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Issue 23 (June 1998)
Campbells in the soup after sauce ale turns sour
Employee power
Unfair dismissal compensation
New codes: same contents
The multi-headed ERDRA
Protecting whistle blowers at work - the Public Interest Disclosure Bill
Transfers and economic dismissals
Whelan v Richardson [1998] IRLR 114
Working out compensation for unfair dismissal is fraught with difficulties. A recent case highlights the issues and resolves at least one of the problems.
Julie Richardson was employed as a shop assistant in an off licence until the termination of her employment on 4 August 1995. She earned £72 per week. Following her dismissal she was unemployed for two weeks. She then got a new job as a shop assistant earning only £51.60 per week.
Ms Richardson did this job for 18 weeks and then started a new job on 27 December 1995, again as a shop assistant but earning £95.82 per week more than she had earned in the off licence. She continued in this job until the remedies hearing in November 1996.
The Industrial Tribunal found that Julie Richardson had been unfairly dismissed. She was awarded a basic award and a compensatory award including loss of earnings and loss of statutory rights.
In assessing compensation the tribunal had to decide whether her loss of earnings should be calculated up until 27 December 1995 when she first got the higher paid job, less the money earned from the first job, or whether the loss should be calculated up to the date of the remedies hearing, giving credit for the whole of the income earned during the period from the date of dismissal.
If the second method was used, Julie's claim for loss of earnings would have been be extinguished by the higher pay she had received from 27 December until the remedies hearing. The IT adopted the first method and awarded £511.20 for loss of earnings. The employers appealed.
The Employment Appeal Tribunal held that the IT was correct in calculating the loss of earnings over the period from dismissal to the date she obtained permanent higher paid employment, rather than to the date of the remedies hearing.
The EAT said that as soon as the employee obtains permanent alternative employment paying the same or more than her pre dismissal earnings her loss attributable to the action taken by the employer ceases. It cannot be revived if she then loses that employment either through her own action or that of the new employer.
Neither can the respondent employer rely on the employee's increased earnings to reduce the loss sustained prior to her taking the new employment. The chain of causation is broken.
The EAT emphasised that they were not seeking to fetter the discretion by ITs on the facts of any individual case. However their guidance is most helpful and should avoid the problem of employer's seeking to avoid paying compensation on the basis of their former employee's success in getting higher paid work.
Revised Codes of Practice on: Disciplinary Practice and Procedures in Employment; Disclosure of Information to Trade Unions for Collective Bargaining Purposes; Time Off for Trade Union Duties and Activities
ACAS have revised and updated these three Codes of Practice with effect from 5 February 1998. The changes are very minor indeed and they represent a missed opportunity to modernise the codes in what was hoped to be the spirit of New Labour and strengthened trade union and employee protection rights.
It is interesting that ACAS has decided to update the codes before the Fairness at Work Provisions come into effect.
The revised codes make minor changes to tie up with the new section amendments (primarily in the Trade Union Labour Relations (Consolidation) Act 1992) which have come into effect since the last codes were published in 1977 in the case of both the codes on Disclosure of Information and Disciplinary Practice and 1991 in the case of the code on Time off for Trade Union Duties.