MR A M GENTLE (2) MR J G H RACKSTRAW (3) MR S G ROBINSON v PERKINS ENGINES PETERBOROUGH LTD (FORMERLY PERKINS GROUP LTD) [2001] UKEAT 541_01_2507

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2001] UKEAT 541_01_2507Case No Appeal No. EAT/541/01Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR A M GENTLE (2) MR J G H RACKSTRAW (3) MR S G ROBINSONAPPELLANTPERKINS ENGINES PETERBOROUGH LTD (FORMERLY PERKINS GROUP LTD)RESPONDENT
Before
His Honour Judge Peter Clark Mr P M Smith Miss D WhittinghamDate 25 July 2001
[1]APPEARANCES For the Appellants MR ROBINSON (The Third Appellant) On behalf of the Appellants For the Respondent MR SEAN JONES (of Counsel) Instructed By: Mr J Chamberlain Messrs Wragge & Co Solicitors 55 Colmore Row Birmingham B3 2AS JUDGE PETER CLARK : This is an appeal by Messrs Gentle, Rackstraw and Robinson against a remedies decision promulgated with extended reasons by a tribunal sitting at Bedford under the chairmanship of Mrs C. Tribe on 7 March 2001, following a hearing held on 19 February 2001 (The relevant decision). In order to understand the nature of the appeal it is first necessary to outline the tortuous history of these proceedings. Background[2]The three appellants were employed by the respondent, Perkins Engines Peterborough Ltd until their dismissals, purportedly on the grounds of redundancy, on 8 November 1991. Each then received a statutory redundancy payment based on his age and length of service.[3]Following their dismissals each embarked on these proceedings, alleging unfair dismissal, by Originating Applications presented on 17 January 1992.[4]The initial hearing, spread over seven days between September 1992 and January 1993, before a tribunal chaired by Mr W.B. Carruthers, culminated in a decision promulgated on 4 March 1993 dismissing all three complaints.[5]Following a determined campaign, including appeals to the EAT, the appellants eventually succeeded in overturning that decision on a second review hearing before the tribunal in September 1998. The dismissals were then held to have been unfair. An important feature of that review decision was that the tribunal was persuaded that the respondent had placed false documents before the tribunal at the original hearing.[6]Next came the question of remedies. Each appellant sought reinstatement, alternatively re-engagement by the respondent. On 11 March 1999 the tribunal declined to grant either of those remedies on the grounds that there had been a loss of trust and confidence between the parties rendering it impracticable for reinstatement or re-engagement to take place. Instead, by a decision promulgated with extended reasons on 5 April 1999 each was awarded compensation in the sum of £10,000, the maximum compensatory award available at the date of their dismissal.[7]Against the refusal to order reinstatement or re-engagement the appellants appealed successfully to the EAT. In a judgment delivered by Lindsay P on 12 June 2000 the tribunal's refusal to order reinstatement/re-engagement was set aside and the question of remedies remitted to a fresh tribunal.[8]The remitted hearing took place before Mrs Tribe's tribunal on 19 February 2001, following a directions hearing held before that Chairman on 3 November 2000. The respondent did not oppose reinstatement orders in each case. Accordingly such orders were made, to take effect on 5 March 2001. Further, the respondent indicated that it would not comply with those orders. It was agreed that in those circumstances, to avoid coming back to the tribunal after the date for compliance had passed, the tribunal would then and there assess compensation for non-compliance. By the relevant decision the tribunal held that, in addition to the £10,000 already paid under the decision dated 5 April 1999, the appellants would each receive additional awards of 26 weeks' pay at the rate of £240 per week; that is, £6,240 each. It is against the award of compensation that these appeals are brought, coupled with an appeal against the tribunal's refusal to order costs in favour of the appellants. Legislative history[9]We begin with the position as at the effective date of termination (EDT) in these cases, 8 November 1991.[10]Under the Employment Protection (Consolidation) Act 1978 (the 1978 Act) an industrial tribunal's power to order reinstatement of an unfairly dismissed applicant was contained, first in section 69. In addition to ordering his reinstatement, that is, requiring the respondent employer to treat him in all respects as if he had not been dismissed, the tribunal could order payment of lost benefits, including arrears of pay, between the EDT and the date for reinstatement. Section 69(2).[11]If the employer failed to comply with the reinstatement order, the tribunal was required, by section 71(2) to make an award of compensation for unfair dismissal calculated in accordance with sections 72-76, to be paid by the employer to the employee, together with an additional award, in the ordinary case, of 13-26 weeks' pay. A week's pay was then subject to a maximum of £198 (SI 1991/464).[12]Sections 72-76 provided for the payment of a basic award, equivalent to a redundancy payment and a compensatory award, subject to the statutory maximum imposed by section 75(1). When the 1978 Act was passed the statutory maximum was £5,200. That figure was increased over the years in line with inflation and for dismissals falling within the period 1 April 1991 to 31 May 1993 it stood at £10,000 (SI 1991/466).[13]That regime created an anomaly. It could be cheaper for an employer to refuse to reinstate the employee if the arrears of pay and other benefits calculated under section 69(2)(a) exceeded the statutory maximum under section 75(1).