COMPENSATION

Langley and another v Burlo: [2006] EWCA Civ 1778

CA: Mummery, Smith and Leveson LJJ: 21 December 2006

Under her contract of employment the claimant was entitled to eight weeks' notice and to statutory sick pay during absence through illness. Shortly after she had been injured in a car accident, and while she was on 18 weeks' sick leave, she was summarily dismissed by her employers. An employment tribunal upheld her complaints of wrongful and unfair dismissal, holding that the dismissal was both in breach of her contractual entitlement to notice and was unfair. The tribunal found that, had the claimant been given notice, it would have been at her contractual rate of pay and calculated compensation for the wrongful dismissal based on eight weeks' net pay, rather than on the statutory sick pay she would have been receiving during what would have been the notice period. In calculating the compensatory award for the unfair dismissal claim, the tribunal did not include any sum referable to the notice period, as that loss had already been included in the compensation for wrongful dismissal. The Employment Appeal Tribunal allowed the employers' appeal that the claimant was only entitled to compensation for the notice period based on sick pay and dismissed a cross-appeal by the claimant that a compensatory award for unfair dismissal under section 123 of the Employment Rights Act 1996 should include a sum for the notice period based on full pay, holding, by a majority, that it was impermissible to read into that section the additional factor that a tribunal might have regard not only to the loss flowing from the dismissal but also to a failure to comply with good industrial relations practice.

The claimant appealed against the dismissal of her cross-appeal.

The Court of Appeal held:
In assessing compensation for unfair dismissal under section 123 of the Employment Rights Act 1996, notwithstanding any established principle that good industrial or employment practice required that an employer who summarily dismissed the employee without notice while unfit for work through illness should make a payment in lieu of notice at the normal contractual rate of pay, and that such payment should not be subject to any deduction for sums the employee earned in other employment during the notice period, there was no basis for a tribunal to make an award greater than the loss caused to the employee as a consequence of the dismissal so as to result in the award of a bonus payment. In the circumstances, if the claimant had not been dismissed she would have received statutory sick pay during her period of absence through sickness, and, therefore, that was the correct measure of her weekly loss during the notice period for compensation for unfair dismissal.
Per curiam. (i) It is not accepted that it is or should be a precept of good industrial practice, as the appeal tribunal held in this case, that an employer should pay wages in lieu of notice at the full weekly rate to an employee who is unfit through sickness, in cases which fall outside section 88 of the 1996 Act; nor, more generally, that the concept of "good industrial practice" should be used to create new bases upon which loss can be claimed.
(ii) The narrow principle in Norton Tool Co Ltd v Tewson [1972] ICR 501—that it was good employment practice for an employer who has dismissed an employee without notice to make a payment in lieu and that, in assessing compensation for dismissal, that payment should not be subject to any deduction for sums earned in other employment during the notice period—survives and should be applied by tribunals unless and until a further decision which is directly in point.

The appeal was dismissed.

Appearances: Ayoade Elesinnla (J R Jones) for the claimant; Sarah Wilkinson (Ashurst) for the employers.