Compensation




Dunnachie v Kingston upon Hull City Council (2004)IRLR 287



The Court of Appeal ruled that a tribunal did not err in including the sum of £10,000 for injury to feelings in a compensatory award for unfair dismissal. A majority of the court ruled that Norton Tool Co Ltd v Tuson (1972) IRLR 826, was wrongly decided.



The tribunal's award was at an appropriate point on the scale of awards for injury to feelings in discrimination cases approved in Vento v Chief Constable of West Yorkshire Police (No 2) (2003) IRLR 102, and was adequately explained. However, Lord Justice Sedley acknowledged that 'not every upset' caused by an unfair dismissal 'carries a compensatory award. The power is there to permit tribunals to compensate an employee for a real injury to his or her self-respect. It is likely to become material principally in cases of constructive dismissal where the employee has been driven from his or her job'.



As the editor of the IRLR points out, a close reading of the three judgements delivered by members of the court is likely to leave tribunals 'in a state of some uncertainty as to what the correct law is, especially where injury to feelings is claimed to have resulted from the fact, as opposed to the manner of, dismissal'.



Essa v Laing Ltd (2004)IRLR 313



The Court of Appeal decided that a tribunal erred in holding that the applicant was not entitled to compensation under the Race Relations Act 1976 in respect of loss which resulted from the depression he suffered due to an incident of racial abuse, because the loss was not reasonably foreseeable. A victim of direct discrimination in the form of racial abuse is entitled to be compensated for the loss which arises naturally and directly from the wrong. 'The good sense of employment tribunals' can be relied upon, according to the Court of Appeal, to ensure that compensation is awarded only where there really is a causal link between the act of discrimination and the alleged injury. In a dissenting judgement, Lord Justice Rix held that there is 'nothing in the statute itself, nor in either European or domestic jurisprudence, which requires a conclusion that the relevant rule of remoteness is one of pure causation'. For his part, Lord Justice Pill limited his decision to a case of discrimination taking the form of racial abuse, or other forms of harassment, stating: 'It is possible that, where the discrimination takes other forms, different considerations will apply.'



British Telecommunications PLC v Reid (2004)IRLR 327



A tribunal took into account, when making an award to injury to feelings in respect of a racially abusive remark made to the applicant by a work colleague, that the applicant had been subjected to a disciplinary investigation, transferred to another location and that he had to wait a long time for his grievance to be dealt with.


The Court of Appeal held that, even though there was no finding of discrimination as regard to those matters, if they arose out of the act of discrimination and were consequential upon it, they were relevant to the inquiry into the extent of injury to feelings.


Furthermore, the tribunal did not err in awarding the applicant a sum additional to injury to feelings in respect of aggravated damages. The tribunal was entitled to take account of the fact that the transgressor was not punished and remained in post, and was then promoted, even though the charges against him had not been resolved.


There is no principle that an employer cannot promote an employee while disciplinary proceedings are hanging over his or her head. However, in the light of the particular facts and circumstances of an individual case, such a promotion can be a material factor demonstrating that the employer has behaved in a high-handed way.



Virgo Fidelis Senior School v Boyle (2004) IRLR 268



The Employment Appeal Tribunal (EAT) held that a tribunal had erred in awarding a whistleblower compensation for injury to feelings of £42,500 after finding that he had been subject to a detriment by the taking of disciplinary proceedings against him for making a protected disclosure.



Compensation awards for injury to feelings in detriment cases should be based on the guidelines set out in Vento regarding the level of awards for injury to feelings in race and sex discrimination cases. Those guidelines have already been applied in trade union discrimination cases and it is important that, as far as possible, there is consistency in awards throughout all areas of discrimination. There is no reason why a detriment suffered by a whistleblower should be treated differently. Such detriment should normally be regarded by tribunals as a very serious breach of discrimination legislation, but to compensate simply for the offence, rather than the resulting injury or psychiatric damage, would contravene the general principle that the aim is to compensate and not to punish. In the present case, applying the Vento guidelines, the appropriate award for injury to feelings was £25,000. This was a very serious case meriting a very high award, but not such an exceptional one as to fall outside the normal guidelines.



Furthermore, the tribunal was also wrong not to make an award of aggravated damages on the ground that there is no authority to do so in a whistleblowing case. Aggravated damages are not subsumed in the Vento guidelines. Having regard to the tribunal findings of fact, where the employer's conduct was described as a 'travesty' and in the absence of any apology or mitigation, aggravated damages of £10,000 would be awarded. However, the tribunal was right to conclude that there were no grounds for awarding exemplary damages. There is no reason in principle why exemplary damages should not be awarded in detriment cases, provided that the conditions in Rookes v Barnard (1964) AC 1129, are satisfied. In the present case, however, although the employer's action in dealing with the applicant was properly criticised by the tribunal, it was not such as to be described as 'oppressive, arbitrary or unconstitutional' on Rookes v Barnard principles.



TUPE

Fairhurst Ward Abbotts Ltd v Botes Building Ltd & others (2004) IRLR 304


The Court of Appeal ruled that a tribunal did not err in holding that there was a transfer of part of an undertaking within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) when a building maintenance contract covering the whole of the local authority was divided into two areas for the purposes of a re-tender and the appellants were awarded the contract for one area.


There is no requirement that the part transferred is itself a separate economic entity in the hands of the transferor before the relevant transfer takes place. As Lord Justice Mummery said: 'A part of an undertaking is simply something less than the whole of an undertaking.' Although there can be no transfer of an undertaking of part unless the work is organised in the form of a stable economic entity before the contracting-out of that work has taken place, it suffices if part of a larger stable economic entity becomes identified for the first time as a separate economic entity on the occasion of the transfer of a part from the whole.


However, the tribunal was wrong to hold that an employee was not employed in the part transferred immediately before the date of transfer because he had been off sick. A person on sick leave, like a person on holiday, study leave or maternity leave, remains a person employed in the undertaking, even though they are not actually at their place of work.


The EAT had been right to remit the question of whether the employee's contractual place of work was in the part transferred, and whether he could have been required to work there immediately before the transfer, had he not been off sick.



By Martin Edwards, Mace & Jones, Liverpool