Employment & Immigration Legal Updates 12/10/2009

Compensation for constructive dismissal

The Court of Appeal has recently clarified that money earned by a constructively dismissed employee during what would have been his notice period can be offset against compensation payable by the employer.

Employment associate Alison Parker comments:

Ms Bell (B) was constructively unfairly dismissed by her employer, Stuart Peters Ltd (SP) and was therefore not paid her six month contractual notice pay. She found a new job within three months of her constructive dismissal. The Employment Tribunal and Employment Appeal Tribunal did not allow for a reduction in the compensatory award to account for the fact that B had found new employment and fully compensated her for six months' notice pay.

The tribunal's decision not to offset the compensation against B's new salary was based on a long established principle (from the case of Norton Tool Ltd v Tewson [1972] ICT 501) that an employee should be compensated fully (without deducting any salary from a new job) when dismissed without notice and without payment in lieu of notice. The employer in this case appealed to the Court of Appeal on the grounds that this principle only applies to actual dismissals and not constructive dismissal.

The court agreed that B's salary from her new job had to be taken into account. The court emphasised the primary rule that the employee should only recover 'actual loss' (that is, the loss the employee suffers after taking into account her new salary during the notice period) and that the Norton Tool principle is a limited exception to the primary rule that should only apply in relation to actual dismissals.

Comment

The effect of this decision means that in constructive dismissal cases, employees will not benefit from a double recovery in the form of receiving compensation for the period of notice in respect of their previous job as well as receiving a salary from any alternative employment. However, the Norton Tool principle will continue to apply in relation to ordinary claims of unfair dismissal, where the employee can claim in full for the period of notice if this has not already been paid by the employer.

Click here for a copy of the judgment.

Employment Tribunal Statistics

The Employment Tribunal and Employment Appeal Tribunal (EAT) statistics for 1 April 2008 - 31 March 2009 have been recently published by the Tribunals Service.

Employment solicitor Sasha Lormant comments:

The key statistics include:

• An overall decrease of 20% in the number of claims accepted - but if multiple claims from airline (cabin crew) are excluded, there is in fact a 4% decrease.
• A significant increase in the claims following a redundancy dismissal: breach of contract (up 31%), unfair dismissal (up 29%), redundancy pay (up 48%) and failure to inform and consult on collective redundancy (up 150% from 2007/08 statistics).
• Significant reductions in sex discrimination claims (down 31%), equal pay (down 27%) and working time claims.
• The total number of claims disposed of by the employment tribunals increased by 13% and 32% were settled through ACAS.
• In the EAT the number of appeals rejected as having no reasonable prospect of success at the sift stage increased to 927 (from 888 in 2007/08), more than half of the total number of appeals received.

The statistics reflect the consequences of measures some employers have been required to take in order to survive the economic downturn during the course of the last year. Whilst restructuring the business is often essential, employers need to be vigilant to ensure all statutory and contractual steps are complied with before taking any action against employees.

To view the report click here

Changes to levels of compensation for injury to feelings

Awards for injury to feelings in discrimination claims are set to increase, following guidelines in a recent decision by the Employment Appeal Tribunal.

Employment associate Alison Parker comments:

In discrimination cases, claimants can claim compensation for 'injury to feelings' in addition to compensation for financial losses. Guidelines on the levels of compensation awarded in respect of injury to feelings was set out by the Court of Appeal in the case of Vento v Chief Constable of West Yorkshire Police (No 2) [2003] IRLR 102 ('Vento Guidelines') by way of introducing three bands of potential compensatory awards, depending on the seriousness of the discrimination.

These guidelines were set in 2002 and have been followed by tribunals, subject to inflationary changes in some subsequent cases. We understand the Employment Appeal Tribunal has recently set out revised inflationary adjusted compensation bands in the case of Da'Bell v NSPCC (not yet reported):

• Top band (the most serious cases): £18,000 - £30,000 (formerly, £15,000 - £25,000);
• Middle band (relatively serious cases but not justifying compensation at the top band level): £6,000 - £18,000 (formerly, £5,000 - £15,000)
• Bottom band (less serious cases): £600 - £6,000 (formerly, £500 - £5,000).

Employers should be aware that it is likely the revised bands will be applied by employment tribunals in future discrimination claims.

Age limit justified

The Advocate General has delivered an important opinion on the scope of protection from age discrimination provided by current European law, in the context of age limits for recruitment to the German fire service.

Employment solicitor Sasha Lormant comments:

The Advocate General was considering a German law that requires applicants to the fire service to be under the age of 30. Despite the fact that this law clearly exposes people to different treatment on grounds of their age, the Advocate General concluded that the treatment was justified by a legitimate employment policy and could be defended as a genuine occupational requirement.

The Equal Treatment Directive (from which age discrimination legislation derives) provides that different treatment on grounds of age is permitted where the treatment can be "reasonably justified by a legitimate aim". The German government was able to show that the physical demands of being a fire-fighter mean that, in practice, there are few fire-fighters over the age of 50 who remain active in frontline fire and rescue work. The Advocate General therefore concluded that the age limit was reasonable to guarantee a continuous supply of younger fire-fighters to replace those who could no longer serve on the frontline. In his view, the German law was justified by the need to establish a balanced age range within the workforce in order to maintain an operational service.

Different treatment on grounds of age is also permitted where the age of a person is a "genuine and determining occupational requirement". The Advocate General decided that due to the demanding physical requirements of being a fire-fighter, which naturally diminish with age, it was a genuine and determining occupational requirement that new recruits be under the age of 30. The Advocate General considered that it was proportionate to apply this requirement because it ensured that new recruits could be given sufficiently long service on fire and rescue duties.

Comment

The case will now be decided by the European Court of Justice (ECJ). Although not binding, the opinions of Attorney Generals are useful because they usually offer a good indication of how the ECJ will interpret the law when it eventually hears the case. This opinion is particularly helpful because it sheds light on how age limits for recruitment to a particular job may be capable of justification.

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