[14]The EAT, under Wood P, sought to correct that anomaly in Conoco (UK) Ltd v Neal [1989] ICR 114 by holding that where the employer failed to reinstate the employee the benefits ordered under section 69(2)(a) became payable. The employee was not restricted to an award under section 71(2), as limited by section 75(1).[15]Conoco was expressly disapproved by the Court of Appeal in O'Laoire v Jackel International Ltd [1990] ICR 197. Lord Donaldson MR, giving the leading judgment, held that the only remedy for non-compliance with a reinstatement order lay under section 71. He pointed out (207 F-G) the injustice caused to an employee whose loss of benefits greatly exceeded the statutory maximum under section 75(1) and invited Parliament to review the position.[16]That invitation was taken up by section 30(3) Trade Union Reform and Employment Rights Act 1993 (the 1993 Act), which inserted a new section 74(8) into the 1978 Act. That new provision disapplied the limit under section 75(1) where the amount payable under section 69(2)(a) exceeded that maximum award.[17]The 1993 Act came into force on 30 August 1993. The relevant commencement order (SI 1993/1908) (the 1993 Order) provided, by paragraph 3(11), that the amendment only applied to dismissals falling on or after 30 August 1993.[18]The 1978 Act was replaced by a new consolidating statute, the Employment Rights Act 1996 (the 1996 Act). Meanwhile, the statutory maximum under section 75(1) of the 1978 Act (now section 124(1) of the 1996 Act) continued to rise in line with inflation from time to time. For the period 1 June 1993 to 26 September 1995 (SI 1993/1348) the limit was increased to £11,000; from 27 September 1995 it rose to £11,300 (SI 1995/1953) and then to £12,000 from 1 April 1998 to 24 October 1999 (SI 1998/924). In each case the increase applied to dismissals falling within the relevant period and not before.[19]More substantially, section 34(4) of the Employment Relations Act 1999 (the 1999 Act), increased the maximum compensatory award under section 124(1) of the 1996 Act from £12,000 to £50,000 with effect from 25 October 1999. The relevant commencement order, SI 1999/2830 (the 1999 Order), provided, by Schedule 3, paragraph 8, that the increase applied only to cases where the EDT fell on or after 25 October 1999.[20]The limit under section 124(1) of the 1996 Act has most recently been increased to £51,700 by SI 2001/21 (the 2001 Order) in cases where the EDT falls on or after 1 February 2001.[21]Section 124(4) of the 1996 Act now provides:
"(4) Where – (a) a compensatory award is an award under paragraph (a) of subsection (3) of section 117, and (b) an additional award falls to be made under paragraph (b) of that subsection, the limit imposed by this section on the compensatory award may be exceeded to the extent necessary to enable the aggregate of the compensatory and additional awards fully to reflect the amount specified as payable under section 114(2)(a) … ."
[22]Pausing there, section 124(4) re-enacts section 74(8) of the 1978 Act, as inserted by section 30(3) of the 1993 Act, and section 114(2)(a) of the 1996 Act re-enacts section 69(2)(a) of the 1978 Act.[23]Section 117(3) of the 1996 Act (formerly section 71(2) of the 1978 Act) provides, where the complainant is not reinstated under an order made under section 113 (formerly section 69 of the 1978 Act), for an award of compensation for unfair dismissal, calculated in accordance with sections 118 to 127A and an additional award of between 26 and 52 weeks' pay.[24]The increase from 13-26 to 26-52 weeks pay by way of additional award was effected by section 33(2) of the 1999 Act, again in relation to dismissals where the EDT falls on or after 25 October 1999 by virtue of Schedule 3, paragraph 8 of the 1999 Order.[25]As to the definition of a week's pay, by section 227 of the 1996 Act the maximum is £240 for the basic award where the EDT falls on or after 1 February 2001 (section 227(1)(a)), but for the purposes of an additional award (section 227(1)(b)) the relevant date is the date on which an order for reinstatement under section 114(2)(c) is to take effect. Section 227(1) of the 1996 Act was formerly to be found in Schedule 14 paragraph 8(1) to the 1978 Act.[26]Finally, we would observe that an order for reinstatement will revive the contract of employment, earlier terminated on dismissal, only if it is fully complied with; if not, the EDT remains as at the original dismissal. The relevant decision[27]Having considered the legislative background Mrs Tribe's tribunal concluded:(1) that the appellants could not rely on what was section 74(8) of the 1978 Act (now section 124(4) of the 1996 Act) to disapply the statutory maximum contained in what was section 75(1) of the 1978 Act, now section 124(1) of the 1996 Act, because the EDT, 8 November 1991, preceded the coming into effect of section 30(3) of the 1993 Act on 30 August 1993. Thus the award of compensation was limited to £10,000 by virtue of the 1991 Order. That sum had already been paid to the appellants following the earlier tribunal decision dated 5 April 1999.(2) that each appellant should receive 26 weeks' pay by way of an additional award, the amount of each week's pay being limited to £240. They regarded that award as being the maximum permitted by law. The increase from 13-26 weeks to 26-52 weeks' pay applied only to dismissals taking effect on or after 25 October 1999; however, the amount of a week's pay was tied to the date on which the reinstatement order was to take effect, 5 March 2001.