Labour & European Law Review Weekly Issue 228 28 July 2011
Once a claimant has won their case, the Tribunal then has to assess their compensation. In Wardle v Credit Agricole Corporate and Investment Bank, the Court of Appeal said that Tribunals should only assess the loss suffered by the claimant up to the point when they would be likely to obtain an equivalent job, even though that would involve a considerable degree of speculation.
Mr Wardle worked in risk management for the bank on a salary of £104,000. Had he not been dismissed in 2008, he would have been entitled to a bonus in both 2009 and 2010 of 70 per cent of his salary.
Towards the end of 2007, he applied for promotion as head of the team which offered a salary of £120,000. He was unsuccessful, however, and a French national was given the job. He brought a claim for race discrimination.
He was subsequently dismissed with effect from 31 August 2008, after which he brought additional claims for unfair dismissal and victimisation.
He found another job with the Financial Services Authority in November 2008 on a salary of £105,000, paying a bonus for that year and subsequently at a rate of 20 per cent of salary.
Tribunal and EAT decisions
The Tribunal agreed that he had been discriminated against and that his dismissal was unfair.
In terms of compensation, it assessed his loss from his dismissal until his likely retirement in 2024, but with two main adjustments to reflect an 80 per cent chance that he would have left the bank in April 2010; and a 70 per cent chance that he would have returned to an equivalent job in banking at the end of 2011.
It also awarded him a sum for injury to feelings and aggravated damages and applied the maximum uplift of 50 per cent to the whole award because the bank had failed to follow the statutory dismissal procedure which was then in force.
The EAT reviewed the awards and set aside the discount for the first three years, after which it applied a sliding scale for his loss of earnings. It also set aside the award for aggravated damages and reduced the uplift to 10%.
Court of Appeal decision
The Court of Appeal has now made clear that it is only appropriate for courts to assess compensation over a career lifetime in very rare cases and where the evidence showed that there was no real prospect of the employee obtaining another job, but not, it said, “because the exercise is in principle too speculative. If an employee suffers career loss, it is incumbent on the Tribunal to do its best to calculate the loss, albeit that there is a considerable degree of speculation”.
It went on to say that the usual approach - assessing the loss up to the point when the employee would be likely to obtain an equivalent job - will be fair for the vast majority of cases. In this case, the Tribunal had effectively approached the case on the assumption that it must award damages until the point when it could be sure that the claimant would find an equivalent job.
As for the uplift of 50 per cent, the Court said, again, this “should be very rare indeed” and only used in the most extreme of cases. For instance, it would not be justified in situations where the employer had ignored the procedure altogether (as here), although the uplift in those circumstances should be more than 10 per cent.
However, there would be exceptional circumstances when a Tribunal would be entitled to decide that there was no real prospect of the employee ever obtaining an equivalent job. In those cases, the Tribunal must assess the loss on the basis that it will continue for the course of the claimant's working life.