Shifferaw v Hudson Music Co Ltd UKEAT/0294/15/DA
Appeal against various aspects of the way in which the ET had calculated the Claimant's award after her successful claims of wrongful and unfair dismissal. Appeal allowed in part.
This appeal only related to the remedy judgment following the Claimant's successful claims of wrongful and unfair dismissal. Her main complaint was the way in which the ET had calculated the ACAS uplift. The ET had calculated first the wrongful dismissal damages and then the compensatory award from the end of the damages period. They then applied the uplift to the compensatory award. An alternative approach would have been to have calculated the compensatory award for the entire period, then apply the uplift and finally deduct the wrongful dismissal damages to avoid double counting. The second approach would have been more favourable to the Claimant. The Claimant appealed against the method of calculation and against other aspects including pension loss and holiday pay.
The EAT allowed the appeal in part. They quoted the Employment Tribunal Remedies Handbook 2015-16 (published by us - the 2016-17 edition is now available) when considering concurrent wrongful and unfair dismissal where it was recognised that there are two possible ways of calculating the award. The problem occurs when any adjustments have to be applied to one or other of the wrongful dismissal/compensatory awards since one is more favourable to the Claimant than the other. The EAT said that the ET had discretion as to which one was to be used, but in this case they had failed to specify whether the ACAS uplift applied to the whole award or just to the compensatory award and remitted this issue to the ET to determine. Other issues relating to pension loss and holiday pay were also remitted.
Appeal No. UKEAT/0294/15/DA
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8AE
At the Tribunal
On 1 July 2016
Judgment handed down on 30 August 2016
HER HONOUR JUDGE EADY QC
HUDSON MUSIC CO LTD (RESPONDENT)
Transcript of Proceedings
For the Appellant MR Z SIMRET (of Counsel) Instructed by: Hamlet Solicitors LLP 16-18 Whitechapel Road London E1 1EW
For the Respondent MR STEPHEN HEATH (of Counsel) Instructed by: DMH Stallard 6 New Street Square New Fetter Lane London EC4A 3BF**SUMMARY**
UNFAIR DISMISSAL - Compensation
Unfair dismissal compensation - appeal against Judgment on Remedy - ACAS uplift - assessment of loss - holiday pay entitlement and pension benefits - limitation on period of loss
Having previously found that the Appellant had been wrongfully and unfairly (constructively) dismissed and that an uplift of 20% should be applied to the unfair dismissal compensatory award due to the Respondent's failure to comply with the ACAS Code of Practice on Disciplinary and Grievance Procedures 2009, the ET proceeded to calculate the compensatory award as from the end of the notice period for which it had awarded damages for wrongful dismissal; it then applied the ACAS uplift. The ET had also previously found that the Appellant was entitled to pay for an earlier period of sickness absence, which she had been required to take as holiday. It had not applied the ACAS uplift to this sum.
Otherwise, in calculating the Appellant's losses, the ET had not included an element for her paid holiday entitlement and had limited her pension losses to the employer's contributions up to the period when the ET found the Appellant would have moved on to SSP. The ET had further considered that the Appellant's loss would have ended upon the cessation of her entitlement to SSP; her employment would either then have ended or she would have moved on to zero pay in any event.
On the Appellant's appeal on various grounds.
Held: allowing the appeal in part.
On the ACAS uplift:
When calculating the compensatory award in respect of an unfair dismissal claim in circumstances in which there was a concurrent claim of wrongful dismissal, the ET had a choice as to how to approach its task. It could either start at the expiry of the period compensated by the wrongful dismissal award (the course adopted by the ET in the present case) or it could calculate the unfair dismissal compensation from the effective date of termination and then deduct any sum due by way of pay for the notice period. Where the ACAS uplift was only to apply to the unfair dismissal award, this might be a relevant consideration for the ET in deciding which method to adopt. As it was not possible to tell if the ET in the present case had considered this issue, the appeal would be allowed in this respect and the point remitted for reconsideration.
As for the past holiday pay claim, the ET had made no finding that this should be subject to the ACAS uplift and the Appellant's appeal on this point had been founded upon an error in the Respondent's Counter-Schedule. That had not been a concession and did not serve to extend the ET's ruling. The appeal on this point was dismissed.
Paid holiday as part of the post-dismissal losses:
When assessing the Appellant's losses post-dismissal, the ET failed to include any element for her paid holiday entitlement. As the Respondent conceded, that had been part of the Appellant's claim and should have been addressed by the ET. The appeal in this regard was allowed.
The ET had not erred in failing to expressly refer to the booklet, Compensation for Loss of Pension Rights - Employment Tribunals. In any event, it was apparent that it had effectively applied the simplified approach suggested in that booklet, in circumstances in which - given that the ET had found that the Appellant's employment would, in any event, have ended some time before her expected retirement date - it had been appropriate for it to do so.
As for whether the Respondent would have continued to make pension contributions during the period of SSP, the ET had not referred to the evidence of an earlier period of SSP, during which contributions had continued. In the circumstances, it was unclear whether it had given proper regard to this relevant evidence and the appeal would be allowed on this issue.