(3) that no order for costs should be made under rule 11( sic ), (rule 12) of the Employment Tribunal Rules of Procedure 1993. The Appeal Compensation[28]The principal point taken by Mr Robinson on behalf of the appellants focuses on the true meaning and effect of the 2001 Order, which came into force on 1 February 2001, coupled with the provisions of the 1996 Act, on the facts of this case.[29]We should refer to the following provisions of Article 4 of the 2001[30]We have omitted reference to the provisions relating to an employer's failure to fully comply with the terms of an order for reinstatement (1996 Act, section 117(1), (2)). That is not the position in this case. Here, the respondent has not reinstated the appellants pursuant to the order made by Mrs Tribe's tribunal; thus the position, under the 1996 Act, is governed by the provisions of section 117(3), formerly section 74(8) of the 1978 Act, inserted by section 30(3) of the 1993 Act, and before that amendment, section 71(2) of the 1978 Act, subject to the limit imposed by section 75(1). See O'Laoire v Jackel .[31]The submission advanced by Mr Robinson runs in this way. Under the transitional provisions of the 2001 Order the appropriate date, by virtue of Article 4(f), in the case of an award under section 117(3) of the 1996 Act, is the date by which the order of reinstatement should have been complied with, 5 March 2001. Since, at that date, section 117(3)(a) provides for an award of compensation for unfair dismissal in accordance with sections 118 to 127A, the appellants may rely upon section 124(4) of the 1996 Act, which provides for a compensatory award under section 117(3)(a), together with an additional award of 26-52 weeks' pay (section 117(3)(b)). The EDT, relevant for the purposes of Article 4(e), does not apply in this case.[32]Accordingly the appellants are entitled to recover their loss between dismissal and the date on which reinstatement was ordered, ie 8 November 1991 until 5 March 2001, to include the additional award (see 1996 Act. Section 124(4)), to reflect the order made by Mrs Tribe's tribunal under section 114(2)(a) of the 1996 Act. Thus the compensation due to the appellants is, on their case, calculated respectively as follows; Mr Gentle, excluding pension shortfall, £151,848; Mr Rackstraw, similarly £229,802 and Mr Robinson, including pension shortfall, £391,599. In each case credit will be given for the total sums awarded to each appellant on earlier occasions, £16,240. Those figures are not necessarily agreed by the respondent, but we record them to give some idea of the practical difference to the parties between the approach taken by Mrs Tribe's tribunal, the subject of this appeal, and the sort of award which the appellants may expect if their appeal succeeds.[33]We reject the appellants' submission for the following reasons:(1) The 2001 Order was made by the Secretary of State pursuant to his powers granted by section 34 of the 1999 Act. Section 34 introduced, for the first time, compulsory indexation of the maximum level of certain awards under the employment legislation. Earlier increases, as we have seen, were arbitrary and were not annual. For the future, section 34 provided for annual indexation based on a formula tied to the retail prices index. The first order made under section 34 was SI 1999/3375, which came into force on 1 February 2000 and increased, inter alia, the amount of a week's pay from £220 to £230, but did not alter the maximum compensatory award under section 124(1) of the 1996 Act from £50,000. The next order was the 2001 Order. It follows that the 2001 Order made no alteration to a complaint's right to an award under section 117(3) of the 1996 Act (as to which, see below); it merely increased, so far as may be material: (a) the limit on the compensatory award for unfair dismissal under section 124(1) from £50,000 to £51,700; Schedule paragraph 5 and (b) the maximum amount of a week's pay for the purpose of calculating the basic or additional award of compensation for unfair dismissal or redundancy payment under section 227(1) of the 1996 Act; Schedule paragraph 7. The significance of the transitional provisions under Article 4 is that, whereas the "appropriate date" for calculating the basic award and the compensatory award is the EDT (Article 4(e)); the appropriate date for calculating a week's pay for the purposes of the additional award is the date by which the order of reinstatement had to be complied with. (Article 4(f)). Thus, in the present case, the limit for the compensatory award and the basic award/redundancy payment is the EDT, 8 November 1991, respectively £10,000 and £198 per week; the limit of a week's pay for the additional award is that applying on 5 March 2001, £240. That, in our judgment, is the full effect of the 2001 Order on the facts of this case.(2) It is correct, as Mr Robinson submits, that the relevant statute in force at the time the reinstatement order was made was the 1996 Act. That was, as we have earlier observed, a consolidating statute. It contained certain transitional provisions. In particular, as Mr Jones points out, Schedule 2, paragraph 3 to the 1996 Act provides that:
"Any reference (express or implied) in this Act or any other enactment, or in any instrument or document, to a provision in this Act is (so far as the context permits) to be read as (according to the context) being or including in relation to times, circumstances and purposes before the commencement of this Act a reference to the corresponding provision repealed or revoked by this Act."
