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||BAILII case number:  UKEAT 0010_08_0204
||Appeal No. UKEAT/0010/08
EMPLOYMENT APPEAL TRIBUNAL
52 MELVILLE STREET, EDINBURGH, EH3 7HF
||At the Tribunal
||On 2 April 2008
THE HONOURABLE LADY SMITH
MISS S AYRE, FIPM, FBIM
MR P HUNTER
Transcript of Proceedings
© Copyright 2008
|For the Appellants
||Mr Gordon Lindhurst,
Messrs Beltrami & Co Solicitors
83 Carlton Place
|For the Respondent
||Mr Alex Nicoll,
70 Carden Place
Unfair Dismissal: Automatically unfair reasons / Compensation
Automatically unfair dismissal. Uplift under section 31 of the Employment Act 2002. Whether or not reference/remit appropriate.
THE HONOURABLE LADY SMITH
- This is an appeal against the judgment of an Employment Tribunal sitting at Glasgow, Chairman Miss FCC Carmichael, registered on 3 September 2007, insofar as it calculated compensation in an automatically unfair dismissal claim on the basis that there should be an uplift of 50 per cent under and in terms of section 31 of the Employment Act 2002 ("the 2002 Act").
- We propose to continue referring to parties as Claimant and Respondents.
- Before the Tribunal and before us, the Claimant was represented by Mr Nicoll, consultant. The Respondents had been represented by their solicitor before the Tribunal and were represented by Mr Lindhurst, advocate, before us.
- The Respondents are a bus company. The Claimant was employed by them as a driver until his dismissal on 5 January 2007. The dismissal was automatically unfair in terms of section 98A of the Employment Rights Act 1996. The provisions of section 31 of the 2002 Act concerning the awarding of uplifts to a claimant's compensation in such circumstances accordingly applied.
- The Tribunal determined that the Claimant was entitled to a compensatory award in respect of a loss of earnings consequent on his dismissal. The Claimant had, in his schedule of loss, sought compensation for past loss on the basis that he did not set up his own business until 16 June 2007 and that he sought future loss in respect of 78 weeks continuing loss of earnings. The schedule also allowed for a 50 per cent uplift in compensation. The Tribunal did not, however, award compensation on that basis. They restricted it to a figure calculated by reference to his having started his own business by 17 May 2007 and to his being entitled only to 33 weeks future loss of earnings. They did, however, award the 50 per cent uplift sought.
The Tribunal's Judgment
- The Respondents accepted that the dismissal was automatically unfair. That was a concession that was intimated to the Tribunal at the start of the hearing. In the second paragraph of its reasons, the Tribunal records:
"At the commencement of the Hearing the respondents conceded that the claimant's dismissal was automatically unfair in terms of section 98A(1) of the Employment Rights Act 1996 as amended ('the Act')."
- No evidence was led regarding the circumstances of the Claimant's dismissal or the circumstances surrounding the Respondents' failure to comply with the statutory dismissal procedures. The only evidence led related to the Claimant's loss of earnings since dismissal.
- In the course of submissions, Mr Nicoll for the Claimant sought an uplift in compensation under and in terms of section 31 of the 2002 Act. At paragraph 9, the Tribunal records his submission on that matter:
"The respondents made no attempt at justifying dismissing the claimant, so the tribunal should, he submitted, find that the dismissal was automatically unfair and that the uplift in compensation should apply. … the uplift in compensation should not be restricted because the claimant was less than candid in his evidence. Section 31 of the Employment Act 2002 was intended to be punitive. There was no compliance with any of the stages of the dismissal and disciplinary procedures, and in any case the requirements of section 98(4) of the Employment Rights Act 1996 were not met."
- At paragraph 15, the Tribunal state their approach to the application of the section 31 uplift:
"The tribunal then considered the percentage by which the compensatory award should be increased in terms of section 31 of the Employment Act 2002, due to the respondents' failure to complete the statutory procedure. The respondents had initially denied dismissing the claimant unfairly. Only on the eve of this Hearing did they admit to their failure to apply the statutory dismissal and disciplinary procedures. Had they made that concession sooner, they would have allowed time for negotiation for settlement of the claim, with the potential for averting the need for any Hearing, and they would have spared themselves exposure to the penalty prescribed by section 31, which tribunals are bound to some degree to apply. There was no suggestion that there were any exceptional circumstances which would make any increase unjust or inequitable, and we observed none. We, therefore, considered that the appropriate increase was 50%".
