Harvey v The Institute Of The Motor Industry [1995] UKEAT 208_94_0405

EMPOLYMENT APPEAL TRIBUNAL
BAILII case number: [1995] UKEAT 208_94_0405Case No Appeal No. EAT/208/94Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
HarveyThe Institute Of The Motor Industry
Date 4 May 1995
MR JUSTICE MORISON: For the purposes of this appeal the facts are in a very narrow compass. Mrs Harvey, the appellant, was dismissed by her employers, the respondents, in circumstances which gave rise to a majority finding by the Industrial Tribunal that she had been unfairly dismissed and unlawfully discriminated on the grounds of her sex. It was her case that she had been dealt with inappropriately by her employers before she left on maternity leave, and that she could not return to her old job after her baby was born on 27 January 1990, and that the employers repudiated her contract of employment by the way they treated her, even though she did not comply with the procedure for return to work laid down by Parliament. The majority concluded that:
"(a) she had been constructively dismissed. (b) her dismissal was by reason of the appellant's pregnancy and unlawful contrary to section 1 of the Sex Discrimination Act 1975. (c) her complaint of unlawful discrimination was presented to the Industrial Tribunal within time."
This majority Decision was reserved; sent to the parties and entered in the Register on 1 March 1993. It was indicated in the last paragraph of the Decision that if the parties could not agree on a remedy the case would have to come back to the Industrial Tribunal for a further hearing.The parties did not agree on a remedy and the matter came back for hearing before the same Industrial Tribunal on 22 October 1993. At the end of the hearing on that day, the parties were informed that the Industrial Tribunal's Decision on remedy would be reserved. The members of the Tribunal met to discuss the case, and reach their decision, which they did on 1 November 1993. However, the decision had to be reduced to writing and sent to the parties. Before this was done, on 22 November 1993 the Sex Discrimination and Equal Pay (Remedies) Regulations 1993 ["the Regulations"] came into force.Section 65(2) of the Sex Discrimination Act 1975 provided that:"the amount of compensation awarded to [a successful complainant] ... shall not exceed the limit for the time being imposed [as the limit on compensation for unfair dismissal]".That limit varied in accordance with orders introduced from time to time by the Secretary of State for Employment, which invariably contained transitional provisions applying the new limits from an appropriate date, which, in relation to complaints under the Sex Discrimination Act was defined as `the date on which the act complained of was done' : see for example the Unfair Dismissal (Increase of Compensation Limit) Order 1993 [SI 1993/1348].Regulation 2 of the Regulations repealed section 65(2) in these terms:

"Section 65(2) of the 1975 Act is repealed."

Following the coming into effect of the Regulations the appellant's representative wrote to the Industrial Tribunal, submitting that they were not now constrained by any limit on compensation; the respondents contended that they were.In their written Decision, which was entered in the Register on 26 January 1994, the Industrial Tribunal unanimously concluded that the limit in force at the date of the wrong did apply to their Decision. They assessed compensation, on an unlimited basis, in the total sum of £10,315.54 made up as follows:

£

5,339.16 for loss of earnings [both past & future loss]2,500.00 for injury to feelings500.00 aggravated damages8,339.16 sub-total1,976.38 interest10,315.54 TOTALThey applied the limit and awarded the appellant by way of compensation the sum of £8,925, leaving her with an uncompensated loss of £1,390.54. She was also entitled to, and was awarded, a basic award, which is additional to the compensatory award and is not affected by the limit. It is to be noted that, but for the application of interest, the amount of the award would have been within the limit.The appellant's appeal raises three issues:Were the Industrial Tribunal right to apply the limit?Was there an error in law in the way they assessed her compensation, in allowing a period of loss of 4 months?Ought the Indstrial Tribunal to have awarded a sum for loss of statutory rights?The arguments on either side have been compellingly put.We shall deal, first, with the important question as to the date when the abolition of the limit takes effect. We shall then consider the other two issues together.1. The abolition of the limitUnder the Sex Discrimination Act 1975 it is unlawful for an employer to dismiss an employee by reason of her sex. Any complaint about such conduct must be referred to an Industrial Tribunal. Section 65(1)(b) of the Act provides that where a tribunal finds such a complaint to be well-founded it shall make:

"an order requiring the respondent to pay compensation ..."