Limitation of loss:
The Appellant had also taken issue with the ET's decision not to make any award for future loss, having found that she would have moved on to zero pay at the end of her SSP entitlement and would have been dismissed before the Remedy Hearing, given her lengthy period unfit for work due to ill-health. That was a permissible finding of a lawful reason for dismissal and the ET's reasoning was adequately explained. The appeal against this finding was dismissed.**HER HONOUR JUDGE EADY QC****Introduction**
- I refer to the parties as the Claimant and Respondent, as below. This is the Full Hearing of the Claimant's appeal against the unanimous Remedy Judgment of the London (Central) Employment Tribunal (Employment Judge Auerbach, sitting with Mr Simon and Mr Grant on 2 June 2015; "the ET"), sent out on 30 June 2015. The ET had previously (see its Liability Judgment of 30 January 2015) ruled that the Claimant had been wrongfully and constructively unfairly dismissed, succeeded in her claim for five days' unauthorised deductions from wages in respect of previous holiday and held there had been an unreasonable failure to comply with the ACAS Code of Practice on Disciplinary and Grievance Procedures 2009 ("the ACAS Code"). At the subsequent Remedy Hearing, the ET (relevantly): awarded £3,011.34 damages for wrongful dismissal; declined to make an order for reinstatement on the unfair dismissal claim but made a compensation award of £8,868.06 (including an uplift of 20 % for breach of the ACAS Code and an element for failure to provide a written statement of terms and conditions); and further made an award in respect of five days' holiday entitlement/ unauthorised deductions.
- The Claimant appealed various aspects of the ET's Remedy Judgment and, after an Appellant-only Preliminary Hearing, was permitted to do so on the basis of amended grounds.
- Following a Full Merits Hearing in December 2014, the ET found the Claimant had continuous employment with the Respondent from 21 September 2009, which terminated on 12 August 2013, when she was constructively wrongfully and unfairly dismissed.
- The ET considered it "convenient" (see paragraph 17 of the Reasons) to first address the question of compensation for wrongful dismissal, before turning to the compensatory award for unfair dismissal (it had already assessed the basic award on the basis of the Respondent's slightly higher calculations; paragraph 16 Reasons). It found the Claimant had been entitled to two months' notice and accordingly made an award for pay for this period in satisfaction of her wrongful dismissal claim, taking into account the contributions the Respondent would have made into the stakeholder pension scheme for the months in question.
- The ET rejected an argument raised by the Claimant that the amount awarded for pension losses should have been greater, addressing the point raised as follows:
"25. … Mr Simret [for the Claimant] raised further arguments particularly in relation to pension loss. Firstly, he said that the Claimant would also have made contributions to the scheme, as indeed she would, and potentially would have obtained tax relief and the benefit of seeing those contributions invested in due course into a final pension. However, we calculated her net loss of earnings by taking her gross pay and deducting only the tax and national insurance [ET's emphasis]. Her contributions would have come out of that net amount, and so to award her contributions as an additional loss would be double counting. If she received in her award a sum to reflect the pay net only of tax and NI, plus the employer's contributions, that fully covers her lost remuneration. As to Mr Simret's point about tax relief, the award is immediately payable and it would be open to her to invest it in pension or other tax-efficient investments and to see her investments grow in future, so no further compensation in that regard is appropriate."
- Having awarded the Claimant damages for the notice period, from 12 August to 12 October 2013, the ET turned to the compensatory award for the unfair dismissal claim, looking at the Claimant's losses from 12 October 2013 going forward. In fact the Claimant had been ill for much of that time, having been admitted to hospital in December 2013 with a significant brain infection which had impacted upon her mobility. The Claimant had also suffered from anxiety, stress and depression. She had only been fit to return to work in June 2015.
- The ET considered how matters may have unfolded had the Claimant not resigned. It found as follows:
"56. … We considered first the period from 12 October 2013 (the end of the period covered by the wrongful dismissal award) until 27 December 2013 (when she went into hospital). We did not know when, prior to her going into hospital, the brain infection began to manifest itself and practically affect her. We knew that the Respondent pays five days' company sick pay ordinarily, but we also knew - and Mr Nazarali [witness for the Respondent] said this again in evidence at the remedy hearing - that the directors might well, over the short term, have been disposed to continue her full pay for a period as a matter of discretion beyond that. However, Mr Nazarali also said in evidence that there was no precedent for such a long period of sickness absence.
57. On the basis of the evidence available to us, doing the best we could to assess this counter-factual scenario, we made the assumption (erring on the side of generosity) that the Respondent would probably have paid the Claimant her full pay until she went into hospital on 27 December 2013: a period of some 2½ months; and therefore that our compensatory award should reflect that 2½ months' loss of net pay plus pension contributions. Applying the rate we have previously used for net rate of pay and pension contributions [on the wrongful dismissal claim] that comes to £3764.18. We assumed then, however, that remaining in hospital for a month, and remaining unfit thereafter for a long period, she would have been put on to SSP, and remained on it. If that lasted for the maximum allowance of 28 weeks she would have received a further £2436.10 at the appropriate SSP rates."
