Evans v Gateacre Community [1996] UKEAT 798_95_2501

EAT

Evans v Gateacre Community

[1996] UKEAT 798_95_2501 · 1996-01-25

JUDGE SMITH QC :

This is an application for leave to proceed to a full hearing by Mr James Evans against the decision of an Industrial Tribunal originally promulgated on 17 July 1995 when the Industrial Tribunal decided that the Respondent, the Liverpool City Council, should pay to the Applicant compensation in a sum of the order of some £16,000. They held that the compensatory award was subject to the limit presented by section 75(1) of the Employment Protection (Consolidation) Act 1978 and that s.74(8) did not apply to the calculation.

By a very recent and very careful reasoned review decision in relation to that award, which was promulgated only on 22 January 1996 and which we have been able to consider this morning, the Industrial Tribunal has enhanced the basic award somewhat but disallowed the review on the point that has been argued again by Mr Evans before us today, namely, putting it shortly, that the Industrial Tribunal were wrong, so it was submitted to them and so it has been submitted to us, to cap that part of the compensatory award which related to the amounts which had been specified as due to be paid under section 69(2)(a) of the Employment Protection (Consolidation) Act 1978 when the order for reinstatement was made.

It is quite apparent that the point of law which we have to consider and which the Industrial Tribunal had to consider on the review, is whether the full effects of the cap or limit which is set out in section 75 of the Employment Protection (Consolidation) Act 1978 applies or whether the new sub-section (8) in section 74 applies to Mr Evans' case, so that the cap or limit is limited in a way that allows the amount specified under section 69(2)(a) not to be subject to the limit. That is the matter which we have to deal with again today. We have to decide whether it is arguable that the IT have erred in law in failing to apply s.74(8).

The circumstances that lead up to the award of compensation are very unfortunate and give rise to a situation where we have considerable sympathy for Mr Evans. He was employed as a teacher at the Gateacre School under the authority of the Respondents, the Liverpool City Council and, of course, under the responsibility of the Governing Body of that School and he was dismissed by the Respondents on 31 December 1992 on the grounds of alleged misconduct, allegedly relating to alleged racist remarks of some kind. As a result, of course, he brought proceedings for unfair dismissal before the Industrial Tribunal and succeeded in establishing his case that his dismissal had been unfair.

In the course of those proceedings, as indeed was quite clear, it was established that the effective date of termination - the dismissal date - was 31 December 1992, although those proceedings for unfair dismissal were ultimately decided by the Industrial Tribunal in or about December 1993.

The Industrial Tribunal held, as I have already said, that the dismissal was unfair and at a further hearing, which took place in March 1994, they ordered pursuant to section 69 of the Employment Protection (Consolidation) Act 1978 that the Applicant should be reinstated with effect from the Autumn Term 1994, which I interpreted as being September 1994 (t matters not precisely) but certainly from the Autumn Term 1994. The terms of that decision are quite clear: that:

"(a) the applicant be reinstated to his post of Assistant Teacher of Science at Gateacre Community Comprehensive School. (b) such reinstatement to take effect from the commencement of the Autumn Term 1994 and to be at Point 9 of the Common Pay Spine and with the benefit of such increases in pay as are detailed in the Appendices `A' and `B' to this decision. (c) the applicant to be treated in all respects as if he had not been dismissed, and his contractual rights in relation to pay, seniority, holidays and pensions to be restored to him. (d) the applicant to be paid all arrears of pay, from the date of his dismissal to the date of reinstatement, at the rate shown in Appendices `A' and `B'; any earnings received by the applicant from other employment ... to be set off ..."

and that there be liberty to apply to the Industrial Tribunal.

That was a very clear decision and it included within it the specification of the amounts that were to be paid between the date of the dismissal and the date when the order to reinstatement was to take effect in accordance with section 69(2)(a) of the 1978 Act.

It is perfectly clear on reading that decision that in making that order at that time the Industrial Tribunal had regard to the issue of practicability in making that decision ordering reinstatement.