It is to be noted that paragraph 1(2) of the Regulations provides that, for the purpose of the Regulations, "an award under the sex discrimination legislation" means, inter alia , an order under section 65(1)(b).

Paragraph 3(1) of the Regulations provides that

"Where, at any time after the commencement of these Regulations an industrial tribunal makes an award under the sex discrimination legislation"
it may include interest on the sums awarded.It follows, therefore, that those parts of the Regulations dealing with interest took effect in relation to awards made from the date of commencement of the Regulations, namely 22 November 1993, and there is no contention to the effect that the Tribunal were wrong to award interest in this case.Further, as the explanatory note to the Regulations makes clear, and as is well-known in any event, these Regulations were designed to give effect to the decision of the European Court in Marshall No 2 , which was published on 2 August 1993. There, the Court determined that1. the statutory limit on compensation in section 65(2) of the Act, and2. the absence of a power to order interest on awards of compensationwere incompatible with the objectives of the Equal Treatment Directive . In the light of that decision, of the Government's commitment to fulfil its Treaty obligations and of the decision in Francovich v Italian Republic [1992] IRLR 84 ECJ, which states that a Government which fails fully to implement a Directive may, in certain circumstances, become liable to an individual who thereby suffers loss, it would appear to have been the Government's intention in making the Regulations to seek to give full effect to the Equal Treatment Directive as soon as possible.Against that background, we turn to the rival submissions, and summarise, first, those on behalf of the appellant:The plain and ordinary meaning of the words used in the Regulations, viz "Section 65(2) of the 1975 Act is repealed", is that the section is repealed as from the date when the Regulations came into force.There are no transitional provisions postponing the date when Regulation 2 takes effect; all statutory provisions take effect from the date of commencement of the Act unless there is a clear indication to the contrary.The Regulations apply to all awards made after the date of their commencement; here, although the oral hearing was completed before 22 November 1993, the Decision, and hence the award, was not formally made until after the limit had been repealed. Therefore, there was no element of retrospectivity.If, contrary to the submission in 3, there was an element of retrospectivity, the Regulations were not affecting substantive rights. The repeal did not "substantively affect any vested rights or impose new obligations. The presumption against retrospection therefore does not apply." The changes are to be regarded as a procedural or adjectival law change, rather than a change affecting a substantive or vested right: it creates neither an entirely new remedy nor an entirely new obligation upon employers.Our attention was also drawn to the provisions of paragraph 1(1)(b) of Schedule 2 to the European Communities Act 1972 . The Regulations in this case were made under the provisions of section 2(2) of the 1972 Act. The power to make regulations conferred by that subsection is limited by and to the extent of the provisions of Schedule 2.Section 2 of the 1972 Act provides:"(1) All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression "enforceable Community right" and similar expressions shall be read as referring to one to which this subsection applies.(2) Subject to Schedule 2 to this Act, at any time after its passing Her Majesty may by Order in Council, and any designated Minister or department may by regulations make provision-(a) for the purpose of implementing any Community obligation of the United Kingdom, or enabling any such obligation to be implemented, or of enabling any rights enjoyed or to be enjoyed by the United Kingdom under or by virtue of the Treaties to be exercised; or(b) for the purpose of dealing with matters arising out of or related to any such obligation or rights or the coming into force, or the operation from time to time, of subsection (1) above;and in the exercise of any statutory power or duty, including any power to give directions or to legislate by means of orders, rules, regulations or other subordinate legislation, the person entrusted with the power or duty may have regard to the objects of the Communities and to any such obligation or rights as aforesaid."The relevant provisions of Schedule 2, to which the powers conferred by Section 2(2) are subject, are to be found in paragraph 1(1) of the Schedule:
"The powers conferred by section 2(2) of this Act to make provision for the purposes mentioned in section 2(2)(a) and (b) shall not include power-
..................(b) to make any provision taking effect from a date earlier than that of the making of the instrument containing the provision;"It was submitted that paragraph 1(1)(b) prevents regulations such as these from taking effect before they have been made. The Regulations were made on 11 November 1993 and came into force on 22 November. Therefore, it was submitted, as they did not take effect before 11 November they were not, thereby, ultra vires the powers conferred by Section 2(2). Paragraph 3 of The Regulations expressly applied to awards made by Industrial Tribunals at any time after the commencement of the Regulations. Those awards might be in respect of wrongs committed before the Regulations were made. It must have been the view of the Secretary of State that the Regulations in relation to interest did not, thereby, `take effect' before the Regulations were made; nor was such a result contended for on behalf of the employers.The Respondents arguments may be summarised thus:Section 16(1) of the Interpretation Act 1978 provides:
