MIDLAND MAINLINE v MR C M WADE [2002] UKEAT 1382_01_0411

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2002] UKEAT 1382_01_0411Case No Appeal No. EAT/1382/01Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MIDLAND MAINLINEAPPELLANTMR C M WADERESPONDENT
Before
His Honour Judge J McMullenDate 4 November 2002
[1]APPEARANCES For the Appellant MR THOMAS LINDEN (of Counsel) Instructed by: Engineering Employers Federation Broadway House Tothill Street London SW1H 9NQ For the Respondent MR COLIN BOURNE (of Counsel) Instructed by: Messrs Pattinson & Brewer Solicitors 1-2 Bridge Street York YO1 6WD HIS HONOUR JUDGE J McMULLEN QC Introduction This case is about compensation for unfair dismissal and disability discrimination. We will continue to refer to the parties as Applicant and Respondent. It is an appeal by the Respondent in proceedings against a Decision of an Employment Tribunal sitting at Sheffield, Chairman Mr G R Little, promulgated with Extended Reasons on 7 September 2001.[2]The Applicant was represented there by Mr Bourne of Counsel, and in all subsequent proceedings. The Respondent was represented at some of the proceedings in the Employment Tribunal by an officer of the EEF, and by a solicitor, and today by Mr Linden, of Counsel.[3]The Applicant claimed unfair dismissal and disability discrimination. A number of other claims were made but not pursued and were dismissed at the merits hearing on 27 and 28 July 2000. The Applicant succeeded on his claims of unfair dismissal and unlawful disability discrimination.[4]The essential issue before the Employment Tribunal in the Decision under appeal was the assessment of compensation. The Employment Tribunal Decision included a further award to the Applicant for disability discrimination at a second remedy hearing. The Respondent appeals against that finding on grounds which we will set out below.[5]The Respondent is a train operating company. The Applicant was employed by it as a train manager from 28 August 1990 until the relationship ended by dismissal on notice which expired on 23 October 1999. The Applicant had been off sick with a condition known as mechanical back problem with nerve roots irritation for sixteen months. He was, it was conceded, disabled within the meaning of the Disability Discrimination Act 1995 . He was dismissed because of this and the dismissal was not justified. The Respondent failed to make reasonable adjustments for him. The Employment Tribunal found the Applicant to be a versatile person who could be given work which did not involve train duties, which he found a strain. The Employment Tribunal found that the Respondent did not carry out such procedures, medical examination and consultation, as a reasonable employer would, and upheld his unfair dismissal claim.[6]At a hearing before Miss Recorder Slade QC, and members, on 22 May 2002, a decision was made that this case should go to a full hearing. In Reasons sent to parties on 9 November 2000, the Employment Tribunal ordered re-engagement and in due course made an Order for the payment of arrears up to the date of re-engagement. The Tribunal made awards for disability discrimination and for unfair dismissal in different ways. The Respondent refused to comply with the re-engagement Order.[7]The Decision, which has been called the first remedy decision, involved an Order by the Employment Tribunal of re-engagement and arrears of pay, which in due course was adjusted on review to £19,695 plus £3000 which it described as injury to feelings, and interest on that sum. The date for compliance with the re-engagement Order was 29 December 2000. In our experience, re-engagement Orders are extremely rare. In this case, re-engagement was not complied with. On 23 January 2001, the Employment Tribunal adjusted the figure which we have given above, and on 2 March 2001, the Respondent paid the arrears of pay and the award for injury to feelings.[8]On 12 July 2001, the Employment Tribunal awarded an additional award of fifty two weeks pay, a basic award and compensation for disability discrimination plus interest. It is that second remedy hearing which is the subject of today's appeal. The Tribunal directed itself by reference to the relevant provisions of the Disability Discrimination Act and section 98 of the Employment Rights Act 1996 and leading authorities which are cited in its Extended Reasons on the merits hearing and to which in due course we will return.[9]The Respondent submitted that the Employment Tribunal have erred in law when it went on to make its second award in respect of disability discrimination. The issue was crystallised as being the failure by the Employment Tribunal to regard itself as bound by its earlier award. The Respondent's submission[10]Mr Linden's principal submission is that the Tribunal had completed its task at the first remedy hearing in respect of its finding of disability discrimination and was wrong to re-open the matter. There is no equivalent in disability discrimination legislation to a re-engagement Order. There was no indication in the first remedy Decision that its award of £3000 was provisional and the factors which the Tribunal took into account in its decision to award additional compensation include certain matters which might well be regarded as compensatory. A claim was made that the Tribunal had no jurisdiction. It is submitted that that claim ought to have been acceded to.