UFD Remedies
Cases
Norton Tool Co Ltd v Tewson
[1972] EW Misc 1 [1972] ICR 501, [1973] 1 All ER 183
Sir John Donaldson:
The judgment which I am about to deliver is the judgment of the Court.
The industrial tribunal, sitting in London, unanimously decided that Mr. Tewson was unfairly dismissed and that he should be awarded £250 by way of compensation. There is no appeal from the finding of unfair dismissal, but the employers have appealed against the assessment of compensation on the grounds that if the tribunal had directed itself correctly in law it would have been lower, whilst Mr. Tewson has cross appealed on similar grounds, save that he says that the award should have been higher. Both parties have asked that if either appeal or cross appeal succeeds we should ourselves substitute some other figure rather than send the claim back to the tribunal for further consideration. This request involves no disrespect to the tribunal and reflects only a common desire to avoid increasing the costs of the proceedings. A
That loss falls to be considered under the following heads.
(a) Immediate loss of wages
The Contracts of Employment Act, 1963, as amended by the Industrial Relations Act, 1971, entitles a worker with more than 10 years’ continuous employment to not less than 6 weeks’ notice to terminate his employment. Good industrial practice requires the employer either to give this notice or pay 6 weeks’ wages in lieu. Mr. Tewson was given neither. In an action for damages for wrongful, as opposed to “unfair,” dismissal he could have claimed this 6 weeks’ wages, but would have had to give credit for anything which he earned or could have earned during the notice period. In the event he would have had to give credit for what he earned in the last two weeks, thus reducing his claim to about 4 weeks’ wages. But, if he had been paid the wages in lieu of notice at the time of his dismissal, he would not have had to make any repayment upon obtaining further employment during the notice period. In the context of compensation for unfair dismissal we think that it is appropriate and in accordance with Ihe intentions of Parliament that we should treat an employee as having suffered a loss in so far as he receives less than he would have received in accordance with good industrial practice.
Accordingly, no deduction has been made for his earnings during the notice period.
We have no information as to whether the £25.60 per week is a gross or a “take-home” figure. The relevant figure is the “take-home” pay since this and not the gross pay is what he should have received from his employer. However, neither party took this point and we have based our assessment of this head of loss on 6 weeks at £25.60 per week or £153.60.
Mr. Tewson drew £3 unemployment benefit for a short period, but we were not asked to make any deduction for this and have not done so.
Finally, we have taken no account of the extent to which Mr. Tewson’s income tax liability may be reduced by his period of unemployment, since we consider that the sums involved will be small and that such a calculation is inappropriate to the broad common sense assessment of compensation which Parliament contemplated in the case of unfair dismissal of a man earning Mr. Tewson’s level of wages.
(b) Manner of dismissal
As the complainant secured employment within four weeks of his dismissal and we have taken full account of his loss during this period, we need only consider whether the manner and circumstances of his dismissal could give rise to any risk of financial loss at a later stage by, for example, making him less acceptable to potential employers or exceptionally liable to selection for dismissal. There is no evidence of any such disability and accordingly our assessment of the compensation takes no account of the manner of his dismissal. This took place during a heated exchange of words between him and one of the directors.
(c) Future loss of wages
There is no evidence to suggest that the complainant’s present employment is any less secure than his former employment, and we have therefore taken no account of possible future losses due to short working, lay-off or unemployment, apart from loss of rights in respect of redundancy and unfair dismissal which are considered separately at (d) below.
(d) Loss of protection in respect of unfair dismissal or dismissal by reason of redundancy.
These losses may be more serious. So long as the complainant remained in the employ of the respondents he was entitled to protection in respect of unfair dismissal. He will acquire no such rights against his new employers until he has worked for them for two years (see paragraph (a) of section 28 of the Act). Accordingly, if he is unfairly dismissed during that period his remedy will be limited to claiming damages for wrongful dismissal which are unlikely to exceed 6 weeks’ wages and may be less. Furthermore, upon obtaining further employment he will be faced with starting a fresh two-year period. This process could be repeated indefinitely so that he was never again protected in respect of unfair dismissal. Whilst it is impossible for us to quantify this loss, which must be much affected by local conditions, we think that we shall do Mr. Tewson no injustice if we include £20 in our assessment on account of it.
