HIS HONOUR JUDGE BIRTLES
Introduction
1.
This is an appeal from the Judgment of an Employment Tribunal sitting in
Bristol on 25 October 2010. The Judgment was sent to the parties
on 1 November 2010. The Employment Tribunal had previously found
that Mr Hill was constructively unfairly dismissed and awarded him
compensation. The Judgment sent to the parties on 1 November 2010
was a review following a successful appeal to the Employment Appeal Tribunal.
The Employment Tribunal on the second occasion awarded Mr Hill £9,069
compensation. He appeals against that assessment and the Respondent has a
cross-appeal on one point of the compensation award.
The factual background
2.
Mr Hill left his employment with the Respondent on
8 January 2009. He brought a claim for constructive unfair
dismissal. At a hearing on 16-17 November 2009, the Employment
Tribunal decided (Reasons for Judgment dated 17 February 2010) that
Mr Hill had been constructively unfairly dismissed. He was found to have
contributed to his dismissal by a factor of 70% (the “Discount Decision”) and
he was awarded a 10% uplift under section 31 of the Employment Act 2002
(the “Uplift Decision”). Subject to that discount and uplift his loss of
earnings were assessed as being £3,600 for the period up to
31 December 2009 (the “Cut-Off Date Decision”).
3.
Mr Hill appealed that decision on the basis that the Discount
Decision, the Uplift Decision and the Cut-Off Date Decision were not Meek
compliant. The Employment Appeal Tribunal (HHJ Reid QC presiding) allowed the appeal on 15 June 2010 and remitted the matter to the
same Employment Tribunal.
4.
A further remedies hearing was held by the Tribunal on
25 October 2010 and a Judgment on review was sent to the parties on
1 November 2010. The Employment Tribunal revised the Discount
Decision from a reduction of 70% to 50% and revised the Uplift Decision from a
10% uplift to 40%. The Employment Tribunal found that Mr Hill’s loss was
£76 per week (a finding on the evidence against which there is no appeal from Mr Hill,
although the Respondent cross-appeals on that point). However, the Cut-Off
Date Decision was unchanged.
5.
Mr Hill again appealed against all three decisions. The appeal
against the Uplift Decision was dismissed by HHJ Serota QC on
11 February 2011 (although that decision is subject to challenge),
but the appeal was against the Discount Decision and the Cut-Off Date Decision
remained before the Employment Appeal Tribunal.
The Employment Tribunal’s Judgment
6.
This appeal is against the Judgment on review, sent to the parties on
1 November 2010. At that review hearing on
25 October 2010, the same parties appeared before the Employment
Tribunal, as appeared before us. The material parts of the Judgment are as
follows:
“Findings
We adopt the findings of fact made in our original Judgment
which were not the subject of criticism by the Employment Appeal Tribunal.
The Law
The relevant law is the ER 1996 s.123 in particular and EA 2002
s.31. In considering these we have had particular regard to the cases cited to
us by Mr Hatt which we have detailed above.
Decision
1. Calculation of Loss
In our original calculations, we had concluded that the proper
basis for such calculation was the difference between the contractual basis of
the Claimant’s earnings with the Respondent with his new employer. The
thinking behind this decision was that in both employments there were likely to
be opportunities on occasions for overtime or night work but with the uncertain
state of the economy at the relevant time (and indeed at present) it was
inappropriate to rely on such opportunities - small engineering companies were
undoubtedly experiencing difficult times. We calculate the difference in
contractual pay net as £76 pw.
We now consider the period upon which such calculation should be
made. Mr Hatt suggested that it should be until retirement in 15 years time.
We are not persuaded by this submission and noting that since obtaining his new
employment the Claimant has made no effort to seek or obtain higher paid
employment elsewhere in the Cheltenham area have decided that the period to
which our original calculation was made i.e. to 31 December 2009 is
correct. The calculation is accordingly:
8 January 2009 to 31 December 2009 51 weeks at
£76 pw £3,876.
2. Contribution. S.123 ERA 2002
We have reviewed our original decision and have regard to the
fact that the Claimant was the senior representative of the Respondent present
at the pre-Christmas celebrations, this certainly places him in a different
position to his co-workers who may be seen as following his lead when he failed
to “clock off” at the conclusion of the authorised break period. However, it
was Christmas and we are satisfied that it was not a deliberate attempt on the
part of the Claimant to defraud the Respondent by claiming payment for time
which had not been worked but rather an error of judgement. In these
circumstances, we review our findings as to contribution reducing it from 70%
to 50%.
