The employer's ability to pay is not a factor which the Employment Tribunal ought to consider when determining how much compensation it is just and equitable to award under Employment Rights Act 1996 s.123.
Mrs Jin successfully brought claims against her former employer, Tao Herbs and Acupuncture Ltd alleging unfair dismissal and unlawful deductions from wages. The Employment Tribunal ordered Tao Herbs to pay compensation of £9,951.34 for unfair dismissal, 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, plus a further £1,000 or so in respect of unlawful deductions from wages.
Tao Herbs appealed to the EAT. Permission to appeal was initially refused on paper. Tao Herbs asked for its application for permission to appeal to be reconsidered at an oral hearing under Rule 3(10) of the EAT Rules.
At the Rule 3(10) hearing the EAT refused permission to appeal.
The EAT (HHJ McMullen QC) rejected an argument that the Tribunal had failed to consider the question of whether to make a ("Polkey"-type) reduction because the business and/or Ms Jin's relationship were both in a poor state and her employment was unlikely to last long. It was difficult to believe that any Tribunal sitting in 2009 would have bee unaware of the recession, but Tao Herbs' business has in fact grown since Mrs Jin was dismissed (from two directors and Mrs Jin to a staff of eight). Moreover the Tribunal's decision to award loss of earnings up to the date of dismissal but to award no future loss of earnings suggested that it had in fact applied itself to the question of Mrs Jin's future prospects.
Of more general importance is an argument put forward by Tao Herbs' solicitor that making a substantial award was not just and equitable because if this award had to be paid, the business would go into liquidation.
The EAT ruled that this last submission was wrong in 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. There are places in the employment protection canon where 'ability to pay' is a feature (see e.g. the costs regime), but the EAT ruled that the possibility that the employer may have difficulty in paying an award was not a relevant consideration in assessing damages payable in respect of a statutory tort.
editor's comment:
The problem highlighted by this case is not new (see for example Hill v Evans, Strattford Tribunal on 12th May 1997 which led to a question in the House of Lords by Lord Vinson): ie is it just and equitable for a tribunal to make a compensatory award which will probably lead to the closure of the employer's business and/or to difficulties, even redundancy, for other staff?
ERA 1996 s.123 does not expressly limit the tribunal's consideration of what is just and equitable to loss sustained by the claimant. The wording is somewhat ambiguous. On the one hand it can be argued that because the loss sustained by the claimant is the only consideration stated in the section it is, as this case suggests, the only consideration a tribunal should take into account. On the other hand, it can equally well be argued that as a matter of grammar "just and equitable in all the circumstances" is effectively a free standing phrase and that the reference to the "loss sustained by the claimant" which follows merely ensures that the loss for which compensation is awarded must be loss which is "attributable to action taken by the employer".
See related topics on emplaw.co.uk here:
Sharon Shoesmith, Director of Children and Young People's Services for
the London Borough
of Haringey at the time of the death of Peter Connelly ("Baby P), has
been given leave to appeal to the Court of Appeal against the High
Court's ruling of 23rd April 2010 that her dismissal was lawful.
Foskett J has given Sharon Shoesmith leave to appeal to the Court of Appeal from his judicial review decision of 23rd April. Her appeal can proceed, if she decides to pursue it, against the Secretary of State and Haringey but Foskett J refused leave to appeal in relation to Ofsted.
At the same time as granting Ms Shoesmith leave to appeal he dismissed an application for costs against her of around £350,000, save that she will have to pay a relatively small amount of £25,000 including VAT.
In this costs ruling Foskett J. is quite scathing about the way in which the then Secretary of State (Ed Balls) had handled matters leading up to Ms Shoesmith dismissal. He was also scathing about the government's explanation for delay in providing its Skeleton Argument and evidence in reply in the resulting law case - he said the explanation made "pretty hollow reading".
For notes on the judicial review decision (and a link to that decision) from which the present applications arose see the emplaw web-updater of 27th April 2010.
As a separate but related matter it is of interest that that Nevres Kemal, the social worker who blew the whistle on Haringey's child protection system six months before Baby P died, has lost her employment tribunal claim that the council had victimised her. Ms Kemal was dismissed by the Council and was later refused an interview for a social worker post. An employment tribunal at Watford has dismissed her claims (see the Hornsey and Crouch End Journal of 1st September 2010).
See also the Guardian, 1st September 2010 .
See related topics on emplaw.co.uk here:
John Watkinson, the former chief executive of the Royal Cornwall Hospitals Trust (RCHT), claimed unfair dismissal against the Trust. He argued that he lost his job because he had opposed plans to move some cancer services and surgery from Truro to Plymouth and was about to blow the whistle , suggesting the transfer of services may have been unlawful without a full public inquiry.