[11]It was also argued by reference to the judgment of the Court of Appeal in London Borough of Lambeth -v- D'Souza [1999] IRLR 240 that what the Tribunal had decided at its first remedy hearing was a final Order and it could not be unpicked. The Tribunal made the point, it was submitted, that it could not have been envisaged at the time of the first remedy hearing that the Tribunal would come back and re-visit this matter. It was submitted that it is inherent in the compensation regime at the time that the statutory cap on compensation will mean that a person who has been treated unlawfully will not receive full compensation.[12]Finally it was submitted that the Tribunal could have approached the failure of the Respondent to comply with the re-engagement Order in a number of ways. It could have made clear that it was a provisional award in the first place; alternatively made an award expressly limited to injury to feelings; or made a recommendation that the Respondent take certain actions under the DDA or apply for a review. Ultimately, the sanction could have been made in the alternative so that if, at the first remedy, the Tribunal was alert to the possibility of a failure by the Respondent to comply, it could have made a further award. The Applicant's submission[13]For the Applicant, Mr Bourne contended that the circumstances here are distinguishable from D'Souza because the Tribunal itself has visited its earlier decision and interpreted what it meant. The Tribunal in D' Souza refused to re-open its earlier decision. It was contended that the Tribunal can make an award of a recommendation under the DDA ; it would be inappropriate for it to have to do that at the same time as it was making an Order for re-engagement which is a firmer Order than the rather loose language of a recommendation, and re-engagement carries its own enforcement regime and further compensation.[14]Mr Bourne submitted that the EAT should provide the necessary implication, as he put it, to the Decision of the Tribunal that the award it made was provisional and he pointed out that the Applicant ought to be compensated for all his losses flowing from unlawful discrimination. The combination of measures and procedures outlined by Mr Linden artificially caught the Applicant in a procedural network, the result of which, if Mr Linden's case were accepted, would involve an injustice. The legislation[15]The relevant provisions of the legislation are found in the Disability Discrimination Act section 8. This provides as follows:
"8(2) Where an [employment tribunal] finds that a complaint presented to it under this section is well-founded, it shall take such of the following steps as it considers just and equitable - (a) making a declaration ….. (b) ordering the respondent to pay compensation to the complainant ; (c) recommending that the respondent take, within a specified period, action appearing to the tribunal to be reasonable, in all the circumstances of the case, for the purpose of obviating or reducing the adverse effect on the complainant of any matter to which the complaint relates. (3) Where a tribunal orders compensation under subsection 2(b), the amount of the compensation shall be calculated by applying the principles applicable to the calculation of damages in claims in tort …… (4) For the avoidance of doubt it is hereby declared that compensation in respect of discrimination in a way which is unlawful under this Part may include compensation for injury to feelings whether or not it includes compensation under any other head."
[16]The Employment Rights Act provides for remedies on a finding of unfair dismissal. The Orders in sequence are for reinstatement, re-engagement, compensation. The choice of the Order is to be made clear to the applicant - see section 116. In this case the applicant sought re-engagement and was awarded that Order. A failure to comply with the Order triggers its own enforcement mechanism under section 117 which provides as follows:
"(1) An [employment tribunal] shall make an award of compensation, to be paid by the employer to the employee, if - (a) an order under section 113 is made and the complainant is reinstated or re-engaged, but (b) the terms of the order are not fully complied with. (2) Subject to section 124 […..], the amount of the compensation shall be such as the tribunal thinks fit having regard to the loss sustained by the complainant in consequence of the failure to comply fully with the terms of the order. (3) Subject to subsections (1) and (2) […..] if an order under section 113 is made but the complainant is not reinstated or re-engaged in accordance with the order, the tribunal shall make - (a) an award of compensation for unfair dismissal (calculated in accordance with sections 118 to [127A], and (b) except where this paragraph does not apply, an additional award of compensation of [an amount not less than twenty-six nor more than fifty-two weeks' pay],to be paid by the employer to the employee."
