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Remedies and Schedules of Loss

NADIA MOTRAGHI

•Schedules of Loss show the compensation sought by a Claimant and how this is calculated;

•A well prepared schedule of loss can significantly increase the Claimant’s position in negotiations and may avoid the need for a final hearing by enabling early settlement.

•These are documents familiar to lawyers but often confuse non-lawyers

•There is a growing trend for Tribunals to order that a schedule of loss be provided following a CMD;

•Failure to comply with a Tribunal order can lead to a fine/ adverse consequences/ possible strike out of a claim or part of it.

•Trade union officials therefore need to be confident in drafting these schedules.

Schedules of Loss

Employment Tribunal Service Annual Report 2006/7

The ET service annual report 2006/7 showed:•For unfair dismissal claims, the average award was £7,974 (this is a reduction from last year).

•The maximum race discrimination award was £123,898 and the average award was £10,052 (a reduction from last year).

•The maximum sex discrimination award was £138,648 and the average award was £15,059 (the average award is an increase from last year).

•The maximum disability discrimination award was £138,658 and the average award was £15,059 (the average award decreased from last year).

In this session…

•We will look at what to include in a schedule of loss based on those claims most commonly made

•Go through two worked examples

•But first some revision…

Unfair Dismissal (1)Two heads: Basic award and Compensatory Award

– Basic Award • One week’s pay for each week worked (if aged under 41)• One and a half week’s pay for each year worked (if 41 or over) • Half a week’s pay for each week worked for those aged under 22• The statutory maximum for a week is currently £310• NB Union related / H&S dismissal minimum award - £4,200 • Can be reduced for Claimant’s contributory fault (%) where it is

“just and equitable” to reduce. – Compensatory Award

• Loss of earnings– Up to the date of hearing – Future losses

Unfair Dismissal (2)

Compensatory Award• Loss of earnings

– Up to the date of hearing – Future losses

» Stress personal characteristics of Claimant age/ state of health/ skills and experience

» State of the labour market: location/ transport/ reference position (e.g. gross misconduct stigma).

• Loss of fringe benefits/ bonuses/ commission – E.g. bus pass/ car (loss of private use)– Private medical care/ mobile phone

Unfair Dismissal (3)

Compensatory award (cont)

Don’t forget: • Expenses reasonably incurred as a result of dismissal e.g.

costs of looking for a job/ attending interviews/ moving home expenses/ business start up costs

• Pension losses • Loss of statutory rights

Statutory dispute resolution procedures

Failure to comply with statutory dismissal procedures (s98A(1) ERA) – “Automatic unfair dismissal” – Basic award uplifted to 4 weeks’ pay as a minimum

Failure to comply with statutory dispute resolution procedures– Award can be uplifted if at time of ET1 the failure to complete

process was “wholly or mainly attributable to” employer– If employee is responsible, then award can be decreased. (s31

EA 2002) – Mandatory minimum of 10%, discretionary maximum of 50% – Unless not just and equitable in all the circumstances.– Adjustment applies to compensatory award only.

Calculating the uplift

Statutory uplift

EAT says Tribunal should only look at whether the employer has complied with the three step procedure:

• Step 1 letter, Step 2 meeting, Step 3 appeal• Do not look not other factors e.g. deliberate breach, size of

organisation, long serving Claimant treated in shoddy fashion etc. (Aptuit Ltd v Kennedy, EAT unreported, September 2007).

Discrimination Remedies (1)Injury to Feelings awards

– Vento bands (Vento v Chief Constable of West Yorkshire Police (No. 2) [2003] ICR 318, CA)

• Upto £5000 for “isolated” or “less serious” incident. (Awards of £500 or less to be “avoided altogether”)

• £5,000 - £15,000 for “serious cases which do not merit an award in the highest band”

• £15,000 - £25,000 for “most serious” cases e.g. where there has been a “lengthy campaign of discriminatory harassment”.

• Awards of more than £25,000 should be made in only the “most exceptional cases”

– Claimant must show anger, distress, affront caused by unlawful act – usually easy for Claimant to prove.

– These are RPI linked so should be uplifted like personal injury awards.

Discrimination Remedies (2)

Interest on awards:

ET (Interest on Award in Discrimination Cases) Regs 1996• Interest on financial loss, at 6% from date of loss for special

damages (appropriate to half of this rate where loss continuing over time in interest of simplicity)

• On injury to feelings awards from the date of the discriminatory act.

Discrimination Remedies (3)

Aggravated Damages– Recoverable where employer behaved in high-handed, malicious,

oppressive manner in committing act of discrimination e.g. • £7,500 where employer failed to investigate complaints of

discrimination and failed to apologise (Armitage & HM Prison Service v Johnson [1997] ICR 275, EAT)

• £5,000 where employer tried to cover up and trivialise acts of discrimination (HM Prison Service v Salmon [2001] IRLR 425, EAT)

• £2,000 where discriminator not punished and remained in post and then promoted even though charges not determined (BT plc v Reid [2004] IRLR 327, CA)

• £7,500 where employer defended ET proceedings in an inappropriate and intimidatory manner. (Zaiwalla v Walia [2002] IRLR 697, EAT)

– In practice, rarely awarded but a further good negotiation tool.

