Appeal No. UKEAT/0273/07/DM

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 14 September 2007

Before
HIS HONOUR JUDGE McMULLEN QC
(SITTING ALONE)

DALIA ROS & DANIEL ANGEL T/A CHERRY TREE DAY NURSERY	APPELLANT

MISS J M FANSTONE	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR T IRVING
(Solicitor)
Hancock Quins Solicitors
22/24 Station Road
Watford
Hertfordshire
WD17 IER	
For the Respondent	MR J FANSTONE
(Representative)

SUMMARY
Unfair dismissal – Compensation
Contract of Employment – Written particulars
The Employment Tribunal Chairman wrongly awarded forward loss of earnings to the Claimant who was dismissed 10 minutes before her one month’s notice of resignation took effect. Her loss of earnings in her new job was not attributable to the dismissal. Gover & Ors v Property Care Ltd [2005] UK EAT 0458 05, and [2006] EWCA Civ 286 applied.
The Chairman correctly awarded compensation for the failure of the Respondent to give the Claimant a written statement of terms.

His Honour Judge McMullen qC

1.	This case is about the assessment of loss following a dismissal, in circumstances when the dismissed employee would have resigned in any event.  It also considers the failure to provide a statement under section 1 of the Employment Rights Act of terms and conditions of employment, and the circumstances in which a default judgment has been reviewed.

2.	I will refer to the parties as the Claimant and to the two employers as the Respondent.

Introduction
3.	It is an appeal by the Respondent in those proceedings against a judgment of an Employment Tribunal Chairman sitting at Watford, Mr Andrew Hogarth QC sitting alone, registered with reasons on 27 February 2007.  A second review of his judgment was refused by him on 10 May 2007, for reasons which he gave.

4.	The Claimant was represented there by her father, as today.  The Respondent was represented by one of the two employers, Mr Daniel Angel, and today has the advantage to be represented by Mr Tony Irving, solicitor.  

5.	The Claimant claimed unfair dismissal, unlawful deductions from pay and failure to provide employment particulars.  The Respondent contended that the dismissal was for gross misconduct.  The essential issue related to the failure by the Respondent to submit a response to the claim.  As a result, a default judgment was entered.  This was the subject of an application to vary or to review.  It was refused.  Nevertheless, when the case came up for compensation, pursuant to the finding by the Tribunal on the default judgment of unfair dismissal, Mr Hogarth this time decided to accede to the application for a review and did conduct a review with evidence as to whether or not it was correct to order the default judgment.  He did the review but refused to move the decision that the Respondent was liable by default.

6.	The Chairman went on to assess compensation and to make an award of £855.94 for unpaid wages and a basic award for unfair dismissal of £1,740 which are not the subject of an appeal. But compensation for unfair dismissal of £5,000 and an award under section 38 of the Employment Act 2002 of £580 are. Directions sending this appeal to a full hearing were given in chambers by Underhill J.  

The legislation
7.	The 2004 Rules enable the Tribunal to make a default judgment, where a Respondent has not submitted a response in time.  Where unfair dismissal is found the Tribunal will make a basic award, as here, and may make a compensatory award in accordance with section 123 of the Employment Rights Act 1996, which provides in relevant part:
“(1.)…..the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.”

8.	In addition, an employee is entitled to a written statement of terms and particulars, for section 1 provides:

“1 Statement of initial employment particulars 
(1)	Where an employee begins employment with an employer, the employer shall give to the employee a written statement of particulars of employment.”

During the lifetime of the employment, if changes are made a statement must be given, see section 4(1).

9.	The remedy for failure to provide such a statement is linked to success in another employment right, such as unfair dismissal, as here.  Section 38 of the Employment Act 2002 entitles an Employment Tribunal to make an award when there has been a breach of section 1 of the 1996 Act.

The facts
10.	The facts are not in issue.  The Claimant was employed within this day nursery, and had been there for almost five years, from June 2001.  On 17 April 2006 the Claimant gave written notice to the Respondent she was going to resign and that the employment would terminate on 15 May 2006.  On that day the Respondent summarily dismissed her at 4.50pm - ten minutes before her resignation was due to come into effect.

