Appeal No.	 EAT/0886/02/ST

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 11 November 2002

Before
THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)
MR D A C LAMBERT
MRS R A VICKERS

MR T J FLATMAN	APPELLANT

LONDON BOROUGH OF SOUTHWARK	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING EX PARTE

Revised

	APPEARANCES

For the Appellant	The Appellant in Person	

THE HONOURABLE MR JUSTICE BURTON (PRESIDENT)

1	This is the Preliminary Hearing of an appeal by Mr Flatman against the decision of the Employment Tribunal sitting in London South in respect of his claim for compensation for unfair constructive dismissal under the Wages Act and in respect of breach of contract against his former employers the London Borough of Southwark.  So far as the Respondent, the London Borough of Southwark, is concerned, it has already appealed against the decision in respect of one aspect only and that was the award of £5,000 by the Tribunal in respect of alleged stress suffered by the Appellant.  This was part of the award of compensation for unfair dismissal which the Tribunal made, on the admission by the Respondent that there had been unfair constructive dismissal, which arose out of the words of Lord Hoffman in the House of Lords decision in Johnson v Unisys Ltd [2001] ICR 480 which the Tribunal concluded enabled them to make an Order in that regard. and they did so, notwithstanding their being no medical evidence before it on the existence or issue of stress.  

2	That appeal by the Respondents, the London Borough of Southwark, has been permitted to proceed by this Tribunal, separately constituted, on 31 October 2002, on the point of law only, as put in a number of different ways, as to the Tribunal having no jurisdiction because of Norton Tool Co v Tewson [1972] ICR 501, notwithstanding what are described as the dictum of Lord Hoffman, and/or that the sum ordered was an inappropriate sum.  This Appellant does not wish to cross-appeal in respect of the £5,000 to seek a higher sum, but will wish simply to resist the appeal of the London Borough of Southwark and defend the amount of £5,000 which was awarded to him, as being, in his submission, both an entitlement he has in law, and the proper amount.   In fact it is likely that that appeal by the London Borough of Southwark will be heard together with other appeals, which will be likely to be heard all at the same time.  

3	That appeal, therefore, is a wholly isolated point, and one of strict law and principle.  Mr Flatman, however, wishes to appeal in respect of other specific matters, not related at all to the £5,000 awarded to him in those circumstances.  He has made his submissions on his own behalf today, representing himself with great skill.  His grounds slim down into four.  The first is a complaint that the Tribunal deducted from the compensation it awarded, the full amount of the invalidity benefit that he received in respect of the relevant period since his employment ceased and with regard to his future loss.  He drew the Tribunal’s attention to Hilton International Hotels (UK) Ltd v Feraji [1994] ICR 259, a decision of this Tribunal presided over by Judge Hargrove QC, in which it was held that invalidity benefit ought not to be deducted from compensation awarded.  That decision was reconsidered by this Tribunal, presided over by Mummery P, in the reported decision of Puglia v C James & Sons [1996] ICR 301.  In that decision, Mummery P considered the earlier decision of Hilton, noted that a number of important decisions had not been referred to the Tribunal in that case and concluded that the decision was wrong, per incuriam, and should not be followed.  That decision of the then President postdates Hilton and is thus preferable to this Tribunal, and in any event it points out the respects in which Hilton was wrong, as it plainly appears to have been, and it has itself formed the basis of the jurisprudence of this Tribunal since 1995.  

4	Mr Flatman has drawn our attention to yet another decision of Judge Hargrove QC in Savage v Saxena [1998] IRLR 182, in which he was dealing with housing benefit.  He there concluded that housing benefit was distinguishable from invalidity benefit, and on that basis should be excluded from the computation of an unfair dismissal compensatory award.  There is no ground to challenge that particular conclusion of Judge Hargrove QC.  It is perhaps surprising that in the course of the judgment, in the light of the way that his earlier decision in Hilton had been dealt with by the later Tribunal presided over by the President, he did not in terms indicate that it was no longer good law, but he recited the submissions of counsel before him to that effect, and in any event, as we have indicated, he did not need to rest his own decision on the correctness of his earlier decision.  We are satisfied in those circumstances that the argument put forward now by Mr Flatman, that, either in whole or in part, there should be some allowance made in respect of invalidity benefit, rather than its deduction in total, is unarguable in this Tribunal, which is bound by, and if not bound, certainly would follow, the decision of Puglia v C James.  That disposes of Mr Flatman’s first point.