3. Uplift. S.31 ERA 2002
In respect of this we have had particular regard to the
authorities cited to us and having the opportunity to re-visit our original
decision willingly do so for that decision had been made hurriedly. We had not
fully taken into account the Respondent’s conduct following the Claimant’s
resignation which we are persuaded is relevant. They had produced a forged
document for the purpose of these proceedings to seek to cover up the fact that
they had utterly disregarded the Statutory Disciplinary Procedures in place of
that time. We conclude that the 10% uplift should be increased to 40%.
Our amended award is accordingly:
Basic award:
£4,200
Compensation Award
51 x £76 (8.1.09 – 31.12.09) £3,876
Loss of statutory rights £ 330
Bonus payable £ 350
£4,556
Less 50% contribution £2,278
£2,278
£6,478
Plus 40% s.31 EA 2002 £2,591
£9,069”
The Notice of Appeal
7.
The Notice of Appeal raises three grounds of appeal and we take each in
turn before turning to the cross appeal.
Ground 1: The Cut-Off Date Decision
8.
Mr Hatt submits that the Tribunal failed to give adequate reasons
for its decision and/or erred in law and/or exercises discretion on an improper
basis. He submits that the only basis given for the Cut-Off Date Decision was
that Mr Hill could have mitigated his loss of earnings by obtaining higher
paid employment. This was not put to Mr Hill by Mr Green for Pollard
at the hearing on 25 October 2010.
9.
Furthermore, Mr Hatt submits there was no evidence upon which the
Tribunal could have concluded that higher paid employment was available or
reasonably available to Mr Hill. The only relevant evidence was given by
Mr Nowasielski (a witness for the Respondent) that there were many other
engineering employers in the area. Finally, Mr Hatt submits that there is
no reasoning apparent in the Judgment to link the possibility of Mr Hill
mitigating his loss to the date of 31 December 2009.
10.
Mr Green opposes this ground of appeal and submits that there was
adequate evidence before the Tribunal which enabled it to reach its decision,
and it was a decision which it was entitled to make. The cross-appeal also is
about ground 1, but we deal with that later in this Judgment.
Decision
11.
There is nothing in the first Judgment, sent to the parties on
7 January 2010 which deals with this issue of compensation. We have
been supplied with the Employment Judge’s notes for the hearing on
25 October 2010. Those notes show that Mr Hill gave evidence in
chief and was cross-examined. In particular (a) he was referred to a list of
wages prepared by the Respondents; (b) in cross-examination he said he thought
he would be unlikely to find another job. However, it is not disputed that
Mr Hill obtained fresh employment shortly after his leaving the Respondent
company.
12.
The other witness at the hearing on 25 October 2010 was a
Mr Nowasielski, who was an employee of the Respondent. He gave clear
evidence to the effect that Mr Hill was now better off at his new
employers, Specialist Engineering Services. Thus, at question 20 (examination
in chief), he said this:
“20. What
is document NI attached to your statement?
A. This
is a document showing a summary of payslips and shows losses of wages. The
Claimant is better off where he is with Specialist Engineering Services (his
new employers) than he would have been with the Respondent.”
13.
At question 33 (cross examination) he said this:
“33. Is the
Respondents’ the best pay in the area?
A. No,
there are others in the area which pay the same or better.”
34. The
Claimant’s basic pay is still less.
A. Yes,
but he has been earning more at Specialist Engineering Services.”
14.
We have not seen the witness statements of either Mr Hill or
Mr Nowasielski. Neither have we seen the documentary evidence referred to
in those answers.
15.
The Tribunal was entitled to raise the question of mitigation of loss in
its Judgment on the figures, sent to the parties on 2 December 2009. In
that Judgment it awarded Mr Hill loss of earnings to
31 December 2009 amounting to £3,600. That was subject to appeal to
the Employment Appeal Tribunal and was revisited by the Tribunal on
25 October 2010. At that hearing, before it reached its decision,
there was evidence before it that Mr Hill was now being paid at a higher
rate of pay than he had when employed by the Respondent. We have set out that
evidence above. Furthermore, on Mr Hill’s own evidence, he had not sought
to look for other work. That fact is specifically recorded in the relevant
part of the Tribunal Judgment. Finally, we note that it is trite law that the
Tribunal is entitled to use its local knowledge. It clearly did so in this
case.
16.
We find the Tribunal was entitled to reach the decision it did that the
appropriate cut-off date was 31 December 2009.
Ground 2: The Discount Decision
17.
Mr Hatt submits that although the Employment Tribunal reduced
Mr Hill’s contribution from 70% to 50%, it failed to address a highly
relevant factor, namely Mr Hill’s eight and a half years unblemished
employment record. If it had done so, it would have reduced the contribution
yet further, probably to a finding in the bracket of 10% to 25%. Mr Green
submits that there is no error of law.
Discussion
18.