- The Tribunal required to apply the relevant provisions of section 31 of the 2002 Act which are:
" 31 ...
(3) 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 one of the statutory procedures applies,
(b) the statutory procedure was not completed before the proceedings were begun, and
(c) the non-completion of the statutory procedure was wholly or mainly attributable to failure by the employer to comply with a requirement of the procedure,
it must, subject to subsection (4), increase any award which it makes to the employee by 10 per cent and may, if it considers it just and equitable in all the circumstances to do so, increase it by a further amount, but not so as to make a total increase of more than 50 per cent.
(4) The duty under subsection (2) or (3) to make a reduction or increase of 10 per cent does not apply if there are exceptional circumstances which would make a reduction or increase of that percentage unjust or inequitable, in which case the tribunal may make no reduction or increase or a reduction or increase of such lesser percentage as it considers just and equitable in all the circumstances."
- These provisions direct the Tribunal as to what is to happen so far as compensation is concerned where an employer has failed to complete the relevant statutory dismissal procedure. The effect of section 31(3)(c) is that the Tribunal are under a duty to impose an uplift of 10 per cent. The starting point is that it must impose that uplift.
- However, the Tribunal will be relieved of its duty to impose the 10 per cent uplift if there are exceptional circumstances which would make it unjust or inequitable to do so. It can then look at whether there should be a lower uplift or no uplift at all. That is the effect of subsection (4).
- Further, there is a discretion conferred on the Tribunal. As with any discretion, it is not obliged to exercise it. It is a discretion to increase the uplift up to a figure between 10 per cent and 50 per cent but only if it considers that it is just and equitable "in all the circumstances" to do so. Thus an increase beyond 10 per cent can be awarded but only if there is factual material before the Tribunal on the basis of which it can properly do so. That is, the exercise of that discretion must be under reference to some particular facts and circumstances surrounding the failure to complete the statutory procedure which can properly be regarded as making it just and equitable that the employer should be penalised further. There will, accordingly, be no room for exercising the discretion in a case where there is no evidence before the Tribunal from which it can make findings of fact as to the circumstances surrounding the claimant's dismissal and how and why it was that the failure to complete the statutory procedure occurred.
- Thus, if there is evidence that is accepted by the Tribunal to the effect that the failure to complete the statutory procedure was because the employer knowingly and deliberately chose to ignore the requirements of the statutory procedure a Tribunal may well consider that the level of his culpability is such as to justify an uplift that is in excess of 10 per cent. Further, if the reason that he did so was, for example, that he was determined to dismiss the employee and fearful that utilisation of the statutory procedure could get in the way of his being able to do so, it is not difficult to envisage a Tribunal taking the view that it would be just and equitable to award an uplift towards the top end of the 10 -50 per cent scale. Equally, however, in a case of the most limited culpability, it seems unlikely that a Tribunal will be satisfied that an uplift in excess of 10 per cent can be justified. As HHJ Burke commented in the case of CEXX Ltd v Lewis UKEAT0013/07, at paragraph 50, a Tribunal can be expected to differentiate between:
"the case of a party who has deliberately flouted statutory requirements of which that party was aware and the case of a party which has fallen into default through ignorance of those requirements rather than deliberate disregard. An employer who is unaware of those requirements will not escape the consequences of his ignorance; the dismissal will be held to have been automatically unfair; and, unless he can bring himself within Section 31(4), he will have to suffer an increase of at least 10% in the award to the employee."
- It follows from the above discussion that where a Tribunal decides that in all the circumstances it is just and equitable to award an uplift in excess of 10 per cent, it must explain its reasons for that decision. The employer is entitled to know what it is about the facts and circumstances of the particular case that leads the Tribunal to conclude that it is just and equitable to increase the uplift. He is entitled to know what it is that has weighed with the Tribunal in reaching its conclusion and how and why it is that it has led them to fix the uplift at the percentage determined upon. That means, in turn, that at appeal stage, this Tribunal requires to ask whether the Tribunal has given sufficient reasons for any uplift fixed that is in excess of 10 per cent.