5	His second ground can be summarised in this way; the Tribunal split into three parts, in the light of the submissions before them, the compensation and the award that it made.  It took into account in so doing the law of unfair dismissal compensation, the law of ordinary contract and the existence of the Personal Injury Allowance Scheme, which was put before them.  It appears that the Respondents, when they belatedly accepted that the Appellant had been constructively unfairly dismissed, also accepted what they had not previously accepted, namely, at any rate for the purposes of this application, that the injury that he had suffered fell within the terms of the Personal Injury Allowance Scheme (PIAS).  Paragraph 2 of the PIAS reads in the material part:

“If the employee concerned becomes totally and permanently incapacitated, the following allowances shall be paid on his ceasing to be employed:
…
b)	a special allowance of an amount not exceeding the sum which when added to any retirement pension, retirement grant, National Insurance or Industrial Injuries benefit or allowances and any other right to benefit or compensation in the aggregate would equal the superannuable rate of pay (including any automatic increments of salary and wage awards that the employee would normally have received) of the position held by that employee concerned at the time when the injury or disease occurred; …”

6	The Tribunal made, in respect of those three periods, the following three decisions; first of all, in respect of unlawful deductions, it concluded – see paragraphs 12 and 21 – that there should be a sum of £11,819.74 paid in respect of salary in full for the twelve months ending on 30 September 2000, and on the basis that that would have been his full salary, the amount that he had been paid was to be made up so as to make good the shortfall that was paid because he had only received half wages.  That related therefore to the making good in respect of his final year of salary of the deductions.  

7	The second in respect of which they made an award was the thirty weeks from 
30 September 2000 until the hearing.  There they made an award, after deduction of the invalidity benefit, to which we have referred, at the full rate of £184.23 net, which is the sum on the basis of which the £11,819.74 was calculated, ie his full wage that he would have received had he remained in full pay until 30 September 2000; and that was paid for an extra thirty weeks up to the date of the hearing, notwithstanding the case that was put forward by the Respondent that the Appellant could and should have mitigated his loss even prior to the date of the hearing.  

8	In addition, there was a further sum awarded for a total period of another thirteen weeks at the same rate, again after deduction of the invalidity, or incapacity, benefit.  There were thus the three periods: full amount for fifty two weeks made up, full amount for thirty weeks and then full amount at the old rate for thirteen weeks.

9	The argument put forward, both in respect of the thirty weeks prior to the hearing and the thirteen weeks future loss, was largely one of mitigation.  The Respondents alleged that the Appellant could and should have found a job earlier, at the very least could and should have started the retraining course so as to update his previous qualification in computers, to enable him to start a new computer qualified job earlier than in fact he was going to be in a position to do.  The Appellant was arguing for a much longer period, and was alleging that he had justifiably taken or been able to take no steps up to the hearing, and was now going to start to take the qualification, and thus it could be some time in the future before he was going to be able to find a new position with the new qualification, which he would be able to use, in a job which he could do, notwithstanding the physical injury from which he now suffers, which renders the kind of job he had previously done for the Respondents impossible.  

10	The Tribunal’s decision, as we have indicated, was to limit that further future loss to thirteen weeks, having heard the evidence.  The case that the Appellant would wish to make, as he explains it to us today, by way of appeal, is that no allowance or provision was made for continuing loss because, he says, an office job would be likely to pay, at any rate, to start with, less than he was receiving and was deemed entitled to receive under the PIAS in his old job.  Thus, for example, there could have been some provision for some continuing period of partial loss once he found a new job.  This is, he accepts, not an argument that he ran at all below, and it appears to us that it is not possible for him now to run it on appeal.  There is no evidence as to whether the kind of job with the computer qualification, albeit an office job, would indeed mean less money than he is earning in his old job, and in any event, it appears to us that the Tribunal was making a broad brush decision that the loss here was thirteen weeks, after taking into account the arguments by the employers that he could and should have mitigated his loss earlier than he had done.  In those circumstances we do not believe that it is right to grant him permission to appeal or allow an appeal to proceed in respect of this head.  

11	The third head on which he relies is by reference to Clause 2 (b) of the PIAS, to which I have referred.  He asserts that he ought to have been entitled to the automatic increments of salary and wage awards that an employee would normally have received, in the calculation of his loss, either as breach of contract or as a compensation for unfair dismissal, but in any event, pursuant to the terms of the PIAS.  We have read Clause 2 (b).  However, it is important also to note what is said by Clause 5 of the same Scheme which reads as follows:

“In the event of any employee being incapacitated in the circumstances mentioned in the preamble paragraph to this Scheme for employment in the position which he held at the time when the injury or disease occurred, the Council shall, so far as is possible to do so, offer him alternative employment suitable to his capacity, and in that event the employee shall be entitled to be paid at the superannuable rate of pay (as defined in sub-paragraph 2(b)) of the position which he held at the time when the injury or disease occurred, subject to the deduction of the amount of any statutory right to benefits and the life annuity equivalent of any damages recoverable; provided, however, that he shall not be paid at a rate less than the appropriate rate for the alternative occupation.”

