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United Kingdom Employment Appeal Tribunal |
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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Secretary Of State For Employment v Searle [1996] UKEAT 1213_95_2806 (28 June 1996) URL: http://www.bailii.org/uk/cases/UKEAT/1996/1213_95_2806.html Cite as: [1996] UKEAT 1213_95_2806 |
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At the Tribunal
HIS HONOUR JUDGE J HULL QC
MR K M HACK JP
MR S M SPRINGER MBE
JUDGMENT
Revised
APPEARANCES
For the Appellants MR R JAY
(Of Counsel)
The Treasury Solicitor
Queen Anne's Chambers
28 Broadway
London
SW1H 9JS
JUDGE HULL QC: This is a case in which Miss Searle, a lady who is aged 37, living at Wokingham, was employed by a firm called Harris Adacom Network Systems Limited, from 1 October 1984 until that firm's insolvency on 25 October 1994, serving a total of ten years, and under Section 49 of The Employment Protection (Consolidation) Act, she was entitled to ten weeks notice.
She was dismissed on 25 October 1994 as a result of the insolvency. She therefore, in accordance with the provisions of the Act, became entitled to complain that she had not had the ten weeks notice to which she was entitled. As for the nature of their complaint it is perfectly plain, both on principle and authority, that it is a claim for damages for breach of contract. It is course perfectly true that an employer, very frequently in such circumstances, if solvent, would pay the employee ten weeks pay in lieu of notice. There are two possibilities there. The employer is either exercising a contractual right which gives him the option to do that, or alternatively simply saying "well I am now liable for damages and I now tender the maximum amount for damages for which I can be liable". That is not in point at all. The employee is not entitled to insist, in the absence of express contractual provision, on ten weeks pay in lieu of notice. The action which the employee is given by law is an action for damages, and that is shown perfectly clearly by the authorities to which we have been referred, and in particular in the House of Lords in Westwood v Secretary of State for Employment [1985] ICR 209.
What happened was that after her dismissal in this summary way, Miss Searle was able to receive substantial earnings, more than she would have earned during the period of notice given by the Act. In those circumstances on her application under Section 122 of the Act, in respect of the insolvency of the employer, the Secretary of State observed that it appeared that she had received all she was entitled to. If one looks at Section 122, it provides that:
"(1) If on application made to him in writing by an employee the Secretary of State is satisfied--
(a) that the employer of that employee has become insolvent; and
[(aa) that the employment of the employee has been terminated; and]
(b) that on the relevant date the employee was entitled to be paid the whole or part of any debt to which this section applies,
the Secretary of State shall, subject to the provisions of this section, pay the employee out of [the National Insurance Fund] the amount to which in the opinion of the Secretary of State the employee is entitled in respect of that debt."
The word "debt" is a somewhat misleading one, because, on the face of it, it looks as if it is referring to liquidated sums only. It is quite clear that it is not. That was one of the points that was decided in the House of Lords in the case to which I have referred. Sub-section (3) provides:
(3) This section applies to the following debts:--
(b) any amount which the employer is liable to pay the employee for the period of notice required by section 49(1) or (2) or for any failure of the employer to give the period of notice required by section 49(1);"
As I have said, the plain entitlement of the employee is, under that, to damages. Further on one finds under sub-section (5) that there is a limit, at the moment of £205, in respect of the sum which the employee can recover for each week of the period.
In those circumstances, Miss Searle having received more than £205 (multiplied by 10) in the weeks concerned the Secretary of State said there was, in his view, no sum due and owing. The matter was brought to the Industrial Tribunal, and not for the first time we comment that the Industrial Tribunal did not have the assistance from the Secretary of State to which it was entitled. The Secretary of State wrote a letter dated 8 June 1995 to the Tribunal saying:
"The Secretary of State for Employment resists the case on the following grounds:-
It is not admitted that the applicant is entitled to a greater payment under the provisions of sections 106 and 122 of the Employment Protection (Consolidation) Act 1978 than she has already received and she is put to proof thereof."
It would have been perfectly simple, one would have thought, for the Secretary of State to write a circumstantial letter along the lines of Mr Jay's Skeleton Argument, at any rate to refer the Tribunal to the relevant case, making it quite plain that the claim was misconceived. That was not done. The Secretary of State did not attend the Tribunal, relying simply on what he said. In those circumstances the Industrial Tribunal plainly fell into error. What the Chairman (sitting alone) said, having referred to the statutory provision, was:
5. I find however that the applicant's entitlement to pay in lieu of notice was a statutory entitlement and not one which is subject to the normal rules of mitigation of loss; Abrahams v Performing Rights Society Limited, Times Law Reports 5 June 1995. Accordingly I award the applicant the sum of £2,050.00 which the respondent is ordered to pay her."
We have been referred to the full report of that case. It was, quite plainly, completely different. In that case the employee had a right not merely to notice, but if he was not given the notice required by the contract, a right to pay in lieu of notice, which, if my recollection is correct, was no less than two years. It was an important contractual right and the House of Lords held that it was a right which he was entitled to assert, namely to two years pay. Therefore, because the terms of the contract were different, what the employee there was claiming was not damages but a liquidated sum due under the contract.
Unfortunately, therefore, the learned Chairman fell into error and misconceived what the nature of the application was. The application was for what the Act calls a sum due. In fact it is damages, and the Applicant was therefore obliged to give credit in respect of the relevant period. Like anybody else who is wrongfully dismissed and claims damages for breach of contract, she must give credit for what is to be set against it. That is made plain by authorities really too numerous to go into, but in particular by the House of Lords decision to which I have referred.
Notwithstanding that these points were not taken before the Industrial Tribunal, and not- withstanding that the letter, as I say, was brief and unhelpful, in view of the fact that these are public sums of money, we have allowed this case to proceed. The Secretary of State failed to ask timeously for the full reasons of the Tribunal, but we are satisfied that we have seen enough from the short reasons. The Chairman made the reasons for his decision perfectly plain, and so made it perfectly plain that (unhappily) he was mistaken.
With every sympathy for the Chairman in all the circumstances, he was without the assistance we think he was entitled to, he was wrong, and we must allow this appeal. Miss Searle was not entitled to any sum and, as she now recognises herself, the appeal has to be allowed and we so order.
