Whyte v London Borough of Lewisham UKEAT/0256/12/RN

Appeal against the deduction of Incapacity Benefit from the award of compensation. Appeal dismissed.

The claimant was found to have been unfairly dismissed. The Tribunal deducted from the compensatory award the amount he had received in Incapacity Benefit and also completed a recoupment notice because the claimant had received Job Seeker’s Allowance. The claimant argued that IB should not have been deducted from his award. There was also an issue concerning the failure by the DWP to either serve the respondent a recoupment notice stating how much it was seeking to recoup in benefits from the employee, or notify the employer in writing that it did not intend to serve such a notice – thus the prescribed element had not been paid either to the DWP or the employee.

The EAT applied the reasoning in the case of Morgans v Alpha Plus Security Ltd [2005] ICR 525 and dismissed the appeal on the IB issue. They also expressed their dissatisfaction with the DWP in its failure to respond properly to the recoupment notice and sent a copy of the EAT judgment to them.


Appeal No. UKEAT/0256/12/RN




At the Tribunal

On 28 February 2013





Transcript of Proceedings



For the Appellant
MR M WHYTE (The Appellant in Person)

For the Respondent
MR T BROWN (of Counsel)

Instructed by:
London Borough of Lewisham
Legal Services
Lewisham Town Hall



No error of law in Employment Tribunal's approach to compensation for unfair dismissal. Observations on the correct approach by the DWP to the prescribed element in accordance with Regulation 7(2) of the Recoupment Regulations 1996.