- The ET did not accept that the Respondent would have dismissed the Claimant - a long serving employee - before her SSP allowance was exhausted, but did find that:
"58. … Once her SSP entitlement expired, however, her losses fall to zero, either because she might have been dismissed at some point after that date, or, even if not, because, still being unfit for work, she would then have been on zero pay."
- In respect of the Claimant's claim for pension loss (in addition to addressing the argument regarding the calculation of that loss, as set out above), the ET further observed:
"59. Mr Simret invited us to infer that during the period in which the Claimant was on SSP the Respondent would also have continued to make contributions into the private pension scheme. However, we did not have sufficient evidence to make that inference. This was a case where both parties were making minimum contributions into a private stakeholder scheme, and where, while she was receiving ordinary pay, matching contributions were made on both sides. We did not have sufficient evidence to infer that the Respondent would have continued to make such contributions during the period when she was not working and was off sick and in receipt only of SSP."
- As for the position after the SSP period expired, on the basis that the Claimant would have been fit to return to work only after the date of the Remedy Hearing, the ET reasoned:
"62. We did not consider it appropriate to make any further award for potential future loss from the date of the remedy hearing, having regard to the length of time for which the Claimant had been unfit to work on account of the brain infection and aftermath, the chance that she would have been lawfully dismissed on account of long term absence some time after her SSP had expired and by the time of the remedy hearing, and the overall long period that had elapsed since her dismissal."
- The ET then returned to the uplift it had previously found should be applied due to failure to comply with the ACAS Code; that had been addressed at paragraph 175 of its Liability Judgment as follows:
"175. Section 207A Trade Union and Labour Relations (Consolidation) Act 1992 applies to Tribunal claims under various jurisdictions. Its effect (among other possibilities) is that, where the particular claim relates to a matter to which the [ACAS Code] applies, and there has been an unreasonable failure by the employer to comply with some provision of the Code, then the Tribunal may, if it thinks it just and equitable to do so, increase its award by up to 25%. The jurisdictions include unfair dismissal, and, in such a case, the effect of section 124A of the [Employment Rights Act 1996] is that any such adjustment falls to be made to any compensatory award."
- The ET had agreed with the Claimant in part: in relation to certain aspects of the handling of her grievance there had been failures to comply with the ACAS Code. In its Remedy Judgment, it addressed this issue as follows:
"65. … Whilst we rejected … some other complaints of failure to comply with the ACAS code, we found unreasonable failure to comply in relation to James De Wolfe having not been an independent person to deal with the Claimant's grievance. We considered that this was a serious failure because he was the person considering her whole grievance and she was not given a right of appeal. The just and equitable uplift was more than the 10% proposed by [the Respondent]. However, there were some measures taken to address her concerns internally, and other complaints had not succeeded before us [ET's emphasis]. Overall, within the statutory range of 0% to 25%, we considered a 20% uplift would be fair in this case. …"
- The ET also awarded a further uplift of two weeks' pay under section 38 of the Employment Act 2002 (and section 124A Employment Rights Act 1996) for what it had found to be a failure on the Respondent's part to provide the Claimant with an up-to-date written statement of her principal terms of employment.
- The ET then turned to the Claimant's holiday pay claim. It had found there had been a breach of the Working Time Regulations 1998 and/or an unlawful deduction of wages when the Claimant was required to "convert" an earlier period of sick leave into holiday; she should, rather, have been treated as having five days holiday entitlement due to her. Although the Claimant had been paid at full rate for that five day period (when, if treated as sick leave, she would have been due only SSP), the ET did not consider her losses should be calculated on any lesser rate; whilst this might give the Claimant a small "windfall", the fault for that lay at the Respondent's door. The ET carried out a separate calculation in respect of this claim and awarded the Claimant £413.86 gross in respect of the five days' pay thus found to be due.
- Section 123 of the Employment Rights Act 1996 ("the ERA") explains that the compensatory award for unfair dismissal is to be:
"(1) … 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."
- As has been recognised in the case law (see, e.g. Software 2000 Ltd v Andrews it is for the ET assessing compensation to do so "using its common sense".
- By section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992 (as amended) ("TULRCA"), it is provided (relevantly for present purposes):
"(1) This section applies to proceedings before an employment tribunal relating to a claim by an employee under any of the jurisdictions listed in Schedule A2.
(2) 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 a relevant Code of Practice applies,
(b) the employer has failed to comply with that Code in relation to that matter, and
(c) that failure was unreasonable,
the employment tribunal may, if it considers it just and equitable in all the circumstances to do so, increase any award it makes to the employee by no more than 25%."
- It is not in dispute that amongst the jurisdictions listed in Schedule A2 TULRCA is included both claims of unfair dismissal and of unauthorised deduction of wages.
- In respect of an award of compensation for unfair dismissal, section 124A ERA (relevantly) provides:
"Where an award of compensation for unfair dismissal falls to be -
(a) … increased under section 207A of the [TULRCA] … (effect of failure to comply with Code: adjustment of awards), …
the adjustment shall be in the amount awarded under section 118(1)(b) [the compensatory award] and shall be applied immediately before any reduction under section 123(6) [contributory fault] or (7) [redundancy payment paid by the employer exceeding the amount of the basic award]."
