr Boddy were unable to suggest how the pension with Handelsbanken might be valued, because its value depends on investment returns over the next 10 years, which are anyone's guess. The position which Mr Martin took was that this was a matter upon which the Respondent had to call evidence, possibly from an actuary (though even an actuary would have to proceed on the basis of assumptions as to investment returns, which assumptions might well be completely inaccurate). In the absence of any such evidence, he invited us to award the full amount of the loss - in other words to take no account of the Handelsbanken pension at all.

50. We do not accept that contention. The burden is on the Claimant to prove his loss and in the absence of specific evidence on the point we must do the best that we can to achieve justice in the case. We have done so by treating the new employer's pension contributions as akin to a stream of income. The annual "income" is £10,500. The Claimant has received £14,875 to date. He will be aged 51 on 7 January 2009. The future value of that income can be calculated by taking the appropriate multiplier from table 7 of the Ogden Tables, 6th edition. The multiplier is 7.96 producing a value of £83,580. The total is £98,455.

51. In order to compare like with like we must use the same Tables to calculate the value of the Barclays pension. The appropriate table is table 19 and the appropriate multiplier is 13.51. The multiplicand is 11/60ths x £55,000 = £10,083. The calculation is 13.51 x £10,083 = £136,221.

52. Therefore, the Claimant's prima facie loss of pension is £136,221 less £98,455, i.e. £37,766.

53. But the matter does not rest there. There was, of course, a chance that the Claimant would not have remained in the Barclays pension scheme until age 60. The job was highly pressured and stressful. Even if the Claimant's workload had been reduced, in the light of his various health scares, it is not unlikely that he would have left Barclays before his normal retirement age. We assess that risk at 25%. (This is a considerably higher reduction than the 'standard' reduction for contingencies other than death contained in paragraphs 33 - 43 of the Explanatory Notes to the Tables.) Similarly, there is a chance that he will not remain in the Handelsbanken pension until the same age. That risk is smaller. We assess it at 17%, (which is the 'standard' reduction for a 50 year old). This reduces the figures for the loss of the Barclays pension to £102,166 and the figure for the present value of the Handelsbanken pension to £81,718. The difference is £20,448, which is a fair estimate of what the Claimant has lost and the sum which we award him."

Compensation and appeals

7. At the outset, it is important to understand the jurisdiction of the EAT in appeals on questions of compensation. In Dench v Flynn & Partners [1998] IRLR 63 (CA), Sir Christopher Staughton said this:

"Other rules adopted by the Employment Appeal Tribunal, if such they be, are at most guidance. What has to be assessed in terms of section 123(1) of the Employment Rights Act 1996 is such amount as the tribunal considers just and equitable in all the circumstances, having regard to the loss sustained by the complainant in consequence of the dismissal, in so far as that loss is attributable to action taken by the employer. That includes a test of causation, or perhaps the same test twice over, once by reason of the words "in consequence of" and a second time in the words "attributable to".

That is the ordinary common sense test of the common law. Was the loss in question caused by the unfair dismissal or by some other cause? The tribunal must ask itself and answer that question, and then ask what amount it is just and equitable for the employee to recover. Rules will no doubt help as guidance in the process, but that is the task which ultimately has to be undertaken."

8. That reinforced the position given as early as 1974 in Nohar v Granitestone (Galloway) Ltd [1974] ICR 273 at 274 G-H:

"… we think it right to state the general principle to be applied by this court in reviewing assessments of compensation made by a tribunal. In this court we have jurisdiction only on points of law and, accordingly, we can interfere with the tribunal's award only if we are satisfied that the tribunal failed to take into account some element of compensation that they were legally bound to take into account or assessed compensation in respect of such an element at a figure manifestly unwarranted by the evidence led before them. We are not entitled to substitute our figures for the tribunal's figures simply because it may be that in any case we felt that had we been the Tribunal we would have awarded a figure different from that awarded by them"

9. More recently, in Bentwood Bros (Manchester) Ltd v Shepherd [2003] IRLR 364, Peter Gibson LJ set out the scope of the EAT's approach in the following way:

"10. In considering whether or not the Tribunal has been perverse in their award of 10 years pension payments, I bear in mind that there are many statements in the authorities on the narrow circumstances in which it would be proper for an appellate body to interfere with the assessment of damages by a tribunal. We were referred in particular to Gbaja-Biamila v DHL Ltd [2000] ICR 730 at page 742 paragraph 36 where Lindsay J, the then President of the Employment Appeal Tribunal, said this:

