McKindless Group v McLaughlin
If an employer fails to comply with the statutory dispute resolution procedures, tribunals have the power to increase the claimant’s compensation. In McKindless Group v McLaughlin (IRLR 678, 2008) the Employment Appeal Tribunal (EAT) said that tribunals cannot do so if they do not have any evidence surrounding the dismissal.
Mr McLaughlin was dismissed from his job as a bus driver at the beginning of January 2007.
The dismissal was automatically unfair because his employer had not followed the statutory dispute resolution procedure. The tribunal just had to consider therefore whether to increase his compensation, as per section 31 of the Employment Act 2002.
Section 31(3) states that if an employer has not complied with a requirement of the statutory dispute resolution procedure, it must (subject to subsection 4), increase the award by 10 per cent and may, if it considers it “just and equitable in all the circumstances to do so”, increase it by up to 50 per cent.
Subsection 4 says that the duty on a tribunal to increase an award “does not apply “if there are exceptional circumstances” that would make the increase unjust or inequitable.
The tribunal said that his dismissal was automatically unfair and uplifted his compensatory award by 50 per cent, because the company only admitted “on the eve of the hearing” that it had ignored the statutory dispute resolution procedure.
The tribunal reasoned that if they had made that concession sooner, there would have been time to try to settle the claim and therefore no need for a hearing. It did not think there were any exceptional circumstances making an increase unjust or inequitable.
The EAT, however, disagreed. It said that the discretion under section 31(4) can only be exercised “if there is factual material before the tribunal” making it just and equitable to penalise the employer over and above 10 per cent.
Conversely, it said that tribunals cannot exercise this discretion if they do not have evidence about the circumstances surrounding the dismissal and why the employer did not complete the statutory procedure. Just because an employer failed to carry out a stage of the statutory procedure would not necessarily result in an uplift of 10 per cent or over, it said. That would depend on the circumstances of the failure including the level of culpability involved.
The EAT also said tribunals cannot look “beyond that. It is certainly wrong to look at what happened later, once there were tribunal proceedings ongoing and penalise an employer via the s.31 uplift, for his conduct there. If his conduct is worthy of censure then it can be met with an award of expenses. We do not accept that s.31 provides a tribunal with a separate or alternative means of penalty.”
It follows, therefore, that when a tribunal decides to award an uplift in excess of 10 per cent, it must explain its reasons for doing so. Employers are entitled to know why a tribunal has decided that it was just and equitable to increase the uplift.
The EAT therefore had to ask if the tribunal had given sufficient reasons in this case for an uplift in excess of 10 per cent and decided that it had not. It was pure speculation on the part of the tribunal, said the EAT, to conclude that if the employers had not left it to the last moment to concede that the dismissal was unfair there would have been time to negotiate a settlement.
Finally the EAT ruled that section 31(3) does not require employers to explain any failure to follow the statutory dismissal procedures. Instead, the onus is on the claimant who wants an uplift in excess of 10 per cent to provide the tribunal with evidence in support of their claim.
The EAT ruled that the correct uplift in this case was 10 per cent.
Absurdity is piled upon absurdity. This decision means that an unscrupulous employer can avoid a big uplift by making everyone guess their motives, whilst guileless employers who explain themselves take a hit. By adopting a respondent-led focus and allowing employers to profit from their wrongdoing, the EAT appears to have lost sight of the fact that they are there to give justice to someone that even the employer concedes was comprehensively unfairly dismissed.