- Allowing that there are a number of different deductions that might be applicable when calculating a compensatory award under section 123 ERA, in Digital Equipment Co Ltd v Clements (No.2)  ICR 237, the EAT (Morison J presiding) gave guidance as to the order in which the ET should approach its task. As qualified by the Court of Appeal in that case (see  ICR 258), that can be set out as follows (see Harvey on Industrial Relations and Employment Law at paragraph ):
"(1) The first task is to calculate the loss which the complainant has sustained in consequence of the dismissal, and insofar as the loss is attributable to action taken by the employer.
(2) In assessing that loss, full credit should be given to all sums paid by the employer as compensation for the dismissal, but excluding at this stage any contractual severance payment to the extent that it exceeds the basic award (s 123(7)). Sums earned by way of mitigation should also be deducted at this stage, since logically there is no distinction between sums earned from the employer and sums earned from third parties.
(3) Any Polkey [v A E Dayton Services Ltd  1 AC 344 HL] reduction should then be made: this determines that proportion of the loss for which the employer is responsible.
(4) Any reduction for contributory fault is then made in relation to that loss as established.
(5) From that sum it is necessary to deduct any contractual redundancy payment to the extent that it exceeds the basic award.
(6) If the sum calculated in accordance with the above is in excess of the statutory 'cap', the final stage will be to reduce it so as to bring it down to the statutory maximum."
- Where an ET is considering whether an employee's compensation should be limited because she would have been dismissed at some future date in any event, the dismissal thus postulated must be one that is for lawful reasons, see [Johnson v Rollerworld ]()UKEAT/ 0237/10/JOJ (Langstaff J presiding):
"22. … if the Employment Tribunal is contemplating a dismissal as being the event which gives rise to the end of compensation which would otherwise continue, it must necessarily be contemplating a fair dismissal. It is no part of the Employment Tribunal's function to cap an award by imposing a time limit on continuing loss of earnings if the dismissal which it contemplates is one which is unfair. …
23. Thus we regard it as axiomatic that if a Tribunal is anticipating a future dismissal then that dismissal has to be for good, that is, lawful reasons."
In that case, the EAT considered that the ET's reasoning was insufficient for it to be clear that the hypothetical dismissal in question would have been for a lawful reason.
- Otherwise, in assessing loss, an ET must be astute to take into account the various benefits to which the employee might have been entitled arising from their employment, benefits that might well continue, notwithstanding a period of ill-health; see as observed by the EAT (HHJ Richardson presiding) in [Wood v Mitchell SA]() UKEAT/0018/10/CEA:
"21. … in estimating what loss a complainant has sustained in consequence of the dismissal a Tribunal ought generally to take account of [possible contractual rights even if the employee becomes ill for reasons not connected to their employment] … and estimate their financial value in the light of the evidence before them. The date at which ill health supervened will not generally be the cut-off point. It is right to estimate; for how long would the employee have been employed? What pay or other benefits would have accrued to him during that employment even granted that he would have been ill? …"
- In respect of sums relevant for the calculation of pension losses, it is common ground before me that the booklet, Compensation for Loss of Pension Rights - Employment Tribunals, had been withdrawn and, in any event, that it would not be an error of law simply for an ET to have failed to have regard to the guidance provided in that booklet.
- That said, it is relevant to note that, in terms of the simplified approach and the substantial loss approach laid down within that guidance, it has been observed that the latter course would tend to be justified in "whole-career loss" cases, whereas the former might more appropriately used in a case where the employee "would probably have changed jobs, and thus left the scheme, before retirement age …" (see per Underhill LJ in Griffin v Plymouth Hospital NHS Trust .
- Where (as in the present case) the pension scheme in question is a money purchase scheme, the simplified approach allows that the ET should calculate the loss on the basis of the employer's contributions from the effective date of termination. It will be the ET that is generally best placed to determine whether that is the appropriate course in any particular case. As Underhill LJ put the point in Griffin:
"67. … it is more appropriate simply to award lost contributions up to that date [when the employee would have left the scheme in any event] … rather than embarking on the exercise of valuing rights on retirement which would almost certainly never have accrued and then applying a massive "finger-in-the air" discount. The question is whether the uncertainties that would have to be reflected in such a discount are so great that they undermine the point of assessing the hypothetical whole-career loss in the first place. Whether that is so in any particular case is a matter for the judgment of the tribunal. The observation at the beginning of para 4.13 [of the booklet] … is because, so the authors believe, experience shows that in most cases the relevant uncertainties are indeed too great."**The Appeal; the Parties' Submissions; Discussion and Conclusions**
- The appeal raises disparate points that, for ease of reference, are most usefully considered under separate headings, as set out below.
