Digital Equipment Co Ltd v Clements (EAT, unreported) 5 December 1996, overturning decision reported at [1996] IRLR 513
Calculating compensation for unfair dismissal is not always easy. Even the Employment Appeal Tribunal has found this a thorny problem. In Issue 4 of LELR (see: EAT slashes compensation payments) we reported the EAT's conflicting decisions in Cox [1996] IRLR 389 and Clements [1996]IRLR 513. In an unusual, but welcome, move the EAT reconsidered its decision in Clements because it conflicted with the decision in Cox. The outcome is one which will please employees.
The issue concerns the order in which the calculation of compensation should be carried out. The Tribunal calculated Mr Clements' loss at £43,000.
It said that there was a 50% chance he would have been dismissed for redundancy even if a fair procedure had been followed - this meant his compensation should be reduced by 50%. But he had also received a payment of £20,500 from his employers which had to be deducted from his compensation.
How should the calculation be done? If the payment of £20,500 was deducted first this would leave a balance of £22,500 which, when reduced by 50%, gives a final figure of £11,250.
But if the 50% reduction is applied first, the full £20,500 would be deducted from half of £43,000, leaving a balance of only £1,000. The EAT judgment led to Mr Clements receiving the higher figure of £11,250.
The correct approach is first to work out the loss suffered, after calculating lost earnings and other benefits. Then take into account any payments received as a result of the dismissal. This is because the employee must be put financially in the position she or he would have been in if she or he had not been dismissed.
Consequently, the payment received from the employer should be deducted at this stage of the calculation to establish the true net loss suffered, before taking into account any reductions for the chances of a fair dismissal or for contributory fault by the employee.
The EAT distinguished between a deduction - which is for sums received by the employee and is part of the calculation of loss- and reductions, which are applied to the final figure.
In future, Tribunals should calculate the net loss after deducting amounts received from the employer on dismissal and only then apply any percentage reduction which they have decided is appropriate. If this leaves a figure in excess of the statutory maximum for a compensatory award, the 'cap' will apply so that the employee receives only the maximum of £11,300.
The correct approach has now been cleared up. But for how long? The EAT's judgment tells us that the Court of Appeal will be considering the same issue later this year. The EAT has reached a fair and logical conclusion. Let us hope the Court of Appeal agrees.
£28,500 race bias award not excessive
HM Prison Service and others v Johnson (IDS Brief 582)
The Employment Appeal Tribunal has ruled that a £21,000 compensation award for injury to feelings caused by serious and prolonged racial discrimination was not excessive. The award was larger than any other reported award for such injury since the lifting of the statutory limit to compensation.
The EAT said it was the worst case it had encountered. It was not unreasonable, the EAT said, to make separate awards of compensation against individuals who, in the course of employment, acted out of sheer malice and victimised him on racial grounds.
The case concerned an 18-month campaign of discrimination against a prison officer who was humiliated, ostracised, ridiculed and treated with contempt.
At the appeal the Prison Service argued that although the Industrial Tribunal was entitled as a matter of law to apportion the damages for injury to feelings between the employer and the two employees, that should not happen in practice save in exceptional circumstances. To keep individual employees in the proceedings as separate parties caused unnecessary complications, was inconvenient, gave rise to the possibility of overlap in the assessment of compensation and could give the complainant the opportunity to vent personal animosity and take revenge. It was preferable that the employer who was vicariously liable for a very wide range of his employees actions should be liable to pay compensation.
Mr Justice Smith said that although it was possible to order the employer to pay, by finding him vicariously liable for his employees behaviour, it would not necessarily follow that it should be done. It was a question for the discretion of the Tribunal.
The EAT upheld the IT's award against the Prison Service of £20,000 for injury to feelings, £7,500 aggravated damages and £500 against each of the Prison Officers.
Employer must give maternity rights guidance
Gray v Smith (Belfast Industrial Tribunal
An Industrial Tribunal has ruled that an employer who failed to provide any guidance concerning maternity rights waived his right to strict compliance with the statutory notification procedure.
Ms Gray was employed as a clerical worker by Mr Smith but did not have a written contract of employment. In October 1994, she informed Mr Smith orally, that she was pregnant.
He did not have a written maternity policy and did not give her guidance or advice as to her rights to maternity leave or pay. At the end of January 1995 Ms Gray said she wanted to go on maternity leave on the 10 February. Her baby was born on 10 April.
In June she asked when she could resume work and was told there was no job for her. The IT accepted that Ms Gray had failed to comply with the statutory obligation to notify her employer in writing the fact that she was pregnant and of her expected week of childbirth.
She argued that the employer had waived or was estopped from relying on the requirement that notification must be in writing when he accepted her verbal notifications. She relied upon the House of Lords decision in Scally (1991) IRLR 522, that an employee cannot reasonably be expected to be aware of a contractual term unless it is drawn to their attention,which applied to a situation where an employee would be subject to a detriment if she was not informed of her obligations.