Section 123 provides as follows:
"……….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."
Section 124 provides a cap, which at the time of these proceedings was £12,000, on a compensatory award. Section 126 deals with double recovery and provides this:
"(1) This section applies where compensation falls to be awarded in respect of any act both under - (a) the provisions of this Act relating to unfair dismissal, and (b) any one or more of …….the Disability Discrimination Act 1995 (2) An employment tribunal shall not award compensation under any one of those ……Acts in respect of any loss or other matter which is or has been taken into account under [any of them] by the tribunal (or another [employment tribunal] ) in awarding compensation on the same or another complaint in respect of that act."
The provisions we have outlined above therefore provide separate codes for the treatment of the statutory torts of unfair dismissal and unlawful discrimination.[17]The relationship between those two regimes is at the centre of this appeal. In Morganite Electrical Carbon Ltd -v- Donne [1988] ICR 18 EAT , Mr Justice Hutchison and members had to consider the application of additional awards in the context of an award for re-engagement. It is said at page 28 as follows:
"It appears to us that there must be a wide discretion as to the matters that can properly be taken into account by an industrial tribunal in deciding where in the range of [now 26 - 52 weeks] the additional compensatory award should fall. Plainly one factor would ordinarily be the view that the tribunal takes of the conduct of the employer. We consider that it would also be material for a tribunal to take into account the extent to which its compensatory award has met the actual loss suffered by the claimant, and that it may be legitimate to reflect, as was the case here, that the statutory limit of £8,000 meant that the tribunal's view as to the true nature of the loss had to be cut down so as to accord with the statutory limit. What is plain is that in deciding where in that bracket to pitch the award, the tribunal must address its mind to the fact that it is a discretionary power, and must consider what factors ought properly to affect the exercise of that discretion."
[18]The approach to the principal issue in the case has, it seems to us, been determined by the judgment of the Court of Appeal in D'Souza . This was recorded by the Employment Tribunal as being the worst case of discrimination it had ever seen, and thus resulted in what was thought to have been the highest award of compensation, £358,288. The claim adjudicated by that Tribunal and which was upheld by the Court of Appeal when it reversed the Employment Appeal Tribunal's decision, concerned the lifting of the cap on race discrimination compensation by the Race Relations (Remedies) Act 1994 . The applicant, who had been awarded sums of money consistent with being within the statutory cap sought to re-open the matter upon the enactment of that provision. The Tribunal had been asked to consider whether its award of £3000 plus £2000 exemplary damage was sufficient and the Tribunal refused to consider the matter afresh.[19]The Employment Appeal Tribunal overturned that decision, but on appeal to the Court of Appeal, giving the judgment of the Court of Appeal,

Lord Justice Mummery held as follows, see paragraph 29 and following:

"(1) The summary dismissal of Mr D'Souza on 16 January 1990 occurred in circumstances which entitled him to remedies for (a) unfair dismissal under the Employment Protection (Consolidation) Act 1978 (now consolidated in the Employment Rights Act 1996); and (b) race discrimination and victimisation under the Race Relations Act 1976. Each Act provides for a particular right to be conferred …….. (2) Under the law applicable at the time of the industrial tribunal's decision in Mr D'Souza's favour following the hearing of 16 November 1992, the maximum award of compensation that could be made under the 1978 Act for unfair dismissal was capped …….. In a case of unfair dismissal - but not in a case of race discrimination - a