The question of contribution is found in s.123 of the Employment Rights Act 1996.
The following are the material parts:
“123. Compensatory Award.
(1) Subject to the provisions of this section […] 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.
[…]
(6) Where the Tribunal finds that the dismissal was to any
extent caused or contributed to by any action of the complainant, it shall reduce
the amount of the compensatory award by such proportion as it considers just
and equitable having regard to that finding.”
19.
It is clear that if the Tribunal makes a finding under s.123(6), it is
not entitled to take account of the employer’s conduct. In this case the
allegation that the Respondent produced a forged document at the original
Tribunal hearing. That was made clear by HHJ Reid at paragraph 11 of his
Judgment on the first appeal on 15 June 2010. We agree.
20.
In this case the Tribunal did revisit the facts of the case, having made
findings in its first Judgment as to what happened on the night of
23 December 2008, which was that Mr Hill was the foreman of the
nightshift and four of the nightshift workers and the Claimant had an
unauthorised extended break. In the case of Mr Hill, it was an extension of
one hour and in the case of the four workmen, it was one and a half hours.
There was therefore loss of time to that extent.
21.
In its second Judgment, dated 20 October 2010, the Tribunal
gave two clear reasons why they reduced the contribution from 70% to 50%. The
first reason was that Mr Hill was the senior representative of the
Respondent present at the pre-Christmas celebrations which placed him in a
different position to his co-workers “who may be seen as following his lead
when he failed to ‘clock off’ at the conclusion of the authorised break
period”. That cuts against Mr Hill.
22.
However, the Tribunal went on to point out that it was Christmas:
“[…] and we are satisfied that it was not a deliberate attempt
on the part of the Claimant to defraud the Respondent by claiming payment for
time which had not been worked but rather an error of judgement.”
23.
In our view there was adequate evidence before the Tribunal on
25 October 2009 which enabled it to reach the conclusion it did. It
was a conclusion which was open to it on the facts it found.
Ground 3: The Uplift Decision
24.
In its Judgment sent to the parties on 1 November 2010, the
Tribunal accepted that it had not fully taken into account the Respondent’s
conduct, following the Claimant’s resignation. It said this:
“They had produced a forged document for the purposes of these
proceedings to seek to cover up the fact that they had utterly disregarded the
Statutory Disciplinary Procedure in place at that time. We conclude that the
10% uplift should be increased to 40%.”
25.
Section 31(3) of the Employment Act 2002 says this:
“If, in the case of proceedings to which this section applies,
it appears to the employment tribunal that –
(a) the claim to which the
proceedings relate concerns a matter to which one of the statutory procedures
applies,
(b) the statutory procedure was not
completed before the proceedings were begun, and
(c) the non-completion of the
statutory procedure was wholly or mainly attributable to failure by the
employer to comply with a requirement of the procedure.
it must, subject to subsection (4), increase any award which it
makes to the employee by 10 per cent and may, if it considers it just and
equitable in all the circumstances to do so, increase it by a further amount,
but not so as to make a total increase of more than 50 per cent.”
26.
Mr Green resists this ground of appeal.
Discussion
27.
Essentially, this is a matter for the Employment Tribunal. It heard
Mr Hill, the Claimant, at both hearings. At the first hearing it heard
Mr Richard Pollard, the principal director of the Respondent, whose
evidence was “unreliable and inconsistent”. At both hearings it heard
Mr Lorenzo Nowasielski, whose evidence was “clear and we have no difficulty
in accepting that he was seeking to assist us in establishing the relevant
facts.” At the first hearing the Tribunal also heard expert evidence from
Mr Michael Handy, who identified the “opt out agreement” in the
bundle, dated 14 June 2006 as a forgery, and that evidence was not
challenged by Mr Green appearing for the Respondent.
28.
Although Mr Hatt does not put the matter this way, in order to
succeed he would have to show perversity on the part of the Tribunal. The test
for perversity is well-known: see Yeboah v Crofton [2002] IRLR 634 at paragraphs 93-95 per
Mummery LJ. This ground of appeal does not begin to meet the test set out
in Yeboah.
The cross-appeal
29.
The cross-appeal is in the following terms:
“The Employment Tribunal’s Judgment that the Claimant had
suffered a loss of £3,876 was perverse when the evidence before it at the time
of its decision was that the Claimant has in fact suffered no loss. The
evidence was set out in the Respondent’s alternative schedule of loss at pages
17 to 19 of the Appellant’s bundle and shows that the Claimant did not suffer
the losses awarded to him by the Tribunal.”
30.