Mr Watkinson was dismissed following a statement he made to the hospital board in August 2008 in which he urged that a consultation take place in relation to the plans. As previously noted, an employment tribunal ruled that his dismissal was "automatically... procedurally and substantively unfair." (see Watkinson v Royal Cornwall Hospitals NHS Trust, ET at Taunton on 23rd March 2010 and notes in the emplaw web-updater of 11.5.10).
Mr Watkinson was awarded an interim payout of £67,250 (see emplaw web-updater of 22.7.10) in respect of the Trust's failure to follow proper procedures in his dismissal. The tribunal has now ruled that he should also receive £1.2 million for the whistleblowing part of his claim.
Although the Trust has admitted unfair dismissal, it is seeking to appeal the tribunal decision in respect of the whistleblowing claims.
See related topics on emplaw.co.uk here:
An Employment Tribunal that has dismissed a claim for disability-related discrimination on the basis that there was no 'less favourable treatment' cannot uphold a claim for direct disability discrimination based on the same facts.
Mr Chweidan worked for JP Morgan Europe Ltd (and its predecessors) from 1994, becoming an Executive Director in Structured Credit and Sales in the Hedge Funds team. In March 2007 he had an accident on a client ski trip which left him with a severe back injury. This condition, which affected his ability to work and to attend evening client functions. was eventually classed as a 'disability' within the meaning of Disability Discrimination Act 1995 s.1.
It is well-known that JP Morgan operates within a high-bonus industry. In 2006 Mr Chweidan received a bonus of $798,483. In 2007 it was proposed that he would receive $400,000, but he eventually received $450,000. In that year Mr Chweidan had generated £25 million in sales credits and was said to have prevented JP Morgan losing £50 million. He expressed disappointed with the 2007 bonus. His appraisal for 2007 was good but made mention of his narrow client-focus - JP Morgan were acutely aware that a
large proportion of his work came from one client and they wanted him
to widen his client-base.
In February 2008 Mr Chweidan was told he was at risk of redundancy and, as is common in that industry, he was immediately sent on 'garden leave'. In March 2008 he raised grievances in relation to: disability, age discrimination and unfair selection for redundancy. Ultimately both he and his grievances were dismissed by the employer. Mr Chweidan filed an Employment Tribunal claim for unfair dismissal, disability discrimination and age discrimination. The Tribunal found that he:
The Tribunal found that Mr Chweidan received less favourable treatment than a comparator when it came to the question of direct disability discrimination under Disability Discrimination Act 1995 s.3A(5) ("DDD"). They found that he was paid a lesser bonus and dismissed because of his disability (although they noted that the narrow client-base was also a factor). However, the tribunal did not find less favourable treatment when considering disability-related discrimination Disability Discrimination Act 1995 s.3A(1) ("DRD").
JP Morgan appealed and has won to the extent that the case was remitted to the Tribunal for a re-hearing on the DDD question.
At the EAT (under HHJ Serota), JP Morgan argued that:
"[a]s the [Tribunal] found there was no related discrimination because the "Malcolm" [London Borough of Lewisham v Malcolm [2008] UKHL 43] comparator would have been treated the same way there cannot, on the same facts, be direct discrimination either because a comparator would have been treated in the same way; accordingly, there would have been no less favourable treatment as he would have been treated in the same way as someone: "not having that particular disability whose relevant circumstances including his abilities are the same as, or not materially different from, those of the disabled person"".
The EAT agreed with this assertion. HHJ Serota noted that the Tribunal had not constructed a comparator for Mr Chweidan or explained exactly what the DDD was. He commented on the fact that the key questions in cases of this sort were: (a) was there less favourable treatment, and, if so, (b) what was the "reason why" (see Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] ICR 337)? Whilst the questions could be considered in a different order the Tribunal was still obliged to set out separate reasons for each and why 'less favourable treatment' was or was not found. HHJ Serota said:
"It [seems clear ...], that if the case on discriminatory-related discrimination fails it is difficult to see how the same allegations relied upon in support of that case could found a successful claim for direct discrimination, [Mr Chweidan] has not demonstrated he has suffered less favourable treatment. Both claims will fail."
HHJ Serota therefore concluded that if the Tribunal had based its DDD finding on the same matters as the DRD non-finding then the decision could not stand. He noted that the Tribunal had confused the DDD test with the pre-Malcolm DRD test. HHJ Serota rhetorically asked: if the Tribunal thought that Mr Chweidan's comparator (someone who did not widen his client base) would have been treated differently for the DDD question, then why did they not say so?
The EAT remitted the case to Tribunal to confirm whether the DDD finding was based on additional grounds or whether it was based on the same grounds as the DRD finding. HHJ Serota highlighted that the DDD finding could not stand if it were based on the same grounds as the DRD finding i.e. the bonus, the unfair dismissal or the client-base issue.