further remedy was available; the remedy of reinstatement. The decision whether or not to award it had to have regard to a number of factors, including the practicability of compliance. (3) The initial decision on unfair dismissal ordered reinstatement. That decision, following the hearing of 16 November, also contained an award of compensation for race discrimination. Neither the terms of the extended reasons nor the terms of the decision set out at the beginning of the extended reasons indicated that the award of compensation for race discrimination was other than a final determination of the claims made by Mr D'Souza under the 1976 Act. The award of £5,000 for the infringement of his rights under the 1976 Act was not expressed to be interim, conditional or provisional. There was no express reservation of a right for the tribunal to reconsider that matter at any future or subsequent stage. …… (6) It was submitted on behalf of Mr D'Souza that the award of £5,000 was not a final determination of entitlement to compensation for race discrimination, but that it was provisional only and that the industrial tribunal was not functus officio in relation to the compensation for financial loss in respect of his claim for race discrimination. It was argued that the industrial tribunal reserved until a future date the final determination of Mr D'Souza's compensation, both under the 1976 Act and the 1978 Act. (8) I am unable to accept these submissions. In November 1992 the industrial tribunal applied the law in force at that time. They correctly did so. That is not in dispute. In 1995 the industrial tribunal correctly applied the relevant law in force at that time. The industrial tribunal were right not to apply the Race Relations (Remedies) Act 1994 to the determination of compensation for unfair dismissal. The 1994 Act only applied to cases where compensation was awarded for race discrimination after the Act came into force on 3 July 1994."
Commenting on counsel's submission on behalf of Mr D'Souza,

Lord Justice Mummery, with whom Lord Justice Thorpe and Lord Justice Stuart-Smith agreed, said:

"In brief, this is an impossible and impermissible attempt …."
The Employment Tribunal's Reasons[20]In the instant case, the starting point for the application of those authorities is the first decision on remedies, where the Tribunal made four decisions. The first and second are in respect of re-engagement and arrears of pay. The Tribunal then went on to say this:
"(c) there shall be an award of £3,000 to the applicant as compensation for injury to feelings. (d) there will be an award of interest thereon in the amount of £197.88"
[21]In its Reasons, the Tribunal said this:
"In respect of the unfair dismissal claim the applicant confirmed that he wished to seek the remedy he had sought in his Originating Application namely re-engagement. In respect of the disability claim that was for injury to feelings." "17 In relation to the applicant's claim to injury to feelings, we are assisted by the evidence that we heard from the applicant at the merits hearing."
It then took account of a number of factors, applied authorities and said this:
"Both representatives acknowledged that the appropriate award would be in the lower scale as referred to in the latter case……[ Tchoula -v- ICTS (UK) Ltd [2000] IRLR 643]. We award the sum of £3000 18. We consider that it would be appropriate to award interest (there was an application for it). Accordingly we have awarded interest for the period from the dismissal which, at our discretion, we take to be the relevant act of discrimination to commence the calculation period."
[22]The Employment Tribunal was then invited to return to this matter at its second remedy hearing, where it again made four decisions. In its third and fourth decisions it said this:
"The Applicant is entitled to a compensation for unlawful disability discrimination comprising of £8400 for immediate loss and £7800 for future loss, £750 in respect of lost travel concession, £993.96 in respect of the Share Option Scheme, and £2219.70 for pension, being a total award of £20,163.66."