The IT noted that Mr Smith had not given Ms Gray a contract of employment nor any guidance about maternity rights. In these circumstances he had waived his rights relating to compliance with the strict provisions of the Northern Ireland equivalent to Section 75 of the Employment Rights Act 1996.
The IT held that Ms Gray was discriminated against on the grounds of sex and unfairly dismissed. She was awarded £6,000 for injury to feelings, and £1,924 financial loss.
Time limit runs from date of last act of discrimination
General Medical Council v Rovenska (Times Law Report 31 December 1996)
The Court of Appeal has ruled that the three month time limit for lodging a complaint of race discrimination runs from the date of the last discriminatory act.
This case concerned a Czech doctor who qualified in 1973. She came to England in 1992 and sought political asylum, which was granted. In 1994 she obtained an honorary contract as a Research Registrar at Thomas' Hospital.
Dr Rovenska requested limited registration from the General Medical Council. As a foreign national, she needed to have passed or been exempted from a test by the Professional and Linguistic Assessments Board. Dr Rovenska failed the test twice so she sought exemption from the test. Doctors from certain Universities in Australia, Canada, Hong Kong, New Zealand, Singapore, South Africa, the USA and West Indies did not have to take the test.
After her fourth application was refused by the GMC on 2 December 1991, she sent the GMC a new reference confirming her quality of work but on 10 January 1992 she was again rejected.
In March 1992 she lodged an application for indirect race discrimination on the grounds that the proportion of Eastern European nationals who could comply with the requirements for exemption was smaller than the proportion of nationals from the exempted Countries who could.
The Industrial Tribunal ruled her complaint was out of time since it was lodged more than 3 months after the last refusal in December.
Dr Rovenska appealed. The EAT decided her complaint was in time since she complained of a continuing act of discrimination arising out of the maintenance and operation of a scheme still in force. The GMC did not accept the ruling and went higher to the Court of Appeal.
Lord Justice Brooke said that if the regime which the GMC had selected for its exemptions policy was inherently discriminatory as Dr Rovenska maintained, every time it refused to allow her limited registration without first taking the Assessment Board's test it would be committing an act of unlawful discrimination. The letter in January 1992 invited the GMC to grant the doctor an exemption, but the GMC refused it. The application had been made within three months of the last refusal and was therefore in time.
Put the boot into discrimination: judgement of Towering proportions
Jones v Tower Boot Company Limited (unreported), Court of Appeal
In a landmark Judgment the Court of Appeal has given a wide definition to the words 'in the course of employment' to give them their natural and ordinary meaning in discrimination cases.
Both the Sex Discrimination Act and Race Relations Act make employers liable for acts of discrimination committed by their employees in the course of their employment. It does not matter whether or not it was done with the employer's knowledge or approval.
But employers will not be liable if they can prove that they took the steps that were reasonably practicable to prevent the employee - the individual discriminator - from carrying out the acts of discrimination.
It therefore begs the question of what actually amounts to 'in the course of employment'. The definition of that phrase becomes crucial in defining the parameters of the law.
Raymondo Jones had suffered appalling racial abuse - both physical and verbal - during his month of employment at Tower Boot Limited, where he was the first ever black or ethnic minority employee. During his employment he had his arm burnt with a hot screwdriver, was whipped on the legs with a piece of welt and had metal bolts thrown at his head. He was also subject to racial abuse. He left the job after a month because of his treatment.
The Industrial Tribunal found that Tower Boot Limited was liable for the acts of race discrimination and awarded £5,000 compensation. Jones had neither named the individual perpetrators nor claimed race discrimination against them directly, so that part of his claim failed.
The Tribunal made no findings of fact against management's direct role in the discrimination. But the EAT overturned the decision finding that, since the discrimination was not carried out 'in the course of employment', Tower Boot Limited was not liable.
A majority of the EAT gave a narrow definition of 'in the course of employment' identical to that used in common law, such as employer negligence. They said the employer is liable for the employee's acts which are authorised by the employer. An employer will only be liable for acts which are not authorised if they are so closely linked with authorised acts as to amount to a way of doing an authorised act. The use of a screwdriver for the purpose of burning a colleague's arm and the other attacks on Jones did not fall within that definition, the EAT said.
In a powerful judgment, the Court of Appeal overturned the EAT and stressed the need to give the words a broad definition and their natural meaning. Tribunals must interpret the everyday meaning of 'in the course of employment'.
The purpose of the law is to eliminate discrimination in employment and to widen the net to make both employees and their employers liable for acts of race and sex harassment. It is only if an employer can show that it has taken the reasonable steps to prevent acts of discrimination, that they will be able to escape liability.
The law should be interpreted to enable it to achieve its purpose and therefore be given a broad reading.
It is hoped that the judgment will encourage employers to take preventative measures to prevent discrimination and harassment from happening in the work place. It is likely that reasonable steps will continue to be judged by the standard set in the Codes of Practice by the Equal Opportunities Commission, Commission for Racial Equality and European Commission.