  1. This case has been proceeding in the London Central Employment Tribunal. Mr Whyte was one of three claimants. His employment with the Respondent, the London Borough of Lewisham, ended on 13 January 2008. He brought a claim of unfair dismissal. A Tribunal chaired by Employment Judge Carole Taylor upheld his claim on the limited ground that dismissal was automatically unfair under the then section 98A(1) of the Employment Rights Act 1996 because he was not given a right of appeal. That finding is recorded in the Tribunal's liability Judgment with reasons dated 28 September 2009; see particularly paragraphs 104 and 113 to 115.
  1. A remedy hearing then took place on 31 March 2011 before the same Tribunal. By a Judgment with reasons dated 10 May of 2011 (the remedy decision) the Taylor Tribunal awarded the Claimant compensation totalling £5,404.63. That award included a basic award of £1,650 and a compensatory award based on his loss of earnings from 13 January until 29 June 2008, the relevant period, totalling £3,264.21. That figure represented the prescribed element. The excess immediately payable by the Respondent to the Claimant was £2,140.42. That sum has been paid to the Claimant, however no payment has yet been made in respect of the prescribed element.
  1. At paragraph 15 of their remedy reasons the Tribunal set out a statement of recoupment under the 1996 regulations, namely the Employment Protection (Recoupment of Jobseekers Allowance & Income Support) Regulations 1996.
  1. Against the remedy Judgment and a subsequent review decision by Employment Judge Tyalor dated 20 May 2011, the Claimant appealed. He complained of bias on the part of the Tribunal. Those allegations were withdrawn at a preliminary hearing before HHJ McMullen QC and members held on 22 August 2012 and therefore were dismissed. In the event, only one point was permitted to proceed to this full hearing. That point relates to state benefits paid to the Claimant by way of Incapacity Benefit and/or Jobseekers Allowance; respectively IB and JSA, during the relevant period. That issue is set out at paragraphs 12 to 15 of the Judgment delivered by Judge McMullen on behalf of the EAT at the preliminary hearing.
  1. We note that in advance of this full hearing in his skeleton argument Mr Whyte sought to revive his complaints of bias. That has, as we have said, been disposed of at the preliminary hearing and sensibly, if we may so, he has not sought to reopen that issue before us.
  1. As to the benefits issue the context is this. In a schedule of loss prepared for the Tribunal remedy hearing on 31 March 2011, the Claimant stated that he was on JSA at £130.00 per week from 13 May 2008. He now tells us that was a mistake. Instead he contends that based on the print out from the Department for Work and Pensions (DWP), see supplementary bundle S, page 4, which was in evidence before the Tribunal remedy hearing, he received only £211.25 in IB during the relevant period. That was also his contention in his review application dated 5 April 2011. However, Mr Brown relies on the Judge's comments on the Appellant's affidavit in these proceedings at paragraph 15 where she records that in evidence the Claimant said at the remedy hearing that he had received IB from February 2008 for a period of nine months to a year. That covers the remainder the relevant period up to 29 June 2008. Again, Mr Whyte tells us that he received no more than £211.25 apparently shown on the DWP printout.
  1. We remind ourselves that it is for the ET, not this EAT to find the facts. Based on the evidence before them the Tribunal was entitled in these circumstances to deduct from the net pre-dismissal weekly wage of £309.81 IB at the relevant rate. That calculation appears on the Respondent's schedule of loss before the ET at pages 74 to 75. As to whether IB falls to be deducted from the net earnings figure Harvey on Industrial Relations Volume 1 D1/2706.1 refers to three EAT authorities which provide respectively for no deduction, full deduction and 50% deduction. What that passage does not refer to, although it is cited in a different context at D1/2525 is the Judgment of Burton P in Morgans v Alpha Plus Security Ltd [2005] ICR 525 which Mr Brown has put before us. There the EAT consider all of the earlier authorities, particularly Hilton International Hotels (UK) Ltd v Faraji [1994] ICR 259, Puglia v C James & Sons [1996] ICR 301 and Rubenstein v McGloughlin [1997] ICR 318 before opting to follow the Judgment of Mummery P in Puglia and affirming that the full amount of IB must be deducted from the pre-termination net wage for the purpose of calculating the loss of earnings element in the compensatory award.
  1. We shall follow the normal practice in this Tribunal and apply the reasoning in that final case of Morgans, the earlier cases having there been considered, and uphold Mr Brown's submission that as a matter of law the IB was properly deductable. It follows since there was evidence upon which the Tribunal could base their finding as to IB received by the Claimant, his own oral evidence, no error of law is made out at the remedy stage, nor was any new point raised in the review application which undermines the Judge's decision to reject that application summarily. It follows that this appeal fails.
  1. However, Mr Whyte raises a further troubling aspect to this case. That relates to the prescribed element. Again we set the context. The 1996 Regulations provide that an Employment Tribunal must, unless the employee has received neither JSA or IB or Income support; here on the face of his own schedule of loss he had received JSA, notify the Secretary of State, effectively the Department for Work and Pensions (DWP) of the prescribed element; see regulation 4. The prescribed element is defined in regulation 3. In the present case it is represented by the Tribunal's calculation of lost earnings during the relevant period, i.e. £3,264.21 as explained at paragraph 13 of their reasons.
  1. However, and here lies the problem in this case, although the Tribunal correctly sent a recoupment notice under the Regulations to the DWP dated 10 May 2011, the DWP has not, so we are told by both parties, complied with its statutory duty under Regulation 7(2) to serve the Respondent employer a recoupment notice stating how much it seeks to recoup in benefits paid to the Claimant or notify the employer in writing that it does not intend to serve such a notice. Instead the DWP wrote to the Claimant employee on 11 May 2011 stating its intention not to reclaim any benefits. However, that does not lift the stay on payment of the prescribed element by the Respondent to the Claimant imposed by Regulation 7(2).
  1. Mr Brown tells us that following the preliminary hearing before Judge McMullen's division, his instructing solicitor telephoned the DWP to be told that the department would not speak to the Respondent without the Claimant's consent. We have been shown an email sent by the Respondent's solicitor to the Claimant on 30 August 2011 asking him to provide his consent to the department. He tell us that he then contacted the DWP, but evidently without success.
  1. On what we are told, and the DWP is not a party before us, this appears to us to be an absurd state of affairs. No consent from the Claimant is required, Regulation 7(2) is clear and mandatory, the DWP must either serve a notice on the Respondent or notify the Respondent in writing what it told the Claimant in the letter of 11 May 2011. Until that is done, because of the time limits regime under the Regulations, the Respondent cannot safely release the prescribed element and the Claimant is kept out of his money. Either way the Respondent must pay the prescribed element to either the Claimant or DWP. We draw particular attention to the difficulty which has arisen in this case in order to prevent it happening again. Subject to any representations the DWP may wish to make, and a copy of this Judgment is to be sent by the Registrar to the DWP, we very much hope that the problem in this case will be shortly resolved by the DWP complying with its statutory obligation under Regulation 7(2) and that it will not be repeated in other cases.

Published: 14/04/2013 18:26

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