Compensation for loss of earnings suffered pre-termination in constructive unfair dismissal claims
This article examines the decision of the Employment Appeal Tribunal (EAT) in the case of Mr Martin Symonds t/a Symonds Solicitors v Miss S Redmond-Ord, where, unusually, an employee was awarded compensation for loss of earnings arising from constructive unfair dismissal prior to termination of her employment.
Mr Symonds was a solicitor and sole principal of Symonds Solicitors. Miss Redmond was employed as a secretary. In 2009, she suffered from ill-health and took a period of unpaid leave. In February 2010, Miss Redmond informed her employer that she was ready to come back to work. However, Mr Symonds had hired a replacement secretary on a fixed-term contract and Miss Redmond was thus told that she could not come back to work immediately but would have to wait until July 2010. Symonds Solicitors did not pay Miss Redmond from February 2010.
Loss of earnings
Miss Redmond raised a grievance in March 2010 and, after receiving no response, resigned on 19 April and commenced proceedings for constructive unfair dismissal. She did not make a separate claim for breach of contract or unlawful deductions of wages but did state that she was seeking compensation for her loss of earnings from February 2010.
The Employment Tribunal found that Symonds Solicitors had breached Miss Redmond’s contract by preventing her from returning to work and by failing to deal with her grievances. They awarded Miss Redmond £7,922 in compensation, taking the date in February 2010 when she could have returned to work as the start date for the loss.
Appeal and review hearing
Mr Symonds initially appealed the Employment Tribunal’s decision on the grounds that it had made significant errors in its calculation of compensation. Following a review hearing in October, the Tribunal’s award was increased to £11,143. At the review hearing, Mr Symonds also made the point that February 2010 had not been the correct start date for calculating the award. The Employment Tribunal refused to re-open the question. Mr Symonds also appealed against the review decision.
Employment Appeal Tribunal
As Mr Symonds did not raise the point of the date that compensation should be awarded from in his original notice of appeal, he sought permission to amend that notice of appeal to consider this point. However, this was not granted.
The EAT found that although Mr Symonds’ argument was legally correct and the loss that can be claimed in respect of a constructive unfair dismissal does not include loss flowing from wrongs inflicted on an employee by the employer’s conduct prior to termination, if they allowed the appeal on the ground Mr Symonds sought to argue, Miss Redmond would suffer an injustice.
The EAT stated that the whole basis for Miss Redmond’s claim for constructive unfair dismissal was based on an assertion that Mr Symonds was in breach of contract by failing to employ her between February and April 2010, and Mr Symonds would benefit unduly from the lateness with which he has raised his points. Furthermore, allowing Mr Symonds to take the point might lead to yet another round of civil litigation to no good purpose, as Miss Redmond might seek to recover compensation in the small claims court.
Basic award and compensatory award
Compensation for unfair dismissal consists of two elements: a Basic Award and a Compensatory Award.
The Basic Award is calculated by reference to the claimant’s age and length of service, and is calculated using a week’s pay; however, this is subject to a maximum amount for a week’s pay, set by statute. The current maximum amount per week is £450.
The Compensatory Award is designed to compensate a claimant for the monetary losses he or she suffered as a result of the dismissal. Principally, this will be loss of earnings.
Provided a claimant succeeds in an unfair dismissal claim, he or she will be able to recover actual loss of earnings from the date of dismissal until the date he or she obtained alternative employment. In certain circumstances, a claimant will also be able to recover future loss of earnings for such a period as the Tribunal considers fit. From 29 July 3013, the maximum compensatory award is the lower of £74,200 or 52 weeks’ pay.
Guidance for employers
The judgment in the above case demonstrates that it is essential for parties to ensure that pleadings are well drafted, clear and cover all points. It is not authority for the proposition that losses prior to resignation can be awarded in constructive unfair dismissal claims. The law remains as set out in GAB Robins (UK) Limited v Triggs. Those losses could, however, be awarded if the claimant also pursues, for instance, claims for unlawful deductions from wages.
If you are faced with an Employment Tribunal claim or seek to appeal a judgment, advice should be sought at an early stage to ensure that the most appropriate arguments can be put forward to protect your position.
For more information or to discuss how the issues in this article might affect your business, contact our Employment Law team or call us on 0117 904 6000.
Posted on Jan 17th, 2014 by Lyons Davidson