The Appeal and the Claimant's Submissions
- The first issues raised relate to the application of the 20% ACAS uplift. The points made are encapsulated at paragraphs 1 and 2 of the amended grounds of appeal, as follows:
"1. The Employment Tribunal erred in law by failing to apply uplift of 20% to the entire unfair dismissal award contrary to TULR(C)A 1992 schedule A2 (paragraph 28 reasons for dated 2 June 2015). The Employment Tribunal should have first calculated the compensatory award for [the] unfair dismissal period and applied uplift of 20% and then deducted the wrongful dismissal to avoid double counting. In the circumstance taking at face value of £3011.44 the Tribunal had failed to add £602.29. The Employment Tribunal has failed to realise there are two ways in which concurrent claims can be calculated. Either (a) calculate the damage for wrongful dismissal first and then deduct this figure from the compensation award for unfair dismissal or (b) calculate damage and then start the unfair dismissal period from the day after the damages period ended. The Tribunal used the latter but has failed to add the uplift.
2. The Employment Tribunal erred in law by failing to apply an uplift of 20% at paragraph 70 of Judgment dated 2 June 2015. The Employment Tribunal found there was [a] breach of working time regulation and unlawful deduction from wages. It was the parties' agreed understanding that that award is subject to ACAS uplift pursuant to TULR(C)A 1992, schedule 2A. Hence the Tribunal erred in failing to add £413.86 x 0.2 = £82.77 to the total award."
- As the ET had found the Respondent liable for an ACAS uplift on the unfair dismissal award, the Claimant submits there is no principled reason why the entirety of the compensatory period should not have been taken into account for those purposes, subject to a reduction in the total award to ensure no double recovery with the separate award made for wrongful dismissal. The unfair dismissal and wrongful dismissal claims were concurrent; it was open to the ET to calculate the compensatory award for the purpose of the unfair dismissal claim, and apply the uplift to that, before deducting the sum that would be attributable to the notice period (support being given for this as an approach by the Employment Tribunal Remedies Handbook 2015-2016 (2nd Edition, Bath Publishing), at page 16). If the sum awarded by way of compensation for wrongful dismissal was deducted from the unfair dismissal award before applying the uplift (as the ET had done here) it would not be applied to the entirety of the unfair dismissal award, which was contrary to the ET's intention in making the uplift.
- As for the holiday pay claim, the ET had found there had been a breach of the Working Time Regulations and the agreed position of the parties before the ET had been that the ACAS uplift would equally apply to the holiday pay award; certainly, the Respondent's Counter-Schedule of Loss seemed to demonstrate that understanding (that the uplift was also to be applied to the holiday pay award). Whilst the ET had not clearly stated that there should be any uplift to the holiday pay claim, the parties had essentially agreed this.
The Respondent's Submissions
- For the Respondent, it was contended that the ET was bound to apply the order of deductions from the compensatory award as had been set out in Digital Equipment Co Ltd v Clements (No.2)  ICR 237 EAT (as qualified by the Court of Appeal; see  ICR 258). In any event, it had reached a permissible view as to the application of the uplift.
- On holiday pay, the Respondent contends that the inclusion of a figure for holiday pay in its Counter-Schedule before the ET was simply an error and irrelevant to the issues. The Counter-Schedule had post-dated the Liability Judgment, in which the ET had not found that the Respondent had unreasonably failed to comply with a relevant Code in relation to holiday pay. The Respondent's Counter-Schedule could neither change the finding already made by the ET nor confer an entitlement on the ET to uplift that award.
The Claimant in Reply
- By way of reply, the Claimant observed that if she had been fairly dismissed at a future date (as the ET suggested) her compensatory award for unfair dismissal would have included a sum to take into account her entitlement to accrued holiday pay, which would thus have been made subject to the uplift. There was no error in the Respondent's Counter-Schedule.
Discussion and Conclusions
(i) Unfair Dismissal/Wrongful Dismissal - Order of Calculations
- The first point made under this head relates to the ET's approach to the unfair dismissal compensatory award, specifically to its decision to first assess the damages due to the Claimant in respect of her wrongful dismissal claim. Had there been no wrongful dismissal claim, the compensatory award for unfair dismissal would have run from 12 August 2013, giving an additional two months' pay, to which the ET would then have applied the ACAS uplift.
- In this case, however, there had also been a successful claim of wrongful dismissal. The Claimant was not entitled to double recovery for the same period; either the compensatory award for unfair dismissal purposes was to start at the expiry of the period compensated by the wrongful dismissal award (the course adopted by the ET) or that sum (pay for the notice period) would need to be deducted from the unfair dismissal compensatory award. In the Employment Tribunal Remedies Handbook 2015-2016 relied on by the Claimant, it is allowed:
"There are two ways in which concurrent claims can be calculated and double counting avoided."
- In the normal course of events it would make little difference as to how this was done (the authors of the Employment Tribunal Remedies Handbook identify that the approach adopted by the ET in the present case might be preferable as it avoids any risk of the recoupment provisions being applied to the wrongful dismissal damages and it would enable any adjustment, e.g. for compensatory fault, to be more easily determined). When applying the ACAS uplift, however, the Claimant says the ET should have proceeded to calculate the total loss from the effective date of termination for the purposes of the compensatory award, apply the uplift and only then deduct the wrongful dismissal sum. To do otherwise, she says, undermines the ET's intention to apply a 20% uplift to her compensation for unfair dismissal.