The loss of rights under the Redundancy Payments Act is much more serious. The claimant is aged 50 and had been continuously employed for 11 years. Accordingly, if he had been dismissed on account of redundancy he would receive about £380. In other words, he had a “paid up insurance policy” against dismissal by reason of redundancy which was worth this amount and would have increased in value at the rate of about £38 per annum, until it reached a maximum of perhaps £800. In his new job, Mr. Tewson will receive no compensation if he is dismissed on account of redundancy within the first two years and, since he is now within 15 years of his 65th birthday, can never build up to the maximum which is based on 20 years’ service. We have no evidence as to whether Mr. Tewson is more or less likely to be made redundant in his new employment but, if a redundancy situation does arise, he is clearly more likely to be selected for dismissal on the normal practice of “last in, first out”. Nor have we any evidence as to the likelihood that if he had not been dismissed by the respondents when he was, he might thereafter have been dismissed by reason of redundancy. In all the circumstances, we think it just and equitable to base our award of compensation upon approximately one-half of his accrued protection in respect of redundancy – say, £200.
The arithmetical sum of these subheads is £373.60, which we have rounded off at £375, which in our judgment represents compensation which is just and equitable in all the circumstances.
In conclusion, we wish to emphasise that it is only because the parties so requested that we have substituted our own figure for that of the tribunal. But for that request we should have remitted the matter and, so long as the correct principles were applied and shown to have been applied, would not have interfered if they had awarded a different figure which might have been higher or lower.
Award of compensation increased to £375
Dunnachie v Kingston-upon-Hull
[2004] UKHL 36
LORD NICHOLLS OF BIRKENHEAD
My Lords, In Norton Tool Co. Ltd v Tewson [1972] ICR 501 the question arose whether under section 116(1) compensation could be awarded for injury to feelings. The point was directly in issue in the proceedings and the court heard contrary arguments on it. Sitting as president of the National Industrial Relations Court Sir John Donaldson ruled (504D-505A):
“In our judgment, the common law rules and authorities on wrongful dismissal are irrelevant. That cause of action is quite unaffected by the Industrial Relations Act 1971 which has created an entirely new cause of action, namely, the ‘unfair industrial practice’ of unfair dismissal. The measure of compensation for that statutory wrong is itself the creature of statute and is to be found in the Act of 1971 and nowhere else. But we do not consider that Parliament intended the court or tribunal to dispense compensation arbitrarily. On the other hand, the amount has a discretionary element and is not to be assessed by adopting the approach of a conscientious and skilled cost accountant or actuary. Nevertheless, that discretion is to be exercised judicially and upon the basis of principle.
The court or tribunal is enjoined to assess compensation in an amount which is just and equitable in all the circumstances, and there is neither justice nor equity in a failure to act in accordance with principle. The principles to be adopted emerge from section 116 of the Act of 1971. First, the object is to compensate, and compensate fully, but not to award a bonus, save possibly in the special case of a refusal by an employer to make an offer of employment in accordance with the recommendation of the court or a tribunal. Secondly, the amount to be awarded is that which is just and equitable in all the circumstances, having regard to the loss sustained by the complainant. ‘Loss’ in the context of section 116 does not include injury to pride or feelings. In its natural meaning the word is not to be so construed, and that this meaning is intended seems to us to be clear from the elaboration contained in section 116(2). The discretionary element is introduced by the words ‘having regard to the loss.’ This does not mean that the court or tribunal can have regard to other matters, but rather that the amount of the compensation is not precisely and arithmetically related to the proved loss. Such a provision will be seen to be natural and possibly essential, when it is remembered that the claims with which the court and tribunals are concerned are more often than not presented by claimants in person and in conditions of informality. It is not, therefore, to be expected that precise and detailed proof of every item of loss will be presented, although, after making due allowance for the skills of the persons presenting the claims, the statutory requirement for informality of procedure and the undesirability of burdening the parties with the expense of adducing evidence of an elaboration which is disproportionate to the sums in issue, the burden of proof lies squarely upon the complainant.
(Emphasis supplied)
There was no appeal. The decision in Norton Tool was generally assumed to reflect the correct legal position until it was called into question in the judgment of Lord Hoffmann in Johnson v Unisys Ltd [2003] 1 AC 518.