Both the Employment Appeal Tribunal and Mr Hatt understood that
cross-appeal to relate to the issue of calculation of future loss:
Mr Hill’s financial loss from 8 January 2009, when he left the
Respondent’s employment, to 31 December 2009, which was the cut-off
date applied by the Tribunal. The basis for that belief was that it was the
Respondent’s case that Mr Hill was earning more from Specialist
Engineering Systems than he would have earned had he continued at the
Respondent’s employment. That is certainly the way in which the Employment
Tribunal saw the matter (see the first part of its Judgment on calculation of
loss).
31.
However, as Mr Green made his submissions to us on the
cross-appeal, it became clear that that was a mistaken belief. Mr Green
submitted in his alternative schedule of loss before the Tribunal that on the
figures for the Tribunal, Mr Hill had earned £119.57 per week, more than
he could have at the Respondent, and should therefore give credit for the sum
of £5,141.51 (42 weeks at £119.57). It followed that he had suffered no loss.
Indeed, Mr Green went further and submitted that “excess” earnings
received by Mr Hill in 2010 from his new employer fell to be deducted from
the loss of earnings, which he suffered in 2009.
32.
Mr Hatt submitted that there could be no appeal against the
Tribunal’s assessment of the continuing loss of £76 per week, to
31 December 2009, which was a finding of fact made after considering
a large volume of evidence and also for reasons fully set out in his
supplementary written submissions that the second point raised by the
Respondent was wrong in law.
Discussion
33.
There was a plethora of material before the Tribunal when it made its
assessment of the continuing loss of £76 per week. They approached the matter
on the basis that the calculation “was the difference between the contractual
basis of the Claimant’s earnings with the Respondent and with his new
employer”. That loss is the Employment Tribunal’s calculation of the
difference between 38 hours at the daytime rate of £15.50 per hour, which
Mr Hill received at his new employer, and the daytime rate of £17.52 per
hour that he was entitled to receive at the Respondent, with overtime and
nightshifts (the Respondent) or twilight shifts (the new employer) being
disregarded. In our judgement, on the material before it, the Tribunal was
entitled to reach the decision that it did, that there was a continuing
difference in contractual pay net at £76 per week to
31 December 2009.
34.
We reject Mr Green’s submission that the Tribunal were wrong not to
take account of the fact that on its own decision, there would be no difference
of pay after 31 December 2009. The Tribunal made no findings as to
Mr Hill’s earnings in 2010 other than drawing the inference that from
1 January 2010, Mr Hill would earn at least the same net pay as
he had earned with the Respondent. They did not make any findings of fact that
he would have earned more, simply that he would have not have earned less from
that date.
35.
It seems to us that this case clearly falls within the ratio of Whelan
and Another v Richardson [1998] IRLR 114
where HHJ Clark said this at paragraphs 42-46:
“42. The assessment of loss must be judged on the basis of the
facts as they appear at the date of the Assessment Hearing (“the assessment
date”).
43. Where the Applicant has been unemployed between dismissal
and the assessment date then, subject to his duty to mitigate and the operation
of the Recoupment Rules, he will recover his net loss of earnings based on the
pre-dismissal rate. Further, the Industrial Tribunal will consider for how
long the loss is likely to continue, so as to assess future loss.
44. The same principle applies where the Applicant has secured
permanent alternative employment at a lower level of earnings than he received
before his unfair dismissal. He will be compensated on the basis of full loss
until the date on which he obtained the new employment, and thereafter for
partial loss, being the difference between the pre-dismissal earnings and those
in the new employment. All figures will be based on net earnings.
45. Where the Applicant takes alternative employment on the
basis that it will be for a limited duration, he will not then be precluded
from claiming a loss down to the assessment date, or the date on which he
secures further permanent employment, whichever is the sooner, giving credit
for earnings received from the temporary employment.
46. As soon as the Applicant obtains permanent alternative
employment paying the same or more than his pre-dismissal earnings, his loss
attributable to the action taken by the Respondent employer ceases. It cannot
be revived if he then loses that employment, either through his own action or
that of his new employer. Neither can the Respondent employer rely on the
employee’s increased earnings to reduce the loss sustained prior to his taking
the new employment. The chain of causation has been broken.”
36.
These propositions were described as helpful by the Court of Appeal in Dench v Flynn and Partners [1998] IRLR 653, although the Court considered that
the obtaining of permanent employment at the same or a greater salary would not
in all cases break the chain of causation. The Tribunal was not wrong to
consider that securing subsequent employment terminated a loss.
37.
Applying those principles to this case, the Tribunal were not in error
of law in taking no account of Mr Hill’s increased salary in 2010. On the
particular facts of this case, we have held that the Tribunal were entitled to
conclude that the net loss of pay terminated on 31 December 2009.
Conclusion
38.
For these reasons, the appeal and cross-appeal are both dismissed.