- Initially, I had been troubled that the course urged by the Claimant might run counter to the guidance provided by the EAT and Court of Appeal in Digital Equipment v Clements (see above) but that case was concerned with deductions for sums paid by the employer as compensation for the dismissal (including any pay in lieu of notice), not with the ET's award for wrongful dismissal. I consider, therefore, that it is right to say the ET has a choice as to how to proceed in a case where there are concurrent wrongful and unfair dismissal claims.
- I can further see, as the Claimant urges, that the course adopted by the ET in the present case may give rise to unintended consequences in terms of any ACAS uplift; that might particularly be so where an ET is concerned with a longer notice period and where the employee was able to find alternative work (so as to mitigate their losses) shortly after the notice period expired. That said, I do not consider that an ET in such a case would be bound to adopt the alternative approach (to calculate first the compensatory award in the unfair dismissal case (including the application of the ACAS uplift) and only then deduct the sum due for the wrongful dismissal); it seems to me this will be a matter for the discretion of the ET.
- In the present case, it is unclear whether the ET considered this permissible exercise of discretion; whether it intended to apply the uplift only to the unfair dismissal award in respect of the period of loss arising at the end of the notice period. I suspect it did not expressly consider the point because it was not specifically highlighted. That said, I accept that the Claimant's Schedule of Loss assumed the uplift would be applied to the entire period of loss. In the circumstances, I consider that the appropriate course is to allow the appeal on this ground and to remit this point to the ET to specifically address the question whether it intended the ACAS uplift to be limited to the unfair dismissal compensation only in respect of the Claimant's losses after 12 October 2013. If it did not, it would be open to the ET to re-visit the approach to the calculation of the concurrent claims so as to give proper effect to its intention in respect of the uplift of the unfair dismissal compensatory award.
(ii) Holiday Pay/Unauthorised Deductions
- The second point raised in respect of the uplift is different and relates to a separate claim for holiday pay/unauthorised deductions arising from an earlier period of sick leave. This was not part of the calculation of the Claimant's loss falling to be compensated as a consequence of the finding that she had been unfairly dismissed (and to the extent that the Claimant's submission in reply suggests that it was, I consider this to be in error). In truth this is a point of challenge made in reliance on a slip made in the Respondent's Counter-Schedule of Loss. This did not amount to a concession of the Claimant's right to an uplift in respect of her holiday pay/unauthorised deductions claim and it is plain that the ET's finding in respect of the uplift was itself unrelated to this claim.
- The uplift awarded by the ET was made in relation to the unfair dismissal claim; specifically, as to how the Respondent dealt with the Claimant's grievance. The Respondent's error in its Counter-Schedule of Loss did not, and could not, extend this to the holiday pay/unauthorised deductions claim. The appeal on this basis is ill-founded and duly dismissed.
The Appeal and the Claimant's Submissions
- By her third amended ground of appeal, the Claimant complains the ET failed to take into account holiday entitlement when projecting forward in respect of her continuing losses. This relates to the finding that the Claimant - who had been ill and, as the ET found, unable to work if her employment had continued - would have gone on to SSP for 28 weeks and would then have been on no pay. The Claimant contends that the ET should have taken into account her statutory holiday entitlement, which would have given a further 15.08 days at full pay (not simply SSP), as was apparent from her Schedule of Loss (see Wood v Mitchell SA UKEAT/0018/10/CEA, supra).
The Respondent's Submissions
- For the Respondent, it had initially been argued that this was an attempt to add in a further holiday pay claim when none was made; it was not a point taken before the ET and it was not open to the Claimant to seek to argue this now. At the oral hearing of the appeal, however, Mr Heath accepted that the Claimant had indeed included this sum in her Schedule of Loss and he could, therefore, not deny that it had been raised below, albeit that it had not be emphasised and was essentially left for the ET to discover the point for itself.
Discussion and Conclusions
- As the Respondent acknowledged in oral argument, the Claimant's entitlement to paid holiday was included within her Schedule of Loss, setting out the various benefits to which she said she would have been entitled, and which would, therefore, have fallen to have been taken into account when assessing her losses for the purposes of her unfair dismissal compensatory award. The ET fell into error in failing to have regard to the paid holiday entitlement when carrying out its calculations and the appeal is therefore also allowed on this ground. Although the amount claimed is fairly small and should be capable of agreement, as I am remitting this matter on other points, I consider I should also remit this issue for reconsideration.
The Appeal and the Claimant's Submissions
- The next issues addressed by the Claimant (paragraphs 5 to 7 of the amended grounds of appeal), relate to the ET's award in respect of pension loss, the appeal being put on the following bases:
(1) The ET failed apply the official Pension Guidance and to use either the simplified approach or the substantial approach in calculating the value of loss of pension rights and, in consequence failed to adequately compensate the Appellant for loss of pension rights.
(2) The ET had failed to take into account evidence before it (from the Yearly Statement for Stakeholder Group Pension Plan), which showed there was a contribution made by both the Claimant and Respondent and a tax relief was added to the monthly pension contribution payments too.
