Issue 91 (July 2004)

Contents

In the news
Fixed time
Equality rules OK
We're all going on a summer holiday
Drunk and disputed
Unreasonable costs
Notice of compensation
Willing volunteers?

Notice of compensation

It is a well-established legal principle that workers cannot be compensated twice for any loss that they incur. This has been confirmed in Hardy v Polk (Leeds) Ltd (2004, IRLR 420), in which the employment appeal tribunal (EAT) said that Ms Hardy was not entitled to be compensated for the full seven weeks of her notice period, as she was only out of work for four of them.

As the decision was made before the decision of the Court of Appeal in Dunnachie v Kingston (see LELR 87 for a summary), it also said that she was not entitled to compensation for injury to feelings.

What happened to Ms Hardy?

Ms Hardy had been working for Polk Ltd for about seven years when she resigned on 29 May 2002, to start a better-paid job with a direct competitor. The company asked her to sign a confidentiality agreement, but she refused and they dismissed her on 5 June 2002.

She then started with her new employer on 8 July, a few weeks earlier than she would have done, had she had to work out her full eight-week notice period. That left a four-week period when neither Polk Ltd nor her new employer was paying her.

She asked the tribunal to award her, among other things, seven weeks' notice pay and £10,000 for injury to feelings. The company admitted liability and the tribunal awarded her four weeks' net loss in respect of salary, but no compensation for injury to feelings.

What were her grounds of appeal?

Ms Hardy appealed against the failure to compensate her for injury to feelings, and the award of four weeks' rather than seven weeks' net loss.

The EAT, however, rejected both her claims - the first on the basis of the (now outdated) decision of the EAT in Dunnachie, that it had no jurisdiction to make such an award and could not see the point in re-hearing the arguments that had already been rehearsed and rejected in that case.

The second was on the basis that she did not have the right to be compensated twice. Ms Hardy had argued that, had her employer paid her for eight weeks in lieu of notice at the outset, and had she then gone off and worked for the competitor, she would have been entitled to keep both the payment in lieu of notice and the money from the alternative employer.

The EAT refused to entertain this hypothesis, arguing that although she had been treated badly, she had been adequately compensated with payments of both basic and compensatory awards. It also pointed out that she was only out of employment for four weeks, and earned more for three of them than she would have done if she had continued to work for her old employer.

The EAT decided not to follow the decision in Norton Tool Co Ltd v Tewson (1972, IRLR 86), but said instead that it was bound by the Court of Appeal decision of Cerberus Software Ltd v Rowley (2001, IRLR 160). It said that, even if a contract of employment entitled the employer to make a payment in lieu of notice, it was still a claim for damages (as opposed to a debt owed by the employer) that the employee had a duty to mitigate.

The tribunal was therefore right to conclude that four weeks rather than seven weeks was the proper calculator. As Ms Hardy was not permitted to make a profit, it could not agree to allow her to recover from Polk Ltd as well as her new employer.

Can she appeal again?

Although the EAT dismissed Ms Hardy's appeal for compensation for injury to feelings, it agreed to extend the time for an appeal until 14 days after the publication of the judgment of the Court of Appeal in Dunnachie.