It is apparent that the Governors of the School had plainly decided that they would not comply with any such order of reinstatement, even before it had been made. Such has remained the attitude of the Governors, as we understand the position from the findings of the Industrial Tribunal, ever since. As a result of that attitude of the Governors and, of course, consequently, the Liverpool City Council, the matter of remedy had to go back to the Industrial Tribunal and in May 1995 the Industrial Tribunal had to reconsider its earlier order of reinstatement and to consider once again whether, in their judgment, it remained practicable for the Respondent employers to comply with such an order. Having made a careful consideration once again of the issue of practicability, the Industrial Tribunal upheld its earlier order of reinstatement and in the light of the Governors continued attitude of non-compliance with the order for reinstatement, the Industrial Tribunal had to appoint a further hearing to assess compensation. That is how, of course, they came to make their decision which was promulgated with regard to the calculation of compensation on 17 July 1995, which we referred to at the beginning of this judgment.

Compensation, of course, fell to be assessed under section 71(2)(a) and (b) of the 1978 Act, namely: compensation for unfair dismissal, calculated in accordance with section 72 to 76 of the Act consisting, of course, of a basic award calculated under section 73 and a compensatory award calculated under section 74, together with an additional award calculated under section 71(2)(b).

The compensatory award to be calculated under section 74 would, of course, include within it the amounts specified by the Industrial Tribunal pursuant to its earlier order promulgated in July 1994, which we have already referred to in detail, specifying amounts in accordance with section 69(2)(a) of the Employment Protection (Consolidation) Act 1978 and the question which has been raised on the review of the Industrial Tribunal order and again has been argued before us as giving rise to what it is submitted is an arguable ground of appeal, is whether the new sub-section 74(8), which was substituted by section 30 of the Trade Union Reform and Employments Rights Act 1993 applies in this Applicant's case so as to allow the normal limit or cap on compensatory awards set out in section 75 to be exceeded as the sub-section provides in order to enable that award fully to reflect the amount specified by the Industrial Tribunal as payable under section 69(2)(a).

The Industrial Tribunal held, in what we regard as a correct and carefully-reasoned decision on review, that the new section 74(8) did not have retrospective effect so as to apply to the circumstances which they found they had to deal with in the applicant's case, so that regrettably the limit in section 75 had fully to apply as though section 74(8) had not been enacted. In other words, on the basis that section 74(8) was not retrospective. Whether their decision is correct entirely depends upon when section 74(8) came into force and that, in turn, requires us to look at the transitional provisions relating to the 1993 Act and relating to section 30 in particular.

We pause before embarking on that exercise simply to say this, that there is no need here for any precise calculation to be done. We assume on the figures that were section 74(8) to apply, this Applicant would receive a considerably higher compensatory award. Looking at the figures and, in particular, at the amounts which appear to have been specified in accordance with section 69(2)(a) by this Industrial Tribunal that would certainly seem to be the case.

We should also mention that we have, of course, taken into account the circumstances which gave rise to the amendment of section 74(8). Those are clearly set out in Harvey at D2439 and they were also correctly referred to in the Industrial Tribunal's recent review decision. Put shortly, the position was, prior to the amendment, as set out in Harvey as indicated above:

"as well as the additional or special award an employee not reinstated or re-engaged is entitled to compensation in the usual way. That, however, is subject in the normal case to a maximum figure. Exceptionally, that maximum figure is lower than the sum which the employer is required to pay in compliance with the order. [By which, of course, is meant the reinstatement or re-engagement order.] In Conoco UK) Ltd v Neal [1989] IRLR 51 this led the EAT to conclude that instead of seeking an additional award under the statute, the employee could try to enforce the order in the County Court. However, in O'Laoire v Jackel International [199]IRLR 70, [1990] ICR 197 the Court of Appeal held that Conoco was wrongly decided and that the only remedy was pursuant to the statute. The court [of appeal] did, however, criticise the result, which positively discouraged employers from complying with the order and acted as an injustice to higher paid employees.

In response to the criticism [the 1993 Act] amended the EP(C)A by inserting s74(8) ..."

That is the background to the position and those are the circumstances in which section 74(8) came to be substituted by section 30.