"... where an act repeals an enactment, the repeal does not, unless the contrary intention appears- (a) affect any right ... obligation or liability acquired, accrued or incurred under any enactment; (b) affect any ... legal proceeding or remedy in respect of any such right, obligation liability ...
and any such investigation, legal proceeding or remedy may be instituted continued or enforced ... as if the repealing Act had not been passed."It was argued that, by analogy with the Privy Council's interpretation of similar provisions in the Ceylon Interpretation Ordinance, in Free Lanka Insurance Company Ltd v Ranasinghe [1964] AC 542 at 550-552, rights and liabilities referred to in the Interpretation Act may be `inchoate' or `contingent'. Such a right might consist of the right to rely upon a time-bar in a statute of limitation. Here, if the appellants were correct, the employers would be deprived of a defence to the difference between the amount of the limit and the amount (higher) of the loss.There is nothing in the Regulations which show a `contrary intention' within the meaning of section 16(1) of the Interpretation Act .If needs be, the respondents would rely upon a presumption against retrospectivity, and they drew our attention, helpfully, to Office Cherifien des Phosphate v Yamashita [1994] 1 AC 486, to which the Industrial tribunal's attention was not referred. The appellant's representative had referred us to the Court of Appeal's decision in this case, which was reversed by the House of Lords.Our conclusions on this part of the case may be shortly stated. We hope that we shall not be regarded as discourteous were we to say that, although we were referred to several authorities, we found no assistance from any of them, save from the decision in the House of Lords in the L'Office v Cherifien case.Had we not had the benefit of the speech of Lord Mustill in that case, we ourselves would have concluded that a somewhat artificial distinction appeared to be drawn by some courts between, on the one hand, rights to be described as substantive and, on the other, rights which are said to be `merely' procedural or adjectival. It did not seem to any of us to be easy to ascertain any principle which determined into which category rights would fall. Further, it seemed to us that some `procedural rights' are more valuable than some substantive rights, and it is by no means clear why the presumption against retrospectivity should be applied differently merely because of the label to be attached to them. We thought that it is, perhaps, a feature of our doctrine of precedent and of the common law's pragmatic approach to problems that, especially where issues of pure construction are concerned, statements by judges of the particular are elevated into statements of general application and, eventually, into statements of principle.We approach the question raised by the first issue in this way:There is a presumption that the legislature does not intend what is unjust and, therefore, we should lean against a construction of the Regulations which give them a retrospective effect. This is consistent with the provisions of The Interpretation Act which gave statutory effect to the common law."The true principle is that Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears. It is not simply a question of classifying an enactment as retrospective or not retrospective. Rather it may well be a matter of degree - the greater the unfairness, the more it is to be expected that Parliament will make it clear if that is intended" : per Staughton LJ in Secretary of State for Social Security v Tunnicliffe [1991] 2 AER p.712, at p.724; cited with approval in L'Office Cherifien at p.525 C-E.We should approach the task of construction, where, as here, the words used are not clear, by asking a single, indivisible question directed at fairness.If the Regulations are to be construed as the appellant suggests, then the employers' liability for acts done before the Regulations were even made becomes unlimited. An employer before doing an act, such as dismissing an employee, is likely to take into account, as part of that decision process, the financial consequences of taking one course as against another. Whilst there is no evidence that such a calculation was made in this case, and we doubt it was because the respondents did not believe that they had dismissed the appellant, nonetheless we must, we think, consider the position of an act done by a hypothetical employer who has considered the options. We must, we think, accept that there may be employers who will find, if we acceded to the appellant's contentions, that some such decisions would, or might, have been different had they known of the Regulations at the time they did the act complained of. Such employers would be prejudiced by the appellant's construction of these Regulations. On the other hand, such employers will, ex hypothesi, have committed acts which were unlawful when done, whatever the date of commencement of Regulation 2.However, if the respondents' arguments were correct some odd consequences would follow. It is not argued that Regulation 3 only applies to wrongful acts committed before the Regulations commenced. Accordingly, awards will increase due to the application of interest to them. The Regulations would thus convey a right to interest but