Buckingham v Sun Chemical Inks (UK) Ltd [1993] UKEAT 299_93_2107

EAT
Buckingham v Sun Chemical Inks (UK) Ltd
[1993] UKEAT 299_93_2107 · 1993-07-21

JUDGE J HULL QC:

This is an appeal which has been put into our list under the Practice Direction so that we can consider whether there is a point of law which might reasonably be argued.It is an appeal by Mr Buckingham, who was a Manager employed by the Respondents, from the decision of the Industrial Tribunal sitting at London (North) on 8th February 1993 and it was, before that Tribunal, admitted that Mr Buckingham had been unfairly dismissed by the Respondents after a long period in their employment. The Tribunal had to assess what loss, if any, he had suffered as a result of his unfair dismissal and they noted that a very large sum of money had been paid to him under provisions which were adopted in relation to all employees. They set that out in paragraph 4; the total sum which was paid was £29,318.94. £23,734.38 of that was in respect of a redundancy payment and then there were payments in lieu of notice of £5,584.56. They then worked out his loss, and that is in paragraph 8 of their decision, and they came to a figure of £14,775. They then referred to Section 74(7) of the Employment Protection (Consolidation) Act 1978 and applied that Section, as they understood it, to the sums which they had arrived at. Treating the greater part as being an ex gratia payment, they said:
"as the amount of the ex gratia payment is in excess of the sum that this Tribunal could award there is no payment due from the Respondents to the Applicant."
they referred to the case of Horizon Holidays Ltd v. Grassi [1987] ICR 851 where there was an ex gratia payment.The substance of the appeal is that Mr Reuben, on behalf of Mr Buckingham, contends that only a very small part of the redundancy payment was ex gratia and he said first of all that the largest of the sums paid was:

"3 weeks' pay x years of service to a maximum of 20 years = 60 weeks"

and he says that and the statutory or contractual pay in lieu of notice, as he calls it, were sums which were indeed contractual, not ex gratia at all. He tells us, and we have no reason to doubt what he says, that these were agreed on a basis of bargaining on behalf of the whole workforce and that they had, expressly or by implication, become terms of Mr Buckingham's contract of employment.Now the question is whether in those circumstances the employers are entitled to take credit for them in the way in which credit has been given by the Industrial Tribunal. We considered what was said in Addison v. Babcock FATA Ltd [1987] ICR 805 in the Court of Appeal. In that case the general principle was enunciated by Gibson LJ at page 813E:
"In the absence of an agreement, express or implied, to the contrary effect it seems to me to be clear that the respondent employers are to be given credit for all payments they have made to the employee on account of claims for wages and other benefits."
and when one looks at the statute, which of course is binding on this Tribunal, under the heading "Calculation of the Compensatory Award" subsection (7) says expressly:
"If the amount of any payment made by the employer to the employee on the ground that the dismissal was by reason of redundancy, whether in pursuance of Part VI or otherwise, exceeds the amount of the basic award which would be payable but for section 73(9) that excess shall go to reduce the amount of the compensatory award."
and that makes no difference between payments which are due by contract and payments which are made ex gratia, although that is the basis on which this appeal is brought.We asked Mr Reuben whether he had any authority for saying that whereas ex gratia payments must be brought into account, payments which are to be paid under the contract of employment are not. He told us that he had not. Indeed it would be surprising if he had authority, because on the face of it contractual payments are within the contemplation of the parties and there is greater ground for deducting those than ex gratia payments. We feel we are bound, both by the words of the statute and by what fell from Gibson LJ, with whom of course the other Lords Justices agreed in Addison v. Babcock , to say that these contractual payments, if that is their true nature, as well as any ex gratia payment fall to be deducted from what would otherwise be awarded in accordance with Section 74(7).We think there may be some confusion in Mr Buckingham's mind with the situation where these payments would have been paid in any event even if he had not been dismissed. That indeed was the case with the ex gratia payments in Addison v. Babcock . If in fact these payments had been payable on achieving a particular age or if they had been some sort of pension payment which he would have received in any event then his contentions would have been, of course, full of substance. But as it is it seems to us that they were indeed redundancy payments, they were paid in the event of redundancy. In the event unfair dismissal was admitted, but that does not alter the fact that the compensation which is due to Mr Buckingham, which is payable in respect of his actual loss, is reduced to nothing by the size of the payments.In those circumstances no point of law is shown and we have to dismiss the appeal.