Tooth-combs, bug bears and tribunal awards for loss of statutory rights

05.03.2013

Daniel Tatton Brown

Once, appearing for a Respondent in the Employment Appeal Tribunal before the then President, Underhill J, I made the mistake of accusing my opponent of seeking to deploy a tooth-comb to the tribunal judgment.

The President pounced: “You don’t mean a tooth-comb. The expression is “a fine-toothed comb” or a “fine- tooth comb”. So he might be using a comb, or a fine-toothed comb, but not a tooth-comb…. It’s a bit of a bug bear of mine”.

Predictably, in view of the judge making it, the point was well made.

Here is a bug bear of mine: tribunal awards for loss of statutory rights.

Employment tribunals routinely award as a head of loss for unfair dismissal a sum in respect of “loss of statutory rights”.   It tends to be about £350. The practice is uncontroversial and seems implicitly to have been endorsed by the Court of Appeal (see e.g. Aegon UK Corp Services Ltd v Roberts [2009] IRLR 1042).

But is it right?

There are two potential problems with the practice. First, it seems to me that the statutory rights in question have not so much been lost, as cashed in. The idea behind the award is that the employee, before dismissal, had sufficient service to have acquired the right not to be unfairly dismissed.  Having been unfairly dismissed the employee will have lost that right: in any subsequent employment their period of continuous service will start from scratch, so for a couple of years they will not have acquired the right not to be unfairly dismissed. That (it is said) is a loss that sounds in compensation. 

This all seems to make sense, but for the fact that the dismissed employee will also typically claim and be awarded a basic award. Had the employee not been dismissed, she would still have retained the right not to be unfairly dismissed but would not have been awarded a basic award. Having been dismissed, the employee avails herself of the statutory right she had acquired by complaining of unfair dismissal, and is awarded (among other matters) a basic award. So to award the employee a basic award and a sum to compensate for the loss of statutory rights is to place her in a better position than if she had not been dismissed. If you cannot have both the statutory right not to be unfairly dismissed and a basic award, you should not be paid a sum to represent the notional value of that “lost” statutory right, and a basic award. The statutory right has been cashed in, not lost.

Secondly, is the sum awarded for loss of statutory rights in fact a “loss” for the purposes of section 123 of the Employment Rights Act 1996? The House of Lords confirmed in Dunnachie v Kingston-Upon-Hull City Council [2004] IRLR 727 HL that “loss” in s.123 refers to pecuniary loss rather than non-economic loss, such that it does not cover injury to feelings, humiliation or distress. It is not obvious that the “statutory rights” that have been lost can be said, per se, to have any pecuniary value. If the unfairly dismissed employee is subsequently booted out in a later job, in circumstances where she could successfully have complained of unfair dismissal had she had the requisite service she may well thereby suffer a financial loss: but that is a different point. Furthermore, if that were the justification for awarding a sum for “loss of statutory rights” such an award should not be a standard amount, but should involve an assessment of factors such as the ex-employee’s future salary, their security of tenure in any new job, and the likelihood of that new employer will be unfairly dismissed before the requisite qualifying service has been completed.

The position bears some similarities to the position of an employee who enjoys life insurance as a benefit of employment, but who neither dies nor pays for replacement life insurance following dismissal. It is not possible to claim for such losses up until the date of the tribunal compensation hearing, according to the EAT in Knapton v ECC Card Clothing Ltd [2006] IRLR 756, as the only loss is “loss of peace of mind”.

I do not know if this bug bear is as justified  as Underhill J’s tooth-comb: but I would be interested in hearing of any successful challenges to the practice or in anyone wanting to take the point to the EAT; and more generally in other employment- related bugbears readers may have.

Postscript: Retreating to chambers to lick my wounds after the hearing before Underhill P, I felt marginally better when I discovered that I was not alone in committing the tooth-comb faux pas: see e.g. Lindsay P in Chief Constable of Yorkshire v Vento [2001] IRLR 124, and (subsequently) Maurice Kay LJ in The President of the Methodist Conference v Preston [2012] IRLR 229. Indeed, even Lord Denning MR in the original decision of Hollister v National Farmers Union [1979] IRLR 238 was guilty of this solecism.