11.	The Claimant claimed unfair dismissal.  The Respondent did not produce a response.  The circumstance in which that was held against the Respondent were investigated before the Employment Tribunal.  The account given on behalf of the Respondent was disbelieved by the Chairman who described it as verging on the ridiculous.  Thus, he dismissed the application for a review.  He returned to this matter when the review was sought again but added nothing to it.  He then went on to assess compensation in respect of the contested issue of the Claimant’s forward losses.  In this he took the following approach:

8.	Mr Fanstone who represented his daughter throughout these proceedings has produced to me the claimant’s payslips for the period after the termination of her employment. It is useful to set out the basic figures that are revealed by these payslips. During the period since, the Claimant has earned something like £940 or £930 a month net of deductions. This can be contrasted with her earnings when working for the Respondents which was about £1,240 a month. The result is that she is earning about £300 a month less than she was accustomed to earn whilst in regular employment with the respondents.
9.	In addition to this information I have been shown a group of letters from the Grovehill After School Club who had offered employment to the claimant but which she was unable to take up as the Respondents were unwilling to provide her with the clean reference that she required.
10.	It is very difficult to assess the financial loss in this sort of situation or anything more than a rough and ready basis. I have to bear in mind that in starting out on new employment, there may have been periods of unemployment before now and that it may have taken some time before the Claimant found a job that suited her.
11.	It seems to me that the best way I can deal with this, taking account of the fact that these losses are losses that are likely to continue into the future for some substantial period of time, is to assess the losses on a lump sum basis. It seems to me that an appropriate figure for loss of earnings to-date and into the future is the sum of £4,000.
12.	In accordance with the provisions of Section 31 of the Employment Act 2002 I raise that by 25% to reflect the failure to conduct the appropriate proceedings, making an award of £5,000.”

The Claimant came out with £5,000.  He then turned to the claim for written particulars and said this:
“14.	Initially the Respondents issued the Claimant with a Statement of Terms and Conditions of Employment. Rather bizarrely, they took this document back from the Claimant before her employment was terminated insisting that it remained their property. Accordingly it seems to me that there is in fact in this case, albeit in somewhat unusual circumstances, a right to an award under Section 38 of the Employment Act 2002. I make an award of two weeks’ pay in the sum of £580.”

The submissions
12.	Very fairly before me, the Respondent, through Mr Irving accepted that findings of fact were made against him and the Chairman was entitled on the evidence to reach the judgment he did, based upon credibility.  However, it was contended that correspondence from Mr Irving’s firm, by another member of the firm lent credibility to the Respondent’s case, 

13.	In criticising the Chairman for failing to pay attention to that, Mr Irving again fairly accepts that he is not able to show that these documents were produced before the Chairman and, therefore, to maintain the criticism of the Chairman for rejecting evidence of the Respondent.  Thus, the appeal to set aside the default judgment is dismissed.  I see no basis for attacking the finding of fact made by the Chairman, on live evidence before him.

14.	The second point relates to the assessment of loss.  Reliance is placed upon the judgment of the Court of Appeal in James W Cook & Co (Wivenhoe) Ltd v Tipper and Others [1990] IRLR 386. Where a business closed shortly after the unfair dismissal of the Claimant his compensation was capped for he would have been dismissed in any event by redundancy.

15.	Mr Fanstone, on behalf of his daughter, contends that life has been made much more difficult her in the labour market by reason of her dismissal for gross misconduct because, as the Chairman found, references are not forthcoming from this employer.

16.	As to the claim under section 1 of the Employment Rights Act, and section 38 of the Employment Act 2002, Mr Irving contends, without seeking to defend the criticism of his client as being bizarre, that the Respondent did discharge his duty under section 1 by giving the document, albeit he later took it back.

Discussion and conclusions
17.	I have already indicated that the default judgment remains in place so the only issue is compensation, and within that, only certain aspects.