- Mr Lindhurst referred to the statutory provisions and submitted that it was evident that the Tribunal were obliged to have regard to the interests of both parties when applying them. The Tribunal had erred in its approach here.
- There were two separate strands to Mr Lindhurst's argument. The first submission was that the Tribunal had erred in failing to take account of the fact that the Claimant had given misleading evidence before the Tribunal with a view to maximising the value of his claim. That was in relation to the date at which he began running his own business from a van, after he had been dismissed. The Respondents had had to go to the lengths of hiring a private investigator and the Tribunal had not accepted the Claimant's version of events on this matter. This should, he submitted, have been viewed as exceptional circumstances so as to result in an uplift of less than 10 per cent. However, as the discussion progressed, Mr Lindhurst rather departed from this submission and focussed on his second strand.
- That second argument was that the Tribunal had erred in law. Its reasoning did not involve application of the statutory provisions. They failed to go through the statutory steps. The references to the late concession and the possibility of settlement had it been made earlier were both irrelevant and the latter was pure speculation. There was, otherwise, nothing advanced by way of reason for the decision to award the maximum uplift. There was nothing advanced by way of reason to justify anything in the 10-50 per cent bracket at all.
- Mr Lindhurst referred, in support of his submissions, to two authorities: CEXX Ltd v Lewis at paras 49 and 50, and The Home Office v Khan & King UKEAT/0257/07 at paragraphs 34 – 41.
- As regards disposal, Mr Lindhurst submitted that we should sustain the appeal and substitute an uplift of either 5 per cent or 10 per cent, the former on the basis that the Claimant's lack of candour in his evidence before the Tribunal amounted to exceptional circumstances for lowering the uplift below 10 per cent. He submitted that there should be no reference back of the sort discussed in Barke v Seetec Business Technology Centre Ltd  IRLR 633 since the Claimant had made no application for such a reference by way of interim application, as he could have done, and since this was a case of inadequacy of reasoning which made reference back for further reasons quite inappropriate. Nor should there be a remit. It would not be appropriate to allow the leading of further evidence and this Tribunal was in as good a position on the material available to reach a view on uplift.
- Mr Lindhurst indicated that if we were, notwithstanding his submissions, minded to remit the case to the Tribunal, he sought to withdraw the concession that the dismissal was automatically unfair.
- For the Respondents, Mr Nicoll submitted that the appeal should be refused, which failing, there should be a reference back to the Tribunal under the Barke principles.
- Mr Nicoll resisted the submission that section 31(4) applied. It would be wrong to take account of the Claimant's conduct in giving evidence. The sanction for that was that section 123(1) of the Employment Rights Act applied so as to restrict his compensation. Compensation was not calculated on the basis of his misleading evidence. He submitted that section 31(3) did not envisage a Tribunal being able to take account of anything occurring between parties after the termination of the employment relationship.
- In support of the 50 per cent uplift, Mr Nicoll asserted that this was a case where there had been no compliance by the Respondents with any stage of the statutory procedures. Further, the Respondents had offered no explanation for that non-compliance. He did not seek to support the Tribunal's reasoning insofar as the 50 per cent uplift appeared to be based on the Respondents having conceded automatically unfair dismissal late in the day. Indeed, he accepted that the Tribunal's reasoning was, as he put it "light". He could see, he said, that the late concession could have been one consideration in the mind of the Tribunal when arriving at the uplift. However, when asked, he could not point to any other consideration that emerged from the Tribunal's reasons and he ultimately accepted that the 50 per cent uplift was not otherwise explained. Against that background, he moved for a reference back.
- Mr Nicoll's position as to the uplift which should be awarded if we were not minded to refer back or to remit was that it should be a figure towards the upper end of the 10 – 50 per cent band because no part of the statutory procedure had been followed.