See related topics on emplaw.co.uk here:
Mrs E Tabaquin Finch had been employed by Parfums Givenchy Ltd on a perfume counter at Selfridges department store in London since 1984. In August 2008 Selfridges closed the operation of this particular counter. That created a redundancy situation. It is pertinent to note here that Parfums Givenchy exist within a group of companies which includes Parfums Christian Dior, Guerlain, and (to some extent) Louis Vuitton. Mrs Finch came within the Parfums Givenchy redundancy pool and when it came to considering alternative employment for her, there were roles available but she was not offered any of them.
Ms Finch brought various claims to an employment tribunal. The Tribunal upheld her claim of unfair dismissal and also made an award (under Employment Act 2002 s.38) for the fact that the employer had not provided sufficient particulars of her contract of employment (as required by Employment Rights Act 1996 s.1). It rejected her claim for five days untaken holiday and for unlawful discrimination. Both parties filed appeals.
The result at the EAT was that Parfums Givenchy won their appeal to the extent that the unfair dismissal element of the tribunal's decision was remitted to a fresh Employment Tribunal to be re-heard. Mrs Finch lost her cross-appeal.
At the EAT (under HHJ McMullen), one of the key issues was Mrs Finch's rejection for jobs she applied for with both Parfums Givenchy and another group company. At Tribunal it had been noted that Mrs Finch had been suspended from work in March 2008 and, although no disciplinary outcome was ever reached on that matter, she believed that the senior HR manager (Sophy Brown) scuppered her chances of employment elsewhere within the company and the group as a result of the suspension. The question of redeployment within the business reached the EAT. Mrs Finch had applied for 9 alternative roles. The Employment Tribunal found that for each of the 9 jobs Mrs Finch was interviewed by HR managers (who worked for Sophy Brown). On appeal, Parfums Givenchy stressed that Mrs Finch had in fact been interviewed by line lanagers and not HR managers; and that one group company does not have power over another group company in a HR capacity (e.g. to reallocate redundant employees). The EAT agreed with Parfums Givenchy that the Tribunal had therefore misunderstood significant facts and that because of such the Tribunal's finding of unfair dismissal should be set aside for perversity. HHJ McMullen set out:
"We cannot be sure that the judgment is unarguably correct, notwithstanding the misappropriation of the functions respectively of HR and line managers. The mistake is made on at least five occasions, attributing the interviewing process to HR managers when it was not."
The EAT then considered an appeal on the EA 2002, s.38 point. Parfums Givenchy argued that the award was invalid because it was based on the duty to provide employees with a written statement of employment particulars under ERA 1996 s.1. The EAT agreed with their interesting contention that that section applies only to those with employment beginning after 13 November 1993 . As Mrs Finch's contract commenced in 1984, the section therefore did not apply. The EAT therefore set aside the Tribunal's ruling on this point (editor's note: Although the judgment does not spell out the rationale for this conclusion, which may appear surprising given that the statutory right of employees to particulars of their employment goes back to the Contract of Employments Act 1963, the reason is presumably that the current version of the provisions only came into effect on 30th November 1993 - see the Trade Union Reform and Employment Rights Act 1993 (Commencement No. 2 and Transitional Provisions) Order 1993 SI 1993/2503 bringing s.26 of that Act into force on 30th November 1993).
Mrs Finch's cross-appeal on the untaken holiday issue failed because the EAT noted that this was put forward as a contractual claim and the contract had not actually provided for the carry-over of holiday. The EAT therefore allowed that Tribunal decision to survive.
In the course of his judgment, HHJ McMullen noted that:
"This Employment Judge was invited twice to provide his notes on particular issues. ...... The Burns/Barke procedure must be used sparingly. ....... After Mummery LJ's comments in Woodhouse School v Webster [2009] IRLR 568 CA judges should be careful not to go beyond their, and the EAT's, very narrow role".The unfair dismissal case was remitted to a fresh Employment Tribunal but it was highlighted that issues concerning the EA 2002 s.38 award and the holiday claim were not being remitted.
See related topics on emplaw.co.uk here:
These Regulations re-enact, with amendments, provisions which were previously made under the Disability Discrimination Act 1995. For example:
See related topics on emplaw.co.uk here:
The Equality and Human Rights Commission (EHRC) has published a new series of guidance documents on the Equality Act 2010, due to come into force (mainly) on 1st October 2010.
The guidance for employers, workers, service providers and service users, (and education providers and students to follow) is available to view and download from the EHRC website.
In addition to various guidances, a number of regulations are now being made under the Act. A list of these (including commencement orders) is available on the emplaw website.
See related topics on emplaw.co.uk here: