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Appeal No. UKEATPA/1477/09/RN

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 14 July 2010

Before

HIS HONOUR JUDGE McMULLEN QC (SITTING ALONE)

TAO HERBS & ACUPUNCTURE LTD (APPELLANT)

MRS Y JIN (RESPONDENT)

Transcript of Proceedings

JUDGMENT

**RULE 3(10) APPLICATION – APPELLANT ONLY****APPEARANCES**

For the Appellant
MISS SAMIRA ALI (Solicitor)
Messrs Rebian Solicitors
City West 3
Gelderd Road
Leeds
LS12 6LX

**SUMMARY**

UNFAIR DISMISSAL - Compensation

An Employment Tribunal assessing loss under s123 Employment Rights Act 1996 did not err when it did not take account of the employer's ability to pay, a matter outside the section.

**HIS HONOUR JUDGE McMULLEN QC**

1. This is case about dismissal for assertion of a statutory right and calculation of compensation. I pre-read the papers but did not read documents produced by the Claimant in the proceedings, this being an application pursuant to appeal sought to be raised by the Respondent in those proceedings. I will refer to the parties as the Claimant and the Respondent.

**Introduction**

1. It is an appeal by the Respondent against the judgment of an Employment Tribunal chaired by Employment Judge Grazin sitting on 6 July and 8 September 2009, given in writing on 30 September 2009, followed by reasons for the judgment sent to the parties on 27 October 2009.

1. The Claimant represented herself. She is Chinese. The Respondent company was represented by Mrs Song, one of its two directors. She too is Chinese. Thus the parties effectively appeared in person. Today the Respondents have the advantage to be represented by Miss Samira Ali, Solicitor.

1. The Claimant contended that she had been unfairly dismissed and had suffered unlawful deductions. The Tribunal upheld the case. The Respondents appeal.

1. In Haritaki v South East England Development Agency UKEATPA0006/08 at paragraph 1 to 13, I set out my approach to hearings such as this under rule 3. On the sift of this Notice of Appeal, in accordance with rule 3 His Honour Judge Serota QC formed the following opinion:

"There is no trace of the arguments as to deductions ever having been raised before the ET and it is far too late to raise them now.

The ET was entitled to conclude on the evidence before it that the Claimant had passed the probationary period.

It is not open to the Respondent to seek to reargue the reasons for the Claimant's dismissal. The Employment Tribunal found, as it was entitled to on the evidence, that she was dismissed because she had asserted her statutory rights to be paid the National Minimum Wage.

This resulted in the dismissal being automatically unfair and entitled the Claimant to maintain a claim for unfair dismissal despite lacking 12 months service.

I do not see the relevance of the argument that the claimant was not entitled to be provided with reasons for her dismissal as this plays no part in the decision.

The arguments as to the conduct of the Employment Tribunal have no substance and come nowhere near setting out an arguable case of bias. The Employment tribunal was entitled to prefer the evidence of the Claimant to that of Ms Song."

Where no point of law is found section 21 precludes the EAT from hearing the case.

1. The Respondents were given the opportunity to submit a fresh Notice of Appeal or to have a hearing and they have chosen the latter. The question for me is whether there is any reasonable prospect of success in any of the points raised.

**The legislation**

1. The legislation so far as is relevant requires that pursuant to the Employment Act 2002, in force at the relevant time, a grievance should be made by the Claimant in respect of allegations of unlawful deductions. For the purposes of unfair dismissal section 98 applies but only in the case of a person who has been dismissed following 1 year's service (see section 108 of the Employment Rights Act 1996). However, without that service an employee is still entitled to weigh a case relating to a dismissal for precluded reasons.

1. Section 123 deals with compensation and provides as follows:

"… 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**

1. The facts can be briefly described bearing in mind the Tribunal depicted each party as calling the other liar. The Tribunal found that the evidence of the Claimant was to be preferred. The Claimant had been employed from 21 April to 23 December 2008. The relationship was rocky. An issue arose as to the Claimant's capability and also as to her qualifications, for she said she was a qualified traditional Chinese medicine doctor.

1. The Claimant raised a number of issues relating to her rate of pay. She also contended that she had not been paid what she was promised and that such was below the national minimum wage.