Discussion and Decision
- We are readily satisfied that the Tribunal fell into error. It is plain from the terms of paragraph 15 that the reason they awarded the maximum uplift was that the Respondents had conceded automatically unfair dismissal late in the day and that had they done so earlier that would have allowed time for negotiation of a settlement of the claim. The latter was speculative. Apart from anything else, the parties were evidently far apart on the matter of quantification of the claim and we do not see that the Tribunal could properly make any assessment as to the likelihood of settlement had there been an earlier concession. More importantly though, it was not open to the Tribunal to take these matters into account when considering the question of uplift. As we have explained, the statutory provisions are framed so as to allow the Tribunal to take account of the whole circumstances surrounding the failure to complete, in this case, the dismissal procedures but not so as to allow it to take account of other extraneous circumstances. The provisions cannot be interpreted so as to allow the Tribunal to take account of something that occurs in the course of the hearing before it. Such matters are irrelevant for the purposes of section 31(3) of the 2002 Act, not that Mr Nicoll really suggested otherwise. When it comes to the question of whether or not there should be an uplift beyond 10 per cent, as above noted, the Tribunal can obviously look to any facts which show how culpable the employer has been in his failure to comply and any other facts and circumstances surrounding the non- compliance but we do not see that a Tribunal can properly look beyond that. It is certainly wrong to look at what happened later, once there were Tribunal proceedings ongoing and penalise an employer via the section 31 uplift, for his conduct there. If his conduct is worthy of censure then it can be met with an award of expenses. We do not accept that section 31 provides a Tribunal with a separate or alternative means of penalty.
- We note that in both the CEXX and Home Office cases there was a focus, for section 31(3) purposes, on the question of culpability. We have already referred to HHJ Burke in CEXX. At paragraph 39, in the Home Office case, Underhill J, having considered the claimant's submission that the uplift should have been 50 per cent said:
"We do not see that the non-compliance with the statutory procedures was so highly culpable that only a maximum award would be appropriate. We will assume, as the Tribunal did, that it was 'infected' by Mr Jeffrey's initial defective reasoning. It was indeed, on that basis, as Mr Aziz said, deliberate; and, as the Tribunal itself acknowledged, it was particularly unfortunate that a person in the position of Mr Jeffrey should have made such an error. Nevertheless, his conduct was not unreasoned or contumelious."
- Paragraph 15 is the only place in the Tribunal's judgment where it gives reasons for fixing the uplift at 50 per cent. Once the reference to the late concession and possibility of settlement are stripped out of that paragraph there is nothing left. There are then no reasons for any uplift in excess of 10 per cent. Further, there are no findings in fact capable of supporting a conclusion that it would be just and equitable in all the circumstances to award such an uplift. Whilst it would have been open to the Claimant to lead evidence of those circumstances, he chose not to do so. Mr Nicoll's submissions came close to being to the effect that section 31(3) places an onus on the employer to explain the reasons for his failure to comply and if he does not discharge that onus then an increase above 10 per cent will follow. We reject any such submission. The provisions of section 31(3) in no way oblige the employer to explain his failure. We would expect a claimant who seeks to have a Tribunal award an uplift in excess of 10 per cent to place material before the Tribunal in support of his case that that is what it should do. If he takes no steps to put material before the Tribunal which is capable of providing a basis for the increased uplift then he takes the risk that nothing will emerge in evidence that has that capability.
- We note Mr Nicoll's submission that the uplift was justified because no stage of the statutory procedures was complied with in this case. We cannot accept that submission. Firstly, and importantly, there is no finding in fact to that effect. It was put before us by way of assertion by one party only. Secondly, in any event, we do not see that a failure to carry out any stage of the statutory procedure would necessarily point to an uplift beyond 10 per cent. It would depend on the circumstances in which that came to occur including the level of culpability involved. An employer who had failed to comply with any stage of the statutory procedures because he was wholly ignorant of them might, for instance, satisfy a Tribunal that he should be regarded as being at the lowest end of the culpability scale so as not to justify any additional uplift at all.