12	The Appellant has however effectively accepted, in the course of his submissions, that the first of these three periods will have included, certainly there is no evidence to the contrary, the automatic increments of salary and wage awards which he would normally have received, namely the period of one year, because he was receiving half pay, and his half pay would have included the increments, at any rate once it was accepted, as it subsequently was before the hearing, that he was qualified within the PIAS.  There is nothing which causes us in any way to doubt the statement and the finding in the Decision, in paragraph 21, stating as follows:

“The Applicant’s salary had he been paid in full would have been gross £11,819.74.”

That appears plainly to us to mean, had he been paid “in full”, ie including any increments by reference to any pay awards to which he would have been entitled during the course of his employment.  The Appellant further submits that there ought to be an account taken of any increments or pay awards which might fall due in respect of the period after ceasing employment, once it was accepted that he fell within PIAS.  It is clear that the periods in respect of thirty weeks and thirteen weeks, to which we have referred, do not include, on the face of it, any increments or pay awards, because the base figure remains the same.  We shall return to the consequences of that in due course.

13	The fourth ground which the Appellant raised was a short one.  That was by reference to Clause 7 of the PIAS.  He referred to it in argument before us.  It is not clear how far it was a subject matter of much argument if any below.  The Clause reads as follows:

“In addition to the foregoing payments, the following benefits shall be paid to or for the benefit of an employee who dies from or suffers an injury sustained in the circumstances mentioned in the preamble paragraph to this Scheme.”

There are then specific sums set out for serious injuries such as death, total and permanent loss of all sight etc.  There is then the proviso:

“that in the event of an employee suffering impairment or partial but not total loss of limbs or faculties the Council shall consider each case on its merits and apportion any benefit which they may in their discretion think fit to pay according to the degree of impairment or loss in the light of the scale of benefits in this paragraph.”

The Appellant has told us that he has been determined to be fourteen percent partially disabled in respect of a physical injury suffered during the course of his employment.  It is quite plain that any payment, except in respect of the specified sums, was entirely within the discretion of the Respondent, and we cannot conclude that it is arguable that the Appellant was entitled to any sum under Clause 7 awardable by the Employment Tribunal, or at all, in those circumstances.

14	In the light of this decision he has consequently no case to pursue the first, second or fourth of the four grounds, which we have summarised, and of course will simply be able to be a Respondent to the appeal brought by the Appellant in respect of the £5,000.  We return to the question of the increments.  The problem before us is that it seems likely that there will have been increments during the period of the thirty weeks and the thirteen weeks.  

15	On the face of the PIAS his entitlement in respect to those increments is not limited to the period when he ceases to be employed under Clause 2 (b), which would have justified the sum in respect of the first of the three periods.  But had he remained employed, he would have been entitled to remain in employment in some capacity or other at the superannuable rate of pay as defined, which would have included the additional increments.  

16	As we have indicated, it would not be normal in an ordinary case of unfair dismissal or breach of contract for an employee to receive increments after the date on which he ceases employment, but in this case there was a concession that he was entitled under the PIAS, and it may be arguable that he would in those circumstances be entitled to what would, it seems to  us, be a relatively small sum, namely the percentage increment arising out of any pay award, or otherwise, during the thirty week period and/or the thirteen week period.  What is said in their written submissions in response by the Respondent is (I read paragraph 11):

“A contractual claim based on the PIAS Part 5 obligation to find other employment is met by the remedy for breach of contract, which is notice.  This is entirely taken up in the compensatory award.”

That does not appear to us, on its face, to take into account the points about increment which the Appellant has made.  

17	The course we propose to take is one which takes into account the relatively small nature of this additional claim, if it is one to which the Applicant is indeed entitled, to which of course at this stage we have only reached a provisional conclusion.  What we are minded to do is to give permission to the Appellant to proceed on this head alone, namely the issue as to whether he is entitled to increments or pay awards in either the thirty week period or the thirteen week period, in addition to the sums that he was awarded by the Employment Tribunal, on terms that the Respondents may put in, in fourteen days, a written submission dealing with this point.  If they concede that the additional sums are payable, then I have no doubt that that would be a proportionate way in which to dispose of this appeal, which we have indicated may cost more than the relatively small amounts of additional money which may become payable to the Appellant.  

18	If, on the other hand, there is some case that they can put in which shows that there is, on any basis, no entitlement in respect of this point, or that for some other reason it should not be permitted to be run, then we will consider any submissions on paper.  Such submissions must be made in writing by the Respondents, and served on the Appellant.  We will conclude on paper whether to discharge the permission to proceed which we are otherwise giving.  

19	In the absence of any such written submissions or any such decision on paper, and of course we reserve the possibility of a restoration of the Preliminary Hearing (but in order to save costs we hope that it will not be necessary), we grant permission on that limited ground.  The Notice of Appeal will consequently go ahead, but limited to paragraph (xxviii) only.  We give permission, subject to the right of the Respondents to make submissions, which we will consider on notice to the Appellant, solely for ground (xxviii).  There will need to be an amended Notice of Appeal, which I think can probably be best dealt with simply by crossing through everything else except (xxviii).