While there may arguably be differences of opinion about the exact ratio decidendi of Johnson v Unisys, I am content to accept that the central legal decision of the majority (Lord Bingham of Cornhill, Lord Nicholls of Birkenhead, Lord Hoffmann and Lord Millett) was as summarised in the headnote of the Appeal Cases report. It reads as follows (518H-519A):
“. . . under Part X of the Employment Rights Act 1996
Parliament had provided the employee with a limited remedy for the conduct of which he complained; that, although it was possible to conceive of an implied term which the common law could develop to allow an employee to recover damages for loss arising from the manner of his dismissal, it would be an improper exercise of the judicial function for the House to take such a step in the light of the evident intention of Parliament that such claims should be heard by specialist tribunals and the remedy restricted in application and extent;”
This is the context in which Lord Hoffmann, who gave the leading opinion, commented on the meaning of section 123 of the 1996 Act. He said that Parliament adopted “the practical solution of giving the tribunals a very broad jurisdiction to award what they considered just and equitable but subject to a limit on the amount”: para 54. He continued:
“55. In my opinion, all the matters of which Mr Johnson complains in these proceedings were within the jurisdiction of the industrial tribunal. His most substantial complaint is of financial loss flowing from his psychiatric injury which he says was a consequence of the unfair manner of his dismissal. Such loss is a consequence of the dismissal which may form the subject matter of a compensatory award. The only doubtful question is whether it would have been open to the tribunal to include a sum by way of compensation for his distress, damage to family life and similar matters. As the award, even reduced by 25%, exceeded the statutory maximum and had to be reduced to £11,000, the point would have been academic. But perhaps I may be allowed a comment all the same. I know that in the early days of the National Industrial Relations Court it was laid down that only financial loss could be compensated: see Norton Tool Co Ltd v Tewson [1973] 1 WLR 45; Wellman Alloys Ltd v Russell [1973] ICR 616. It was said that the word ‘loss’ can only mean financial loss. But I think that is too narrow a construction. The emphasis is upon the tribunal awarding such compensation as it thinks just and equitable. So I see no reason why in an appropriate case it should not include compensation for distress, humiliation, damage to reputation in the community or to family life.
56. Part X of the Employment Rights Act 1996 therefore gives a remedy for exactly the conduct of which Mr Johnson complains. But Parliament had restricted that remedy to a maximum of £11,000, whereas Mr Johnson wants to claim a good deal more. The question is whether the courts should develop the common law to give a parallel remedy which is not subject to any such limit.”
In practice this observation was regarded as the green light to make claims for non-pecuniary loss in tribunals. It was the foundation of Mr Dunnachie’s claim.
…..
On this hypothesis I must now turn to the different ground of decision of Sedley LJ which counsel for the employee urged on the House. Counsel summarised the point as follows: The governing principle is expressed in the requirement in section 123(1) of the 1996 Act to award “such amount as the tribunal considers just and equitable in all the circumstances.” In exercising its discretion, the EAT is to “have regard to” the “loss” sustained by the complainant which is attributable to the unfair dismissal, but this is not the only consideration which bears upon its determination of the compensatory award. The word loss does not limit what may be awarded under the controlling principle.
Sedley LJ concluded that the construction in Norton Tool “leaves the governing concept – compensation which is just and equitable – without a role”: para 30. I would not accept this proposition. It will be recalled that in Norton Tool Sir John Donaldson explained that the claims with which tribunals are concerned are more often than not presented in person and informally, and that it is therefore not to be expected that precise and detailed proof of every item of loss will be presented. The phrase “just and equitable” gives the tribunal a degree of flexibility having regard to the informality of the procedures, and the fact that the maximum award is capped.
Sedley LJ relied on the decision of the House in W Devis & Sons v Atkins [1977] IRLR 314. He held that Devis established that resultant loss is not the only element to which regard is to be had. The leading opinion in Devis was given by Viscount Dilhorne. He stated that (at 955G):
“The paragraph does not, nor did section 116 of the Act of 1971, provide that regard should be had only to the loss resulting from the dismissal being unfair. Regard must be had to that but the award must be just and equitable in all the circumstances, and it cannot be just and equitable that a sum should be awarded in compensation when in fact the employee has suffered no injustice by being dismissed.”