Interest was awarded on top of that. The Tribunal, plainly, was making an award expressly under the Employment Rights Act and also under the Disability Discrimination Act. It decided to make the maximum award in respect of the failure by the Respondent to comply with its re-engagement Order, having addressed the circumstances as presented to it; there is no dispute about the correctness of that approach.[23]The Tribunal then went on to deal with what might be described as the compensatory element under the DDA. It said this:
"8 The next question is how the Tribunal should deal with the compensatory award. Specifically we are restricted to the remedy jurisdiction which flows from the Employment Rights Act 1996 and our finding that the applicant was unfairly dismissed, or are we at liberty to exercise our remedy jurisdiction under the Disability Discrimination Act 1995? This is a relevant matter as the respondent argues that the former should be the case and that in those circumstances any compensation which we award would be subject to the cap, which was £12,000 at the relevant time. The applicant has argued that we are not so inhibited and much has turned upon a case decided by the Court of Appeal"
And it referred to D'Souza.[24]The Tribunal therefore came to the conclusion as follows:
"The question for us is whether we in our earlier decision made a final determination of the discrimination remedy issue. 9 After considerable consideration of this matter the answer we have arrived at is that we did not shut the door in relation to disability discrimination compensation, in circumstances where quite clearly in terms our decision said that £3,000 was not to be the limit of compensation for disability discrimination claim, but was identified as part of that claim, namely injury to feelings. We look at what the Court of Appeal say in D'Souza and we note that there the industrial tribunal had not made and had not been asked to make an express reservation of its right to reconsider is the matter of discrimination remedy at a later stage. Whilst, there is no such express reservation in our decision we believe that the language used, is sufficient to represent our intention and support the decision which we now make based upon our earlier remedy decision. We acknowledge that we are being required to interpret our own decision now in the light of an eventuality which was not in our (nor perhaps the parties) contemplation at the time. 10. It follows that we consider it appropriate to approach the issue of the applicant's immediate loss"
So, the Tribunal there was alive to the point which has now been taken. The Tribunal's error[25]In our judgment, the Tribunal fell into an error. Guided by D'Souza , and acknowledging that the express reference is to the discrimination statute, reflecting an award of £3000, the Tribunal ought to have been bound by its earlier decision. It was not its function to interpret its own earlier decision. It acknowledged that what it was doing was catering for an eventuality which neither it nor the parties had foreseen. It asserted that the language of its decision was different from that in D'Souza , but in our judgment, there is no support for that. In particular, there is no support for the statement which we cited above, "quite clearly in terms our decision said that £3000 was not to be the limit of compensation for the disability discrimination claim but was identified as part of that claim".[26]Since the Tribunal, in its first remedy decision cited the specific claim made by the Applicant for a remedy under the Disability Discrimination Act as being an injury to feelings, and since it cited the common ground of the representatives about the higher and lower bands of awards, and since there are no words corresponding to those words used by the Tribunal and cited above, we are bound to say that the Tribunal erred in its approach to the earlier decision.[27]The Tribunal, in our judgment, had wrapped up the claim of disability discrimination by its finding in favour of the Applicant and by its award to him of compensation based upon the sole head which he had put forward, namely injury to feelings. It had left open the question of further compensation, as the statute obliges it to, for a failure to comply with an Order for re-engagement following a finding of unfair dismissal. In our view, the Tribunal had therefore concluded all matters relating to disability discrimination but had left open further argument and evidence, should its Order of re-engagement not be complied with, as indeed happened.[28]We, of course, recognise that the Applicant has been adjudged to have suffered losses, as set out above, and that there is considerable force in Mr Bourne's contention that that being the case, his client is entitled to compensation for the losses flowing from the unlawful discrimination. There can be no criticism of Mr Bourne's approach to the first and second remedies hearing. It would be artificial for an applicant to have to make plans for a recommendation under the discrimination statute that the Applicant be taken back into the employment, and at the same time to tread the firmer path of a re-engagement Order for unfair dismissal. Nevertheless, it is probably provident so to do.[29]It is also provident to invite the Tribunal to make an award provisional on the compliance with the Tribunal's Order by the Respondent. It was submitted by Mr Bourne that the conduct of Employment Tribunal proceedings could cause further awards of injury to feeling and it seems to us that there is substance in that point see Zaiwalla & Co -v- Walia [2002] IRLR 697 EAT. It has not been necessary fully to argue it before us or for us to decide it. A paradigm example of such greater injury occurring would be a case where an applicant had a re-engagement Order which was not observed by their employer, adding, one might think, insult to injury. The proper way to safeguard the position of an applicant in such a case is to make what might be described as a provisional award, or to link it expressly to compliance with the re-engagement Order. These may seem artificial steps but they are, in our judgment, the way to avoid closing down finally an avenue for just compensation, as was done in this case, and in D'Souza 's case.