Future loss
18.	I made available to the parties my judgment in Gover & Ors v Property Care Ltd [2005] UK EAT 0458 05, which was approved by the Court of Appeal, see [2006] EWCA Civ 286.  In that judgment I set out the kind of circumstances where compensation would be capped and said this:

“21 We would particularly like to thank Mr Bowers for his categorization of the cases which were put before us where it is suggested a reduction in, or cap on, compensation is just and equitable and we adopt them as follows:

a.	Length of time cases, where a dismissal would have occurred in due course - Mining 	Supplies v Baker [1988] IRLR 417 and Lambe above.
b.	Loss of chance cases, where there was a chance of surviving dismissal – for example 	O’Dea above, Wolseley Centres v Simmons [1994] ICR 503 and Dunlop v Farrell [1993] 	ICR 885.
c.	Cases where a reduction has been effected because the Claimant was likely to have been 	dismissed on another ground, for example, O’Donoghue above and James W Cook & 	Co (Wivenhoe) Ltd v Tipper [1990] ICR 716 (factory closure).
d.	Cases where there has been no reduction because there was a complete sham: see Dixon 	v Ferguson Seacabs Ltd EAT 59101 EAT and, King above, where the selection process 	was held to be unfair from start to finish, and similarly  Telelift (UK) Ltd v Cherrington 	[2002] AER (D) 296.

Mr Irving recognises that those cases are about the finding of a likely subsequent dismissal and do not cover expressly a situation of subsequently intended resignation, but says the principle applies: where an event would have terminated the relationship, compensation is not to be made available for losses flowing from the dismissal beyond the date that event would have occurred..

19.	Mr Irving is correct in his submission based upon Cook v Tipper.  True it is that the circumstances envisaged in Cook v Tipper and the other cases I cited are those of a dismissal, but I do not see why the principle does not flow across.  A subsequent intended cessation of the relationship by resignation, which would have occurred any way, or for example by operation of law in a frustration of the contract, is capable of stopping what would otherwise be continuing loss.

20.	Mr Irving fairly accepted that if the change in character of the cessation of the relationship meant that extra losses flowed, they would be awarded compensable.  The example he postulated is that of an employee who had intended to walk into a new job the following week but the new employer, learning of her dismissal for gross misconduct the previous week, refused to take her on for that reason.  The new employer promised work knowing she would resign amicably, but then learns she was sacked for cause. That would fairly be loss attributable to the dismissal and it would be just and equitable pursuant to section 123 to provide for it. 
21.	However, they are not the facts in this case.  The highest it can be put is that the Respondent was found by the Chairman to be unwilling to provide her with a clean reference.  That is not a matter which sounds in these proceedings as a breach of the statute, or of contract.  There is no obligation to provide a reference.  Whether or not it dismissed the Claimant it would still be able to withhold a reference from her.  So there is no finding that shows that losses were attributable to the dismissal.  The loss which has been cited by the Chairman is between the pay which she was receiving in the Respondent’s employment and that in the new employment, but the critical question is whether or not that was attributable to the dismissal.  In my judgement it was not and it would not in any event be just and equitable to make the Respondent pay for those losses in the light of what would have occurred in any event, that is the Claimant’s voluntary resignation.

22.	The Chairman did not consider this matter correctly under section 123, nor in accordance with the principles which I have set out, although it has to be said that there is no authority which has been shown to me, or which I have researched, which shows a resignation, rather than a dismissal.  Nevertheless, as I have held, the principles apply equally.  Thus I will set aside the award of £5,000; the £4,000 loss being raised by a discretionary uplift of 25%.

Written particulars
23.	I then turn to the claim under section 1.  This is an exercise in construction.  The purpose of the Act is to ensure that an employee, from a very early stage of her employment, has in writing from her employer a statement of the main terms and conditions which operate between them.  It is an obligation on the employer to give the employee these particulars.  It is, as the Chairman noted, bizarre for the employer to regard the written statement of those terms and conditions as its own rather than hers, and to take it back, as its property.  This is the wrong construction of the Act.  To give it effect and to give effect to the purpose of this statutory provision, an employer must “give”, so that the employee can keep, the document.  If at a stage in the employment she is without such a document then there is a breach of section 1.  It is a requirement on the employer to give a statement of changes and, thus, for as long as the employee is employed she is entitled to have in her own possession her own copy of the statement of terms.  The Chairman in the unusual circumstances presented to him, correctly decided that there was a breach.  It attracts compensation by virtue of section 38 of the 2002 Act and I dismiss the appeal based on that ground.

24.	I very much want to thank Mr Irving and Mr Fanstone for coming to argue the point.

25.	The appeal is allowed in part against paragraph 2 of the judgment, awarding £5,000 which is set aside and the remainder is dismissed.