[34]We understand that provision to mean, in simple terms, that the enactment of the 1996 Act and the consequent repeal of the 1978 Act did not alter the position as it was under the latter Act prior to the passing of the 1996 Act. That means:(a) the complainant cannot rely upon sections 124(4)(a) and 117(3)(a) of the 1996 Act to disapply the maximum compensatory award provided for under section 124(1), unless the EDT fell on or after 30 August 1993, when section 74(8) was inserted into the 1978 Act by section 30(3) of the 1993 Act, by virtue of paragraph 3(11) of the 1993 Order, and(b) the maximum compensatory award under section 124(1) is, consistent with section 75(1) of the 1978 Act, £10,000 in line with SI 1991/466.(c) the additional award limits of 13-26 weeks, provided for in section 71(2)(b)(ii) of the 1978 Act, remained in force under section 117(3)(b) of the 1996 Act until that provision was altered to 26-52 weeks by section 33(2) of the 1999 Act, but only in respect of dismissals taking effect on or after 25 October 1999 by virtue of Schedule 3 paragraph 8 of the 1999 Order.[35]It follows, in our judgment, that the tribunal was correct to hold that the maximum compensation due to these appellants for the respondent's refusal to comply with the reinstatement orders on 5 March 2001 was:(1) a compensatory award under section 124(1) of the 1996 Act and Article 4(e) of the 2001 Order of £10,000 (already paid),(2) an additional award of 26 weeks' pay at the rate of £240 per week; £6,240.[36]That is what the tribunal ordered. The appellants are not entitled to any further sums by way of compensation, having received the equivalent of their basic award entitlement by way of statutory redundancy payments following dismissal.[37]In these circumstances we dismiss the substantive part of the appeal. Whilst on the face of it complicated, we think that the scheme of the legislation is clear; in a nutshell the appellants are to be compensated in every respect as they would have been immediately following dismissal on 8 November 1991, had a reinstatement order then been made and not complied with, save that the week's pay for the purpose of calculating the additional award is that applicable on the date reinstatement was in fact ordered.[38]Finally, we are conscious that this result will appear unjust to the appellants. They have battled for almost ten years to achieve their entitlement; an order for reinstatement consequent upon a finding of unfair dismissal. It is, in these circumstances, doubly harsh that they find themselves the victims of a lacuna, identified in O'Laoire v Jackel , so many years later. However, we are satisfied that our construction of the legislation also complies with the general principle, to which Mr Jones referred, that Parliament does not intend new legislation to have retrospective effect unless it specifically says so. Costs[39]Mr Robinson contends that Mrs Tribe's tribunal should have ordered the respondent to pay the appellants' litigant in person costs in respect of the interlocutory hearing before Mrs Tribe held on 3 November 2000 and the full tribunal remedies hearing held on 19 February 2001. Earlier costs orders had been made in the previous tribunal's decision promulgated on 5 April 1999. We shall not interfere with the tribunal's refusal to order those costs for the following reasons:(1) The respondent's case on compensation for non-reinstatement was accepted by the tribunal and the appellants' case rejected, correctly in our judgment.(2) Costs may only be awarded in accordance with the provisions of rule 12. They do not follow the event.(3) Under rule 12, the tribunal has a wide discretion with which we, on appeal, can only interfere where an error of law is made out. It cannot be said that the respondent's stance in contesting, successfully, a total additional claim for compensation in excess of £700,000 in these three cases was in any way frivolous, vexatious or otherwise unreasonable for the purposes of rule 12(1). Accordingly, the tribunal's exercise of discretion cannot be impugned. Conclusion[40]It follows that these appeals must be dismissed.

Order

"Transitional provisions 4(1) The increases provided for in article 3 have effect in any case where the appropriate date falls on or after 1 February 2001. (2) In a case where the appropriate date falls before 1 February 2001, the limits having effect in relation to the case immediately before 1 February 2001 continue to apply.