in many cases (such as this one) deprive the employee of it by reason of the limit. Having two different starting dates for the removal of the limit and for the application of interest to awards seems illogical and self-defeating.Further, it would seem likely that, given the choice, the legislature would prefer to transfer onto employers any injustices arising from retro-spectivity than to carry the risk of Francovich claims succeeding against the Government any longer than was necessary.Without in any way deciding the date from which employees of emanations of the state can claim unlimited compensation by relying directly on the Equal Treatment Directive , it is likely that the legislature would have wished to restrict to as short a time as possible any difference between the rights of employees in the private sector and those in the `public' sector: see Foster v British Gas Plc [1991] ICR 84 .Further, we can see no distinction in principle between the unfairness complained of, and the application of interest to awards made after the act was done. In each case the employer will have been making decisions upon a false basis. In each case the liability is greater than would have been estimated. Here, for example, the amount of the interest exceeded the difference between a claim limited by the Act and one which was not so limited. If one was unfair, both were.Finally, it seems to us that the Courts should be slow to construe a legislative provision in a way which perpetuates a breach of community law for longer than is necessary. Faced with two possible starting dates this Tribunal prefers the date which most closely gives effect to the rights and obligations of Parliament under the European Communities Act 1972 .On balance, therefore, we are not minded to say that the construction of the Regulations contended for on behalf of the appellant produces any significant unfairness such that we should arrive at a conclusion different to that which the other considerations we have referred to suggest. Accordingly, we conclude that Regulation 2 of the Regulations did apply at the date of the Industrial Tribunal's award on 26 January 1994. There was, therefore, at that date no limit to be applied to it.2. The amount of the Industrial Tribunal's AwardIn any case such as the present, the Industrial Tribunal is required to undertake a task which is fraught with uncertainty. For reasons which do not need to be elaborated here, as they were fully canvassed in Ministry of Defence v Cannock [1994] ICR 918, the task of the Industrial Tribunal must be to seek to put the employee into the position she would have been in had the wrong not been done to her. To that end, they must ask themselves what would have happened had the dismissal not taken place; and must have regard to what has actually happened since the dismissal, and assess the loss. This will require the Tribunal to consider a whole range of factors, and often what the Tribunal does is to weigh them and say, in effect, "doing the best we can we consider a fair and just award to be this amount". Over-sophistication in the process will often itself lead to injustice to one party or the other. In our view the Industrial Tribunal have not obviously misdirected themselves.The facts of this case were not usual. The appellant said she wanted to go back to work after her baby was born, but did not do so as she felt that her employers were in breach of her contract and repudiated it. By a majority, that argument prevailed. However, in their unanimous award of compensation, they noted that some four months later, in about September, the appellant's husband was offered promotion and the two of them decided that the family needs at that time were best met by the appellant staying at home to look after their baby, who was some 9 months old. Although the Industrial Tribunal's Decision pre-dated Cannock , it seems to us that we cannot say that there was any material misdirection in awarding the appellant four months' loss of wages. It must be clear to all of us who have sat on panels as judges of fact that there are compromises to be struck and adjustments made. This industrial tribunal made a number of awards under different heads, as the figures show. The tribunal would have been quite entitled to have regard to the totality of the award under all the different heads, and we are not satisfied that on the facts of this case we can pick out just one element of the award and say that it is manifestly too low. Looked at overall, we have no reason to believe that the award is other than just and fair compensation for what happened.As to the argument that the appellant should have been awarded a small sum of about £100 to compensate her for the fact that she will need to work for two years before she can build up a bank of employment necessary to protect her from being unfairly dismissed in the future, we reject it. There is no rule of law which requires such a head of compensation to be awarded and no need for an Industrial Tribunal to spell out why sums were not being awarded. Because no mention is made of this item in their Decision, we are not prepared to hold that the Industrial Tribunal did not consider it.Accordingly, it seems to us that the appeals on questions 2 & 3 are simply appeals on facts dressed up as appeals on points of law and they are dismissed.The result therefore is that the appeal allowed and for the figure of compensation awarded of £8,925 we will substitute a figure of £10,315.54, that being the amount of compensation assessed by the Industrial Tribunal before the limit was applied.There will be liberty to apply.