Hilton International Hotels (UK) Ltd v Faraji [1993] UKEAT 136_93_1511

EAT
Hilton International Hotels (UK) Ltd v Faraji
[1993] UKEAT 136_93_1511 · 1993-11-15
HIS HONOUR JUDGE HARGROVE QC This appeal is by the employers from a Decision of the Industrial Tribunal delivered on 31st December 1992. At an earlier hearing on 21st October 1991 the Industrial Tribunal decided that the Respondent had been unfairly dismissed. The nature of the unfairness was that the Appellants did not make reasonable attempts to secure alternative employment for the Applicant within their extensive undertaking. The Tribunal further held that the Respondent was a man who had worked his way up from the bottom and was prepared, within his limitations, to put his hands to anything.At a further hearing on 4th November 1992, the Tribunal made the following further findings of fact -
"(a) (The Respondent) is still subject to a restriction in that he is unable to lift heavy weights. He is 47 years of age and in receipt of invalidity benefit because he is now suffering from depression by reason of his inability to gain employment. (b) (The Respondent) is otherwise actively seeking employment but to date has only managed to secure one interview at the Dorchester hotel where he was unsuccessful."
The manner in which the hearing of 4th November 1992 came about was that the Tribunal adjourned the original hearing to allow the parties to reach agreement upon compensation. This did not prove possible and at the latter hearing the Tribunal awarded the Respondent £10,593.68 compensation. The Tribunal held that it would have been reasonable for the Respondent to have secured employment within 17 weeks of a previous hearing. It was not practical to reinstate him in his previous position because that involved heavy lifting.The Tribunal made an assessment as follows:

(1) Basic award £3,376.13 (ie £153.46 x 22)

(2) Loss to date of previous hearing £4.745.04 (ie £139.56 x 34)

(3) Future loss £2,372.52 (ie £139.56 x 17)

It is in respect of items (2) and (3) that this appeal is brought.The Employment Protection (Consolidation) Act 1978, S.74 provides:
"(1) Subject to sections 75 and 76, 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."
...
"(4) In ascertaining the said loss the tribunal shall apply the same rule concerning the duty of a person to mitigate his loss as applies to damages recoverable under the common law of England and Wales or of Scotland, as the case may be."
It is common ground that the Respondent received a sum of £150 which was not taken into account by the Tribunal in reaching its conclusions. The Respondent maintains that such sum is too small to be the subject of an appeal. The Appellants agree that by itself such sum would never have been brought before the EAT save as an illustration of the haphazard approach of the Tribunal. The main thrust of the Appellants' case is that the Respondent had suffered a back injury which had resulted in his failure to attend work for a considerable period. During the period covered by items(1) and(2) above, the Respondent had been in receipt of invalidity benefit. The Appellants claim that the receipt of such benefit indicates that during the relevant period the Respondent was unfit for work. Accordingly, as he could not have received any earnings owing to his state of health, he can have suffered no loss. Secondly, the Appellants aver that the Tribunal erred in that no account was taken in the calculation of sums received by way of invalidity benefit. The computation was made on a straightforward multiplication of the wages the Respondent would have received by the number of weeks. These points raise in stark form a question which has not been previously decided namely, whether invalidity benefit must or may be considered in making such calculations for compensation.Attention is drawn by the Appellants to the financial position in which the Respondent is now placed by the decision of the Tribunal. He is in receipt of both his salary and his invalidity benefit. It is said that to force the Appellants to pay the salary is manifestly unjust and inequitable. Mr Bonney on behalf of the employers does not shrink from the wide proposition that, in such cases, once an employee is in receipt of invalidity benefit, no question of a compensatory award can arise. In support of this he cites Slaughter v. Brewer & Sons Ltd [1990] ICR 739 where this Court allowed an appeal from a finding by an Industrial Tribunal that a complainant had contributed to her dismissal to the extent of 80%. The dismissal was for reasons of ill-health, and in the course of a reserved judgment Wood J. at p.738 states:
"There may, however, be cases of ill-health where, although section 74(6) is not appropriate, yet an award may be drastically reduced under the overriding provisions of section 74(1). A dismissal may be unfair on procedural grounds yet it may be quite apparent from the medical evidence that an applicant was, at the date of dismissal, quite incapable of carrying out her or his proper function. In another case there may have been insufficient medical evidence hence unfairness, but the subsequent investigations would have shown the dismissal was inevitable. In such a case a possible view might be that such an investigation would have taken some days or weeks and that compensation should cover that period."
Another defect in the Tribunal's findings according to the Appellants is that the Tribunal made the assumption that the Respondent would be in full employment and in full health, and failed to consider whether the loss was a consequence of the dismissal. Further, it is alleged that the Tribunal failed to consider whether the loss is attributable to the action taken by the employers. These errors of law and failure to find facts are said to render the decision unjust and inequitable to the Appellants and fatally flawed.In our view, reading together paragraph 5 of the Tribunal's decision of 21st October 1991 and paragraph 2 of the decision of 4th November 1992, the Tribunal decided that there was an unfair dismissal, that dismissal caused unemployment and from that unemployment flowed the Respondent's depression. We therefore find no difficulty in concluding that the Tribunal had turned its mind correctly to that aspect of the requirements under S.74(1).

