Legal Updates

Employment Law – Unfair Constructive Dismissal – Compensation – Calculation

The case of Bone v Mayor and Burgess of the London Borough of Newham and Others [2009], involved a determination relating to compensation for unfair constructive dismissal. The employee in this case initiated a claim against the respondent employer for a number of reasons, including:

Sex discrimination;
Victimisation; and
Unfair constructive dismissal.

Subsequent to leaving her position in January 2006 with the first respondent employer, the employee became employed in the private sector. The position required a round trip of about 60 miles per day. This was required for her to get to and from her new office.

It should be noted that prior to her commencing work in that position, she purchased a new car, despite already owning one. During her hearings which took place in March and June 2007, in respect of her claims for sex discrimination, victimisation and unfair constructive dismissal, the employment tribunal decided in the employee's favour.

The tribunal found the following in respect of the remedies awarded to her:

The employee had had a 40% chance of being promoted;
Accordingly, the loss of bonus which would have been enjoyed also stood at 40%;
That the employee would have sought funding from her employer for postgraduate study and that the probability that the employer would have provided such funding was 20%; and
The employee's travel costs and the depreciation in value of her car were too remote to be recoverable.

With regards to the employee's future loss of earnings, the tribunal stated that it was:

”…Confident [that the employee's] solid local government experience will stand her in good stead and that she will enjoy at least a 20 per cent increase in salary in 2008”.

The final point for consideration by the tribunal was the employee's loss of pension. It was held that based on the facts and circumstances of the case the ‘simplified loss approach’ should be adopted.

The employee appealed against the tribunal's decision on the remedies that were awarded. The employee argued that there was no reasoning behind the tribunal’s decision with regards to the figures for:

Loss of a chance of promotion;
Loss of bonus;
Loss of funding of postgraduate study; and
Predicted salary increase.

The employee submitted that the tribunal had been erroneous in reaching the conclusion that her travel costs and depreciation in the value of her car were too remote to be recoverable. Accordingly, she argued that in respect of the calculation of her pension loss, the tribunal should have adopted the ‘substantial loss approach’, as opposed to the ‘simplified approach’.

The appeal was allowed for the following reasons:

It was held that the employee was entitled to be made aware of the reasons why the tribunal had reached a figure of 40% in its assessment in respect of the loss of chance of promotion. This meant that the tribunal could be deemed to have erred in law by not providing its reasons for the decision.
Therefore, it followed that by applying the same percentage to the calculation of the employee’s bonus (without giving a reason why the figure was reached) amounted to an error of law.

Furthermore, no explanation was provided on how the tribunal had reached its figure of 20% with regards to the loss of funding for postgraduate study. The tribunal also failed to provide a reason for its finding that the employee would benefit from at least a 20% increase in salary in 2008 and had had absolutely no evidence to rely on in order to substantiate that figure.
It was further held that in the circumstances of this case, the increased cost of private travel was not too remote, but rather followed as a direct consequence of constructive unfair dismissal.

However, it was stated that the tribunal was correct in its finding that the cost relating to the depreciation of the car was not recoverable due to the fact that the employee had purchased the new car without being required to do so – She already had a car which she could have used.

In respect of the tribunal's calculations relating to the employee's pension loss, the tribunal's reasoning was held not to be adequate in all the circumstances. Accordingly, the issue in respect of the employee’s remedy would be remitted to the same tribunal for further determination.

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© RT COOPERS, 2009. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.