- We turn then to Mr Lindhurst's submission regarding the applicability of section 31(4). Parties were agreed that the Claimant's evidence about when it was that he started up in business on his own was lacking in candour; the Tribunal had found him to be vague and evasive and had rejected his evidence on the matter. However, we do not accept that it meant that the Tribunal was bound to regard these as being exceptional circumstances so as to relieve them of their duty to impose an uplift of 10 per cent. Even if such matters could be relevant to a consideration of the applicability of section 31(4), and we very much doubt that they could be, they are not so obviously exceptional as to lead inevitably to the conclusion that the normal 10 per cent uplift should not apply. In the event, we do not require to decide the point but we should indicate that we tend to the view that section 31(4) ought to be interpreted in a similar way to section 31(3) namely so as to look at the whole facts and circumstances surrounding the failure to comply with the statutory procedures, not to matters that have nothing to do with that. Such an approach would appear, logically, to fit with the statutory scheme.
- It follows from these considerations that we are satisfied that the appeal should be allowed.
- We move to the question of the appropriate disposal.
- Firstly, we are not satisfied that it would be at all appropriate to refer the case back under the procedure approved of in Barke. The power that was identified in that case was the power to amplify existing reasons. It was not intended that the power to be exercised so as to allow a Tribunal to make up for shortcomings in its earlier decision or to supply a line of reasoning where none previously existed. That is what we would be doing here were we to make the reference. We would refer, in particular, to passages in paragraphs 46-47 of the judgment of the Court of Appeal:
"46. As Burton J recognised in Burns at paragraph  there are dangers in asking the original tribunal for further reasons where the ground of appeal is inadequacy of reasoning. It will not be appropriate where the inadequacy of reasoning is on the face of it so fundamental that there is a real risk that supplementary reasons will be reconstructions of proper reasons, rather than the unexpressed actual reasons for the decision ...
It is important to keep in mind that the purpose of the Burns procedure is to elicit historical facts from the tribunal:"
- Mr Lindhurst said this was a case of inadequacy of reasoning. It goes further than that. Properly analysed it is a case of absence of any reason. The only reasons given for the 50 per cent uplift were irrelevant ones. No other reasons were given at all and there is no basis on which we could properly conclude that the Tribunal had other reasons in mind. Once the irrelevant reasons are disregarded, there is no reasoning left. Further, there was no evidence put before the Tribunal of any matter relevant to the awarding of an increased uplift. That meant that not only were there no findings in fact relevant to the issue of whether or not the Tribunal could or should go further than a 10 per cent uplift, but there was no material on which any such findings in fact could be made.
- Finally, even if we had considered that this was a case which was, in principle, a candidate for a reference back, given that an application for such a reference could have been made by way of interim application in advance of the appeal hearing and no reason was given for the Claimant not having done so, we would not have been minded to refer it at this late stage.
- This Tribunal regularly remits cases to the same or differently constituted Employment Tribunals on upholding an appeal. However, that only happens in circumstances where it is evident that the claimant has a stateable case. If it is evident that there is no stateable case or that this Tribunal is in as good a position as the Employment Tribunal would be to reach a view on the point at issue, remit does not occur. Further, it is important to bear in mind that the purpose of a remit is not to allow for there to be a "second bite at the cherry".
- Were there to be a remit in this case, it would not be appropriate for it to be on the basis that the Tribunal would rehear the case. Were that to be allowed that would be to afford the Claimant an unwarranted "second bite at the cherry" in circumstances where there is no material before us on which we could conclude that the Claimant has a stateable case for the uplift being more than 10 per cent. He had his chance to lead any evidence he chose regarding the circumstances surrounding the Respondents' failure to complete the statutory dismissal procedures but he evidently chose not to do so. The Respondents were under no obligation to lead such evidence. Thus, any remit would have to be restricted to one which requires the Tribunal to fix the uplift of new. Such a remit would, however, be pointless. The Tribunal would have a duty to award 10 per cent but they would have no findings in fact available to provide a basis for them to go further than that. They would be in error if they did so.
- We are, accordingly, satisfied that the appropriate disposal is to allow the appeal, set aside the judgment of the Tribunal and substitute for paragraph one of it an order that the Respondents make payment to the Claimant of the sum of £10,888.01 and for paragraph three a declaration that the monetary award exceeds the prescribed element by £5,670.91.
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