Add on claims (1)

S38 Employment Act 2002– 2 or 4 weeks’ pay for failure to provide terms and conditions.

(Statutory maximum of £310 per week). Only payable if it is parasitic on another award.

Loss of Statutory Rights (for unfair dismissal claimants) – Usual award is now £250- £300.

Loss of Statutory notice period (s86 ERA)

Loss of long notice period (Daley v A E Dorsett (Almar Dolls) Ltd [1981]. EAT suggested at half statutory entitlement.)

Has the Claimant been paid for all holiday entitlement/ unpaid wages?

Add on claims (2)

•Right to be accompanied–S10, Employment Relations Act 1999–Applies to disciplinary and grievance hearings if worker “reasonably requests” and any meeting under statutory dispute resolution procedures–Compensation: not exceeding 2 weeks’ pay

•Right to Written Reasons for Dismissal –S92 Employment Rights Act 1996–Right to written statement giving particulars if employee requests. Should be provided within 14 days of request. –Compensation: 2 week’s pay if employer fails to provide written reasons or ET finds the reasons given are untrue or inadequate .

Other remedies•Reinstatement and Reengagement

•Obtain back pay for time away; If employer fails to comply – additional award under s117 of between 26-52 weeks pay.

•No figures given 2006/7 and in 2005/6 only 8 employees were reinstated/ reengaged which was 0.02%!

•Nevertheless good negotiation tool.

How to calculate damages: case

studies

Heads of loss

See the written summary of the facts of this case.

The heads of damage to consider in a case such as this are:

• Injury to feelings• General damages for personal injury (PSLA)• Aggravated damages• Past loss of earnings• Future loss of earnings• Future medical expenses

Case Study 1: Race Discrimination

Injury to feelings

Consider the 3 brackets set out Vento v Chief Constable of West Yorkshire Police (No. 2) [2003] ICR 318

• £500 - £5,000 for less serious cases such as isolated or one-off acts• £5,000 - £15,000 for serious cases not meriting award in top band• £15,000 - £25,000 for the most serious cases (eg lengthy campaign of discriminatory harassment)

General damages for personal injuryDamages for pain, suffering and loss of amenity (PSLA) are assessed using the JSB Guidelines (8th edition) and comparable cases.

The relevant section in the JSB Guidelines for this case is 3(A): General Psychiatric Damage. The factors to be taken into account in valuing claims of this nature are as follows

(i) the injured person's ability to cope with life and work;

(ii) the effect on the injured person's relationships with family, friends and those with whom he or she comes into contact;

(iii) the extent to which treatment would be successful;

(iv) future vulnerability;

(v) prognosis;

(vi) whether medical help has been sought;

(vii) (a) whether the injury results from sexual and/or  physical abuse and/or breach of trust;

(b) if so, the nature of the relationship between victim and abuser, the nature of the abuse, its duration and the symptoms caused by it.

The two potentially relevant brackets are:

(b) Moderately Severe Psychiatric Injury: £11,200 - £32,000In these cases there will be significant problems associated with factors (i) to (iv) above but the prognosis will be much more optimistic than in (a) above. While there are awards which support both extremes of this bracket, the majority are somewhere near the middle of the bracket. Cases of work-related stress resulting in a permanent or long-standing disability preventing a return to comparable employment would appear to come within this category.

(c) Moderate Psychiatric Injury: £3,450 - £11,200While there may have been the sort of problems associated with factors (i) to (iv) above there will have been marked improvement by trial and the prognosis will be good.

Aggravated Damages

Aggravated damages are awarded where there is a particular feature which aggravates the sense of injury to the claimant – they are compensatory, not punitive.

Consider the following:

• Whether the discriminator has acted in a high-handed, malicious, insulting or oppressive manner

• Whether the discriminator has been treated leniently by the employer• Whether the employer has acted reasonably and appropriately

during any relevant disciplinary/grievance processes• The way in which the respondent has defended the proceedings

Past loss of earnings

• Assess loss on a net basis

• If pension loss is being compensated under a separate head, any contributions which the claimant was required to make during employment must be deducted from past loss of earnings

• Don’t forget the Tribunal’s power to award interest on past losses in discrimination claims

Future loss of earnings

• The key question for the Tribunal in any case is whether and, if so when, the employee is likely to return to comparable employment

• If the employee is not likely to return to comparable employment, there may nonetheless be a residual earning capacity which needs to be taken into account

Case Study 2: Unfair DismissalThe heads of loss and basis for calculation are more straightforward in a relatively simple case such as this. In particular:• The basic award is calculated according to the statutory formula. But remember that it is reduced by any statutory redundancy payment made.• The key question in relation to loss of earnings will again be whether C is likely to obtain comparable full time employment and, if so, when.• The burden is on the Respondent to prove any failure to mitigate. The test is whether C has taken reasonable steps to mitigate her loss.•Adjustments to the compensatory award under section 31 of the Employment Act 2002 are made immediately prior to the application of the statutory cap (if appropriate). No adjustments under that section may be made to the basic award. See section 124A of the Employment Rights Act 1996.

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