Section 30 itself came into force on 30 August 1993. As we have said earlier, this is a case which often makes for bad law namely a transitional case - we are speaking now about the Applicant's case - because whilst the dismissal took place before section 30 of the 1993 Act came into force the finding of unfair dismissal, the order for reinstatement and, of course, the order made calculating the compensatory award, the basic award, and the additional award, all came well after the Act had come into force. So it is argued before us by Mr Evans that it is at least an arguable point that in the light of that the Industrial Tribunal erred in not deciding that the section 75 limit was subject to the new section 74(8).

We repeat that we have considerable sympathy with the Applicant's position and appreciate that it is both a considerable hardship to him and also an undeserved and unintended benefit to the Respondents if the capping applies unamended. However, in our judgment it is quite plain as a matter of law and, ultimately, this is a matter of law in our judgment, that the Industrial Tribunal was right to conclude in its recent review that the matter is put beyond doubt by the provisions of the Trade Union Reform and Employment Rights Act 1993 (Commencement No. 1 and Transitional Provisions) Order 1993 and in particular by article 3, which is headed "Transitional Provisions". This is a statutory order which is concerned to deal precisely with the situations of the kind that this particular instant application gives rise to, namely, a transitional situation. By paragraph 11 it is provided as follows:

"The amendments of the 1978 Act made by sections 24(2) and (3) (to the extent that they are brought into force by this Order), 28, 29 and 30 [which is the one, of course, that we are concerned with because it is that section that substituted the new section 74(8)] of ... the 1933 Act shall apply to any dismissal where the effective date of termination (as defined in the 1978 Act) in relation to that dismissal falls on or after 30 August 1993."

In our judgment it is quite clear that this new provision, section 74(8), as a direct result of the plain interpretation of the transitional provisions, only applies to a dismissal where the effective date of determination falls on or after 30 August 1993. In other words, it is not retrospective in respect of pre-30 August 1993 dismissals, where the effective date of termination is pre-30 August 1993.

Mr Evans has submitted to us that this in the highest degree unfair, that it works injustice as far as he is concerned and it does not say any way that it only applies to dismissals where the effective date of termination is before 30 August 1993.

We quite understand the first aspect of that submission but we regret that we cannot accept the second limb on that submission. There is just no way in which we can interpret this particular paragraph as in some way implying that, despite its plain wording, persons who have been dismissed where the effective date of termination is before 30 August 1993 can have the benefit of this new piece of law. Accordingly, we regret to say that applying the test which we have to do, that is to say, whether there is any arguable point of appeal because it is only so far as that that the Applicant has to go - we regret that we are unanimously of the view that there is no arguable point of law which arises and, therefore, there is no arguable ground of appeal.

However, the matter does not quite end there because we note that the Industrial Tribunal in paragraph 12 of its review decision expressed the view, especially through one of the lay Members of the Tribunal, that:

"the respondent might see fit to improve, voluntarily, upon the amount which the applicant is to receive."

The Industrial Tribunal had recorded earlier in their reasons that the eventual outcome of this claim, as recorded on their Review, obviously, and for the technical reasons stated, fell short of what the Applicant might have wished for, bearing in mind, as the Industrial Tribunal put it, the catastrophic effect that the events recorded in the Tribunal's earlier decisions had clearly had upon his career.

The Industrial Tribunal, having considered this matter with care and sympathetically, as we hold, over a number of prolonged hearings, were, in our judgment, uniquely in a position to assess the extent of the adverse effect that these decisions had had upon this particular Applicant's career.

In those circumstances, we entirely wish to echo those views of that Tribunal, as expressed in the final paragraph of the Review decision. In our respectful and considered view, the Respondent City Council would be acting both properly and fairly in deciding that their proper course in all the circumstances here, was to honour this award as though the new legislation applied . Indeed, it might be said that that was the least that they could do in the circumstances, especially having regard to the criticisms that were made by the Court of Appeal of the state of the law which, in effect, allowed employers to cock a snook at reinstatement orders under the Employment Protection legislation, so that we hope, and indeed, expect that this matter will be the subject of very careful scrutiny and consideration at the highest level within the Liverpool City Council.