1. The Employment Tribunal concluded, on the basis of the opinion which it formed of the Claimant as impressive, that she was genuine in what she said and that her witnesses were supportive and correct. As it found, the director of the Respondent conducting the proceedings and giving evidence, Mrs Song, was not reliable. Her memory was poor. She was evasive. In those circumstances it upheld the Claimant's claims and made awards totalling roughly £11,000. The lion's share was an award of compensation for unfair dismissal, for having asserted statutory rights which was in the sum of £9,951.34, most of which was taken up by an award to the Claimant of the loss of pay from the date of dismissal to the date the hearing concluded, some 38 weeks. I infer the Tribunal decided to make no award in respect of forward losses and there appears to have been no issue as to the Claimant's mitigation.

**The Respondents' case and conclusions**

1. On behalf of the Respondents Miss Ali makes three points, succinctly by reference to her detailed skeleton argument. The first is that the Employment Tribunal erred in law in that the Tribunal had held that the Claimant had raised an issue relating to minimum pay. In my judgment, the finding of the Tribunal is a finding in relation to the Claimant's claim that she had not been paid what was appropriate. There were unlawful deductions. Whether or not she explicitly raised a claim under the National Minimum Wage Act 1998 is unclear but the Respondent's acceptance that her claim was that she had not been paid what she was due is capable of amounting to an allegation under the National Minimum Wage Act 1998.

1. In any event the finding by the Tribunal is not in relation to that *Act *but in relation to unlawful deduction of pay. It is perfectly possible to complain that the employee is not being paid the appropriate rate of pay as agreed and, furthermore, that it is below the minimum wage. It seems to me the Tribunal correctly found that the 2002 Act regime had been complied with.

1. The second issue relates to the determination by the Tribunal as to the losses suffered by the Claimant. Here Miss Ali contends that the Tribunal erred in law by failing to implement the proposition advanced in Polkey v AE Dayton Services Ltd [1987] IRLR 503. That is to enquire what would have happened had the Claimant not been unfairly dismissed. By application of Software 2000 Limited v Andrews UKEAT/0533/06, Miss Ali contends that although speculation would be involved in this, the Tribunal must have regard to the evidence as to whether or not there was to be a Polkey reduction. She contends that the Tribunal has failed to make a finding on an obvious issue (see Prowes Piper v Anglian Windows Ltd .

1. When I asked whether this point had been raised Miss Ali took instructions and it was clear that the Polkey issue had not been raised by Mrs Song. When I asked what would have been said, and will be said if this case is remitted, Miss Ali told me that the business had gone into a downturn and the Tribunal should have been aware that the business was trading in a recession.

1. In my judgment, there is force in Miss Ali's first point. The Tribunal has not dealt expressly with Polkey. It should in every case of unfair dismissal do so. This was an experienced Tribunal. Could it possibly have overlooked it? I bear in mind that this was a hearing conducted by the parties in person.

1. Nevertheless there are two points which it seems to me are conclusive. The first is that any Tribunal hearing a case in 2009 will be aware of difficult trading circumstances. The second, and more important, is that the Tribunal makes a finding that the relationship between the parties was on its last legs because the Respondent's business was not very busy, as it put it. This created problems in the payment to the Claimant of her proper salary.

1. Thus it seems to me that the Tribunal has been alert to an argument which could be put to it that the Claimant's employment would not survive. Nevertheless I was told today that this business which at the time consisted of two directors, Mr and Mrs Song and the Claimant has now expanded to eight. I do not know whether that position obtained as at the date of the hearing. The view I take is that while this Employment Tribunal can be criticised for not expressly detailing with Polkey, it has in mind the fact that the business has been in difficulty and has confined the Claimant's award to losses up to the date of the hearing. It has in mind therefore, while not expressly saying so the principle of loss enunciated in section 123(1) and in Polkey.

1. The third ground advanced in this application relates to section 123. It is contended that the award to the Claimant was not just and equitable because it was substantial. I reject this as a proposition of law. In the calculation of loss for unfair dismissal the prime consideration is the loss suffered by the Claimant attributable to the action of the employer. The vehicle for the submission today is that if this award has to be paid, the business will go into liquidation.

1. That is not the correct approach to the assessment of an award for unfair dismissal, which does not pay attention to the ability of the employer to pay. There are places in the employment protection canon where ability to pay is a feature (see for example the costs regime). But in the assessment of damages for a statutory tort, the possibility that the employer will be in difficulty paying an award is not a relevant consideration. So of the three live issues argued before me today I form the opinion that none has a reasonable prospect of success. I dismiss the application. The appeal will be taken no further.