Tao Herbs & Acupuncture Ltd v Jin
When calculating a claimant’s loss, section 123 of the 1996 Employment Rights Act (ERA) states that tribunals have to decide what is “just and equitable in all the circumstances”. In Tao Herbs & Acupuncture Ltd v Jin, the Employment Appeal Tribunal (EAT) said that the fact that a business may go into liquidation as a result of having to make the payment is irrelevant.
Basic facts
Mrs Jin was employed by Tao Herbs for just over eight months from April to December 2008 in what was described as a “rocky” relationship.
Tao Herbs raised a number of issues with Mrs Jin, including her capability to do the job of a traditional Chinese medicine doctor and, indeed whether she even had the right qualifications.
For her part, Mrs Jin accused her employer of not paying her what she had promised and that what she was paid was below the national minimum wage.
The relationship came to an end and Mrs Jin claimed she had been unfairly dismissed for asserting a statutory right (to the minimum wage).
Tribunal decision
The tribunal found in favour of Mrs Jin, saying it found her evidence genuine and that her witnesses were supportive and correct. It found the director of Tao Herbs, Mrs Song, unreliable and evasive.
On that basis, it upheld Mrs Jin’s claim and awarded her in the region of £11,000, which mostly represented loss of pay from the date of dismissal to the date of the hearing - about 38 weeks.
EAT decision
The EAT dismissed the company’s appeal on all three grounds. It said firstly that it was irrelevant that Mrs Jin had not raised a claim specifically in relation to the National Minimum Wage Act 1998. The fact that the company understood “her claim was that she had not been paid what she was due is capable of amounting to an allegation under the Act”.
Secondly it said that the tribunal was aware that the company was experiencing financial difficulties and would struggle to pay Mrs Jin the compensation. So although it had not expressly considered what is known as a Polkey reduction (in other words, asking would have happened if she had not been dismissed), it had kept in mind that the business was struggling and confined Mrs Jin’s losses up to the date of the hearing and not after that.
Finally, the EAT said that the payment was just and equitable, as per section 123 of the ERA.
It confirmed that when calculating loss for unfair dismissal “the prime consideration is the loss suffered by the Claimant attributable to the action of the employer”.
The fact that a business may go into liquidation as a result is irrelevant because “that is not the correct approach to the assessment of an award for unfair dismissal, which does not pay attention to the ability of the employer to pay. There are places in the employment protection canon where ability to pay is a feature (see for example the costs regime). But in the assessment of damages for a statutory tort, the possibility that the employer will be in difficulty paying an award is not a relevant consideration”.