(3) More specifically, the ET had failed to add pension rights loss during the sick pay. The evidence showed that, during sickness pay, the Claimant was paid full pension contribution from the Respondent and tax relief. There was no evidence for the ET to conclude that the Respondent would not have made any contribution during SSP paid or during the holidays accrued during the 28 weeks' SSP period.
- The official Pension Guidance referred to by the Claimant is that contained within the booklet "Compensation for Loss of Pension Rights - Employment Tribunals". Accepting that a failure to apply the approaches set out in that booklet would not, of itself, amount to an error of law (not least as those guidelines had been withdrawn), both the substantial and the simplified approaches allowed in the guidelines had been relied on by the Claimant (in the alternative) before the ET. Whichever way the point was considered, the Claimant had lost out: the ET's approach - which only included compensation in respect of the employer's contributions to pension - did not properly compensate her.
- That failure arose, first, by only looking at the employer's contributions; the ET had thereby failed to take into account the loss to the pension scheme arising from the fact no payments were made - whether by the Respondent or the Claimant - during the relevant period and also the tax effect of that and/or the potential costs involved if the Claimant later (after receiving the ET's Judgment) sought to mitigate her loss by making payments into the scheme (or another pension scheme). It needed to look at the impact of that loss on her pension scheme. The ET also failed to award any amount for the tax relief that she would have been entitled to on her contributions in the pension scheme (calculated as £35.84 per month).
- Further, the ET failed to award the Claimant any pension benefit for the period of SSP, when there was evidence before it that the Respondent had previously paid pension contributions for an earlier period when the Claimant was in receipt of SSP.
The Respondent's Submissions
- For the Respondent it is observed that the guidance relied on by the Claimant had been withdrawn as being out of date. In any event, it cannot understand the objection to the ET's reasoning on this point; essentially it came down to a perversity challenge. The ET had, in essence, adopted the simplified loss approach, which was appropriate given its finding in this case that the Claimant would not have continued to be employed until retirement (see Griffin v Plymouth Hospital NHS Trust  EWCA Civ 1240, in particular at paragraphs 65 and 67, and see Harvey on Industrial Relations and Employment Law **at paragraph ).
- As for the question of pension loss during the period when the Claimant was in receipt of SSP, the Respondent accepted there was evidence of payment of pension contributions continuing for an earlier five day period when the Claimant was in receipt of SSP, but there was no evidence that those benefits would have continued for the entirety of the long term SSP. Ultimately, this was a perversity argument and the Claimant had to show an overwhelming case that no reasonable ET would have failed to pick up on the reference to the previous period of SSP in its Liability Judgment and the evidence that pension contributions had continued over that period. It was certainly not a point rehearsed in the Claimant's witness statement.
The Claimant in Reply
- In reply, Mr Simret introduced a new document which he said had been before the ET and made good his submission that he had put the Claimant's pension loss both on the simplified and the substantial loss approaches (in the alternative).
- For the Respondent, Mr Health was unable to recall this document and (having the opportunity to check his fuller papers during the short adjournment) was unable to find a copy of it amongst his files. That said, he acknowledged that (as had occurred at the hearing of the appeal) a number of documents had been handed to the ET at various times by Mr Simret and Mr Heath was unable to say with certainty that this particular item had not been handed in (although he was fairly confident that the Claimant had not given evidence on it).
- Relying on this document, the Claimant contended it showed clearly the way in which her pension loss claim had been put before the ET and demonstrated that the award made had failed to properly compensate her. In particular, even if the Claimant had been fairly dismissed in June 2015, the document relied on suggested she would have been entitled to future pension loss to her expected date of retirement (and the different - lower - figure that had been given in the Claimant's skeleton argument for the appeal had been wrong in that regard).
Discussion and Conclusions
- The ET explained how it approached pension losses and made clear its award was based on the Claimant's gross pay less only tax and National Insurance, plus the Respondent's monthly contribution to the pension scheme (rounding up to the higher of the possible figures in that regard). As the Claimant's contributions would be made out of her net pay, to make an additional award in that respect would have amounted to double recovery; that explains the ET's reasoning in not making an additional award for the Claimant's pension contributions.
- More generally, it is apparent that the ET effectively adopted the simplified loss approach (although not expressly using that label). As this was a case where the ET had found that the Claimant's employment would have ended some time before what would otherwise have been her retirement date, that was an appropriate course. Mr Simret's additional document, setting out how the Claimant's case on pension loss was put before the ET, sought compensation for losses in this regard going to retirement; it effectively ignored the ET's finding that the Claimant's employment would have ended some time earlier (her losses attributable to the Respondent being limited to the expiry of the SSP period, on the ET's findings). This was not akin to a whole-career loss case. The ET may not have used the label "simplified approach" but it is apparent that this is how it approached its task. Given its findings of fact, it was entitled to do so.
- As for tax relief, the ET took the view that the Claimant had not lost out because it remained open to her to invest the sums it awarded into her pension and thus gain the tax benefit. Again that is consistent with a broad brush application of the simplified loss approach and I consider it was a permissible course for the ET to follow. More generally, Mr Simret has been unable to point me to any evidence showing a loss to the scheme for the limited period when contributions were not made into it.