Failure to take account of £150

This Tribunal should only entertain an appeal upon the assessment of the award of compensation (in the absence of an error of law) where there is serious error. (see Fourgere v. Phoenix Motor Co [1976] ICR 495) . We find the failure to take into account £150 is an error of a trifling nature and we do not accept that it is indicative of a haphazard approach on the part of the Tribunal.

Invalidity Benefit

It is necessary to consider what is the nature of a compensatory award envisaged by S.74. It does not say that it shall be the amount of pecuniary loss suffered. It is such amount as the Tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence to the dismissal insofar as that loss is attributable to the action taken by the employer. It is not therefore necessarily the same as the common law in relation to compensation or personal injuries. The Legislature has made a specific provision though in one respect, that in relation to mitigation, the common law shall apply (see S.74(4)). However, guidance can be obtained from the general rule as to compensation set forth in British Transport Commissioners v. Gourley [1956] AC 185 at p.197 :
"The broad general principle which had governed the assessment of damages in cases such as this is that the tribunal should award the injured party such sum of money as will put him in the same position as he would have been in if he had not sustained the injuries ... . There are, no doubt, instances to be found in the books of exceptional cases of insurance."
Does invalidity benefit come within an exception to the Gourley rule? Invalidity benefit arises as a result of the National Insurance Scheme. Those in employment have no option but to pay the sums levied by Central Government. While some would compare such levies to additional taxation, they are more properly classified with insurance premiums. The invalidity benefit is dependent to some degree upon the amount of payments made. If an employer, who has unfairly dismissed an employee, is entitled to deduct a sum paid by way of invalidity benefit, he is benefitting from the employee paying (albeit involuntarily) the levies.In Parry v. Cleaver [1970] AC 1 at p.13, Lord Reid stated in dealing sums which came to the plaintiff as a result of the accident but which would not have come to him but for the accident:
"In two large classes of case such sums were disregarded - the proceeds of insurance and sums coming to him by reason of benevolence. If Gourley's case had any bearing on this matter it must have impinged on these classes. But no one suggests that it had any effect as regards sums coming to the plaintiff by reason of benevolence, and I see no reason why it should have made any difference as regards insurance."
In Parry's case the police officer was obliged under his contract to make contributions towards the scheme. That decision received further support from Smoker v. London Fire and Civil Defence Authority [1991] ICR 449 which held that even where the tortfeasor and the insurers were identical the rule applied. We are of the opinion that the receipt of invalidity benefit can properly be categorised as coming within the "insurance" group of benefits.We are reinforced in this view that by the provisions of Regulation 5 of the Employment Protection (Recoupment of Unemployment and Supplementary Benefits) Regulations 1977. This provides for those two mentioned benefits to be subject to recoupment. No such provision is made in relation to invalidity benefit. If Parliament intended that such sums should, for the purposes of S.74 be subject to recoupment or as a deduction from the compensatory award it would surely have said so.The Tribunal was plainly aware that invalidity benefit was being paid since there is a reference to it in paragraph 2 of the decision of 4th November 1992 and a further note concerning the benefit in the Chairman's Notes of Evidence. There is therefore no question of the Tribunal having overlooked the point. It is contended that this approach will result in an unfairly dismissed employee receiving more after he had been dismissed than he would have done had he continued working. Even in a standard personal injury case this can happen with invalidity benefit since only one-half of that benefit for a period of five years has to be accounted for in assessing damages. Such an apparent inequity is therefore not unknown even to the common law and there is no injustice to an employer being made to pay a sum which, had he not unfairly dismissed the employee, he would have paid anyway when the alternative is to give the employer the benefit of payments under the National Insurance Scheme to which the employee has subscribed. In our view, the Tribunal reached the correct decision in making no deduction.We can deal with the final point of contention between the parties shortly. We do not consider that because invalidity benefit is being paid it follows inexorably that a person has no earning potential over the relevant period. The Tribunal is entitled to look behind the payment of the benefit, inquire what is the nature of the disability and to decide whether that is attributable to the activity of the employer in unfairly dismissing him.For these reasons this appeal fails and is dismissed.