'An appellate court, when reviewing the quantification of compensation by an employment tribunal, should not act as it would when reviewing an award of damages by a jury. In contrast to a jury, the tribunal is expected to give reasons and hence can be judged by those reasons: Skyrail Oceanic Ltd v Coleman [1981] I.C.R 864, 872. That is not to say that the employment tribunal's sovereignty as to facts is here in question. Only if, firstly, a tribunal's given reasons expressly indicate that it has adopted a wrong principle of assessment, or, secondly, (that not appearing by reason of its either correctly stating the principles or stating none) it has arrived at a figure at which no tribunal properly directing itself by reference to the applicable principles could have arrived, will the assessment demonstrate an error of law, the only class of error which this appeal tribunal can correct. That second category may fairly be described as one where the award has been perverse, an award so high or low as to prompt in those aware of the relevant facts found and the applicable principles a reaction that the award was wholly erroneous, even outrageous: see also the collection of definitions of perversity in Steward v Cleveland Guest (Engineering) Ltd. [1996] ICR 535, 541.'

11. This court, like the Appeal Tribunal, will interfere with such assessments with reluctance, given that the Tribunal as the industrial jury can be expected to make broad brush assessments which reflect the Tribunal's local knowledge and experience.

10. It is with that approach that the arguments are to be measured

Submissions and conclusions

11. We will deal with the submissions of Mr Martin and the written response by Mr Boddy, together with our conclusions upon them.
12. The first set of complaints relates to the way in which the Tribunal received submissions. In our judgment, the Employment Tribunal, faced with no positive material as to the correct approach, was entitled to take whichever approach it thought correct in the light of the authorities. There is no dispute as to the finding in the first two lines of paragraph 49.
13. We have been assisted by additional reasons given by the Judge in response to an application by the Claimant for a review. The review was refused, as was an application for corrections to be made under the slip rule on 2 March 2009. This procedure is entirely proper. It follows Bansi v Alpha Flight Services [2007] ICR 308, in which a party who notices that there may be gaps or technical errors in the reasons, is invited to go first to the Employment Tribunal before appealing to the Employment Appeal Tribunal. Very crisp answers are given in cogent terms as to why the Tribunal reasoned as it did. In particular, this is said in paragraph 6:

"In addition to the above, the letter asks various questions about the deductions in respect of the chance that the Claimant would not have remained in the Barclays pension scheme (25%) and will not remain in the Handelsbanken scheme either (17%). The Explanatory Notes to the 6th Edition of the Ogden Tables are clear and it is not appropriate for the Tribunal to embark upon an exposition of them. It was correct to use the Tables A - D in the Notes as a guide because they reflect the general risks of periods of non-employment and absence from the workforce due to sickness."

14. That follows confirmation of the correctness of the figures. We do not accept that the Claimant was at a disadvantage in the way in which the case on pension loss was dealt with by the Employment Tribunal.
15. Turning then to the substance of the appeal, for we do not accept the procedural criticisms nor the criticisms based on a lack of reasons (see Meek v The City of Birmingham District Council [1987] IRLR 250 (CA)). The essential issue was whether or not the guidelines should be adopted by the Employment Tribunal or the Ogden Tables. The Tribunal, in our judgment, committed no error in adopting the Ogden Tables, both for evaluation of the loss of the Barclays pension and for the Handelsbanken pension.
16. We reject the further contention that it was the duty of the Respondent to produce actuarial evidence as to this. The Employment Tribunal collected the material which was available to it and came to a judgment. This is not an exact science. In Scope v Thornet [2007] IRLR 155, the Court of Appeal corrected my approach to the assessment of forward loss when I held that speculation was to be eschewed, for the Court said that speculation is a part of the Tribunal's duty. It is not an exact science, even when Ogden Tables are used, created on a basis of clear arithmetic and actuarial considerations and where the guidelines offered by the committee of Employment Tribunal Judges is also used.
17. We accept, in full, the submissions made on behalf of the Respondent by Mr Boddy in his clear, point-by-point response. The Employment Tribunal committed no error in its approach to the assessment of this pension loss.
18. The Judgment of the Employment Tribunal is one which was open to it. It has given reasons for the approach it took. It is not manifestly excessive; it is not wrong in principle; and, in the circumstances available to it, it has done what we regard as a straightforward arithmetic exercise in order to come to what is just and equitable by way of compensation. The appeal is dismissed.