- The last point made under this head is, however, different and relates to the ET's conclusion that there was insufficient evidence that the Respondent would have continued to make contributions into the pension scheme during the period when the Claimant would have been on SSP. In explaining its conclusion in this regard, the ET does not refer back to the evidence of the earlier week of ill-health absence when the Claimant was on SSP but when both she and the Respondent continued to make contributions into the pension scheme. It may be that the ET did not consider that evidence particularly helpful in determining the position for a much longer period of SSP but I accept that this was potentially relevant evidence to which I cannot be sure that the ET had regard. In the circumstances, I consider that the appeal should also be allowed on this point and this particular issue remitted for reconsideration.
The Appeal and the Claimant's Submissions
- Finally, by paragraph 9 of the amended grounds of appeal, the Claimant challenges the ET's limitation on her continuing losses arising from its finding that her employment would either have ended at the end of the SSP period, on her dismissal, or she would in any event have been on zero pay, and the ET did not consider it would be appropriate to then make any further award for potential future loss thereafter.
- In support of this contention, the Claimant relies on Johnson v Rollerworld UKEAT/ 0237/10/JOJ, see paragraphs 22 and 23 as set out above. She contends the ET should not have found her employment would have terminated after the SSP period. By the date of the Remedy Hearing, she had been declared fit to work and the ET should have identified when she could have returned to work, not imported an arbitrary cut-off period.
The Respondent's Submissions
- For the Respondent it is observed the ET found as a fact that the Claimant became unfit for work by reason of a brain infection from December 2013 and would have been unfit for work by reason of that condition and its aftermath until at least June 2015 (see paragraph 49 of the Remedy Judgment). It had, further, specifically addressed the hypothesis that the Claimant would have been dismissed during the 28 week period in which she would have received SSP but held that the evidence did not support that (paragraph 58). It legitimately found, however, that the length of time that the Claimant was unfit for work on account of her brain infection (18 months) meant that she would have been lawfully dismissed for reasons of her long term absence; the hypothetical scenario the ET was addressing was straightforward and, in those circumstances, it had adequately set out its findings and conclusions.
- In Johnson v Rollerworld, the EAT had been addressing an appeal against an ET's decision in which the reasoning had been insufficiently explained (see paragraph 31 of that case). Although the EAT had been critical of the reasoning there provided, it had not laid down that an ET was required to work though the entirety of a (hypothetical) unfair dismissal case in order to assess whether or not the employment might have been terminated lawfully and fairly at some point in the future. In such cases, ETs often have to make assessments based on very little evidence; the ET in the present proceedings had been faced with very slim evidence and had reached a permissible and adequately reasoned conclusion on that basis.
Discussion and Conclusions
- The ET was charged with determining the award it considered to be "just and equitable" (section 123 ERA). In so doing, it was entitled to adopt a common sense approach, particularly when projecting forward as to what would have taken place had the Claimant not been unfairly dismissed when she was.
- A finding that the Claimant would, in any event, have been dismissed or would have moved on to zero pay (so as to mean she suffered no continuing loss) after such a lengthy period of ill-health is not, on its face, entirely surprising. The real question raised by this ground of appeal, is whether the ET's reasoning adequately explains what it found or whether it fell into the same error as the ET in the Rollerworld case.
- In the present case, the ET had expressly rejected the Respondent's argument that dismissal would have occurred during the period covered by SSP but then continued:
"58. … Once her SSP entitlement expired, however, her losses fell to zero, either because she might have been dismissed at some point after that date, or, even if not, because, still being unfit for work, she would then have been on zero pay."
- If the ET's reasoning stopped there, I consider that the position would, indeed, have been akin to Rollerworld: it would not have been possible to know whether the ET had found that the Claimant would then have been lawfully dismissed or not.
- In the present case, however, the ET returned to the point at paragraph 62 of its reasoning, concluding that it would not be appropriate to make any further award for continuing losses post-dating the Remedy Hearing given "the chance that she would have been lawfully dismissed on account of long term absence …". That identifies the lawful ground of dismissal the ET considered would have served to bring the Claimant's employment to an end. It is right that the ET spoke of "the chance" of such dismissal but that relates to the period from the expiration of the SSP entitlement to the date of the Remedy Hearing (when the ET had found the Claimant would have been on zero pay in any event); it is apparent that the ET had concluded that dismissal would have been a certainty by the time of the Remedy Hearing itself.
- Given the length of time involved and the particular facts of this case, I cannot see how it could be said that the ET reached an other than a permissible conclusion in this regard and I further consider that its reasoning was adequate to the task. I therefore reject the ground of appeal under this head.
- I have had regard to the guidance provided in Sinclair Roche & Temperley v Heard  IRLR 763 EAT. Given that I have allowed the appeal on specific points, apparently overlooked by the ET, my preliminary view is that the appropriate and proportionate course is for these matters to be remitted to the same ET for reconsideration (so far as that remains practicable). Allowing, however, that the parties have not had the opportunity to address me on the question of disposal in the light of my Judgment, I direct that any representations to the contrary be made in writing within 14 days of the handing down of this Judgment.
Published: 31/08/2016 10:46