[30]In those circumstances, the appeal is allowed, and we set aside the figure of £20,163.66 and interest of £982.80 awarded in the second remedy decision, leaving intact the Order for compensation under the Employment Rights Act and the Order for injury to feelings and interest under the Disability Discrimination Act 1995 , given at the first hearing. Compensation for unfair dismissal[31]We indicated that we would hear further argument on whether or not a compensatory award should be made by us.[32]By very helpful co-operation between Counsel, an issue which was foreshadowed to us before we gave our judgment on the principal issue has now been argued fully before us. Sensibly, neither Counsel takes points about whether it is correct to raise the issue. Both parties are anxious to reach a conclusion of this litigation, which we are dismayed to hear continues at Tribunal level, and we will do our best to contribute to resolving the issues by what we say now.[33]The effect of our judgment is to remove from the award the losses of £20,163.66 awarded for disability discrimination. We have indicated that this figure and the interest on it represents actual losses to the Applicant. The question is whether he can obtain, through the unfair dismissal regime alone, some or all of that figure. It is agreed by the parties that the Tribunal Decision, as it stands, fails to make an award for compensation simpliciter . It has awarded the Applicant a basic award and an additional award, and would therefore be obliged to consider a compensatory award on the failure of the re-engagement Order. The approach to this is regulated by a combination of: section 115(2)(d), which requires the Tribunal on a re-engagement Order to specify amounts payable by an employer, including arrears of pay; section 117(3) which requires an Order to be made for compensation, calculated in accordance with section 118 - 127(a) as we have recorded above; section 123 and section 124.[34]The correct approach to this matter is set out by Judge Peter Clark, sitting with members in Selfridges Ltd -v- Malik [1998] ICR 268 . The effect of the judgment in that case was to regard as an error the treatment by an Industrial Tribunal of losses under section 114 and thus in our case 115, as a free-standing head of damage. The correct approach was to look at the effect of the capping provisions and the mitigation of those provisions, set out in section 124(4).[35]The difficulty presented by the legislation and the statutory cap has now been largely ameliorated by the removal of a relatively low cap, and its replacement by a cap of £52,600. That would go a very long way to effecting justice for people who suffer substantial losses. The effect of section 124(4) was to correct the injustice recognised by Lord Donaldson MR in his judgment in O'Laoire v Jackel International Ltd [1990] ICR 197 CA . But that provision, as Judge Clark makes clear, deals only with recognition of a shortfall in the award of money to an employee up to the date of the putative re-engagement, so that in that situation, it is permissible to aggregate compensatory and additional award, and then to consider whether the cap, at that time, £12,000 should be exceeded.[36]That is the only tolerance of the cap and it is, as can be seen, a limited tolerance. In Selfridges , the employer, against whom a re-instatement Order was made, not only failed to comply but failed to make any payments. It was thus unnecessary for the EAT to consider section 124(5) which says:
"The limits imposed by this section applies to the amount which the [employment tribunal] would, apart from this section, award in respect of the subject matter of the complaint after taking into account - (a) any payment made by the respondent to the complainant in respect of that matter"
Does the situation differ where, as in our case, a payment has been made by the Respondent? In our judgment, it would be wrong to treat Midland Mainline more harshly and to give it less credit than the employer in Selfridges who had failed entirely to observe the Orders of the Tribunal.[37]True it is that neither of these cases illustrates a reflection of what we feel was Parliament's intention, that is to give full compensation to a person in receipt of a reinstatement or a re-engagement order which fails. Parliament's intention has been expressed in the words we have read out above, and has been given only limited effect by the compensatory regime. In a case such as this, where there is a very long time period between the putative date of re-engagement and the examination of the issue by the Employment Tribunal, eighteen months, section 124(4) does not do justice.[38]Nevertheless, we have considered Selfridges -v-Malik to be correctly decided and are happy to follow it, recognising as we do that many of the injustices in the previous regime capped at a level which did not keep up with inflation will now not recur. We note unfavourably that certain payments which are not in dispute in this case have not been made, notwithstanding the Order of the Tribunal for their payment, and interest. Those are the awards, which we have not disturbed, and should therefore attract interest, unless they have been disturbed by the Employment Tribunal on subsequent review.