This reveals a decision to the effect that it is open to a tribunal to consider whether it is just and equitable in all the circumstances for the complainant to be awarded all or any of the loss attributable to the dismissal. It was not a ruling that a tribunal is free to award additional sums not amounting to loss.
In my view section 123(1) must be construed as a composite formula. The interpretation preferred by Sedley LJ splits up the formula in a way which, with great respect, is more than a little contrived. It unjustifiably relegates the criterion of loss to a subordinate role. Given the hypothesis that the legislature expressly provided for the recovery of economic loss, it fails to explain why the legislature did not also expressly provide for compensation for injury to feelings. It also fails to take full account of the context. For example, on this expansive interpretation there would as already mentioned be nothing on the face of the statute to exclude the award (subject to the cap which is now standing at £55,000) of aggravated or exemplary damages. This could not have been intended. The better view is that the provision was not intended, in the words of Brooke LJ, to provide for “palm tree” justice.
In his already cited note Professor Collins argued that Norton Tool reversed the grammar of the statute. He said that Norton Tool “elevated the sub-principle of causation of loss to the main principle, and then relegated the general standard of just and equitable compensation to the status of a minor limitation on the application of the principles of causation of economic loss”: at 202. For substantially the same reasons as I have already given I find this argument unpersuasive.
I would hold that section 123(1) does not allow for the recovery of non-pecuniary loss.”
JVC Europe Ltd -v- Panisi
[2011] IEHC 279
Charleton J.
Status of Judgment: Approved
27. This section clarifies the consideration that is to be given to compensation for unfair dismissal. Payments under social welfare and income tax legislation are to be disregarded. In assessing compensation, the court should have regard to the implications for dismissal. My task is to assess the financial damage which the dismissal has brought about and then to place the measure of that damage against the maximum amount of compensation that is available. In the event that the compensation that is available, amounting to 104 weeks remuneration, is less than that sum, then that is the measure of damages. Where the quantum of damage is more, then the jurisdiction is limited to that maximum and the amount of damages must thus be reduced to that maximum sum. Where the measure of damages on dismissal is more than the maximum but contributory fault is found in respect of the dismissal against the employee, the reduction is on the totality of those damages, and not on the maximum award. If the result is to reduce compensation within the maximum award, that sum is appropriate. Where the reduction in total damages for contributory fault puts the damages above the maximum award, then the maximum award is the correct measure of compensation for unfair dismissal.
28. My reasoning on this matter is that it is likely, had Jerome Panisi not been dismissed, that he would have worked within JVC for approximately the same length of time as Thomas Dillon. Redundancy in a situation where employee numbers were diminishing could not have been avoided all the way to his retirement at age 65 in October 2011. During the two years lost, however, he would have achieved full remuneration and would have been topping up his pension entitlement. This would have provided for his retirement. This has otherwise proved to be impossible. He has sought many jobs since his dismissal. Those efforts have been genuine. His actual loss and prospective loss of pension therefore exceeds the maximum of 104 weeks of remuneration. One hundred and four weeks of remuneration is €298,000. On redundancy Mr. Panisi was paid the sum of €101,000. Of this, €19,800 was a redundancy payment; €18,312 was statutory notice; €9,156 was four weeks extra notice; and €51,315 was an ex gratia payment. As there was no redundancy, but as there was a dismissal, Mr. Panisi has now no entitlement to the redundancy money or the ex gratia payment. In addition, it is highly unlikely that he would have been given an extra four weeks notice by way of wages, notwithstanding his long service to the company. After submissions of counsel as to the correct figures, it is agreed that the total award of €298,000 should be reduced. Since Mr. Panisi has already been paid the sum of €101,000, the damages due are €197,000.
Result
29. In the result, there will be a decree in the sum of €197,000 against JVC in favour of Jerome Panisi.”””
C v Daughters of Charity
(UD/62/2007)
EAT
“the response of the claimant to the incident in question was completely unacceptable and in the normal course of events would justify a dismissal. However there was a history of the claimant being bullied in his employment generally. Complaints were made and not adequately dealt with and the investigation into the incident completely ignored the circumstances and background to the situation and the respondent’s own bullying and harassment policy.
The claimant was dismissed as a result of the investigation of one incident and the Tribunal found that the dismissal was unfair.”
The compensation was reduced by over 50% to reflect the contribution of the claimant to his dismissal.