Compensation
Way and another v Crouch (2005) ICR 1362


An employment tribunal decided that an employee had been dismissed because she refused to resume a personal relationship with her employer's managing director.


The tribunal upheld her complaint of sex discrimination against both the managing director and the company, and it made an award of £40,866 compensation against them on a joint and several basis. It said: 'In such cases, we would normally order the employer to pay this compensation, perhaps with an order for a small lump sum to be paid by an individual respondent. However, in this case, the first [appellant] is the managing director of the second [appellant] and is answerable to nobody at the second [appellant]. There is no board of directors and he is the major shareholder. We think it appropriate, therefore, in this case to make the compensation order payable jointly and severally by the first and second [appellants].'


The Employment Appeals Tribunal (EAT) allowed an appeal. Although an employment tribunal is entitled as a matter of law, under the Sex Discrimination Act 1975, to make an award on a joint and several basis, in almost all cases such an award would be unnecessary, as the present practice of apportioning liability where appropriate between individual employees and employers works well and does justice. Where a tribunal considers that a joint and several award was necessary, it was unlikely to be appropriate to make an award of 100% against each respondent, given the language of section 2(1) of the Civil Liability (Contribution) Act 1978, which specifically directs attention to the extent of a person's responsibility for the damage in question.


Since the tribunal failed to have regard to section 2(1) of the Act and to apportion liability between the respondents, the case was remitted for reconsideration.


The EAT further observed that section 2(1) of the Act makes it clear that it is not a permissible option for a tribunal to make a joint and several award of compensation because of the relative financial resources of the respondent. Furthermore, there is no power in the tribunal to make a joint and several award of compensation in relation to a claim of unfair dismissal.




Protective awards

Krasner v McMath and other cases, The Times, 26 September 2005


The Court of Appeal has considered the extent of the liability of administrators to employees of a company in administration whose contracts of employment have been adopted by the administrators. The first question was whether administrators were liable for a protective award payable under section 189 of the Trade Union & Labour Relations (Consolidation) Act 1992.


Condemning the drafting of paragraph 99(6)(d) of schedule B1 to the Insolvency Act 1986, as amended by the Enterprise Act 2002, as 'not merely opaque' but 'a thoroughly unsatisfactory piece of drafting', the appeal court said 'the least unsatisfactory construction' was that a protective award did not appear to fall within the ambit of paragraph 99(6)(d) and was thus outside paragraph 99(5)(c). Therefore, an award could not enjoy 'super-priority' by virtue of paragraph 99(5) unless there was some discernible policy reason for reaching the opposite conclusion. On assessing the policy considerations 'and the rescue culture which sought to preserve viable businesses', there was no basis in public policy for making the administrators liable.


The second question was whether administrators were liable for payments in lieu of notice. Such payments were grouped into four main categories by the House of Lords in Delaney v Staples (1992) 1 AC 687.


The appeal court considered payments in circumstances where the contract expressly provided that the employment be terminated either by notice, or on payment of a sum in lieu, summarily.


In such a case, if the employer summarily dismissed the employee, he was not in breach of contract provided that he made the payment in lieu. A payment of this kind does not fall within paragraph 99(5) and is not to be accorded 'super- priority'.


By Martin Edwards, Mace & Jones, Liverpool and Manchester