Legal Updates

Employment – Unfair Dismissal – Compensation

In the case of Drewett v Seafield Holdings Ltd [2006], an Employment Tribunal held that an employee had been unfairly and constructively dismissed by her employer. This decision was made in November 2005. The tribunal then went on to consider compensation. At the time of her dismissal, the employee was suffering from a medical condition caused by the stress of matrimonial and domestic difficulties for which the employer was not responsible.

The employer did admit that the employee’s medical condition had been exacerbated by its treatment of her, which had culminated in her constructive dismissal. The Tribunal had to consider to what extent the acts or omissions of the employer contributed to the employee’s continued incapacity to work. The Tribunal held that it was satisfied that the employee’s incapacity at that time was attributable to her treatment by the employer. On that basis the Tribunal awarded the employee compensation in the sum of £22, 575.75.

The employer appealed on the following grounds to the Employment Appeals Tribunal:

â–ª     The Tribunal  wrongly applied a ‘but for’ test rather than applying the guidance set out in established authority. The correct test should have been to have assessed the percentage chance that extrinsic factors might have resulted in the employee’s inability to work.

â–ª     The Tribunal’s  finding that there was ‘no material evidence’ to suggest that extrinsic factors might have resulted in the employee’s inability to work was perverse due to the fact that the employee had medical records which claimed the contrary.

The appeal was allowed. The Employment Appeals Tribunal held that:-

§        The question of quantification of the employee’s loss could depend on future uncertain events. It was not decided on a balance of probability, but rather on the courts assessment of the likely risk or her prospects of promotion. These assessments depended partially on the hypothetical actions of a third party, namely the employer, and were often expressed in percentage terms.

â–ª     The Tribunal  was correct in applying the ‘but for’ test to the employees past losses. However, the future losses should have been assessed by looking at the prospect of the employee not being able to work due to the medical condition, which had not been caused by the employer.

â–ª     On the evidence, and on a balance of probabilities, it was likely that the treatment of the employee by the employer had been the cause of her problems at the time of the hearing. Therefore it was held that the tribunal’s finding that there was ‘no material evidence’ was not perverse.

Therefore the appeal on the perversity issue failed. The employee’s losses were considered on the basis of the prospect of her having suffered from her pre-existing medical condition after the remedies hearing.

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© RT COOPERS, 2006. 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.