Roberts v Aegon UK Corporate Services Ltd

JurisdictionEngland & Wales
JudgeLord Justice Elias,Lord Justice Dyson,Lord Justice Keene
Judgment Date21 July 2009
Neutral Citation[2009] EWCA Civ 932
CourtCourt of Appeal (Civil Division)
Date21 July 2009
Docket NumberCase No: A2/2009/0481

[2009] EWCA Civ 932

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL

Before: Lord Justice Keene

Lord Justice Dyson and

Lord Justice Elias

Case No: A2/2009/0481

Between
Aegon UK Corp Services Ltd
Appellant
and
Roberts
Respondent

Mr I Truscott QC (instructed by Doyle Clayton Solicitors) appeared on behalf of the Appellant.

Mr S Plaut (instructed by ASB Law Solicitors) appeared on behalf of the Respondent.

(As Approved By Court)

Lord Justice Elias

Lord Justice Elias:

1

Ms Roberts was dismissed by the appellant (“Aegon”) for redundancy and paid an enhanced redundancy payment. The Employment Tribunal found that this was also an unfair dismissal. She was ultimately awarded compensation of £37,180.30, following a marginal reduction of the original award made by the Industrial Tribunal on a review.

2

The case is somewhat unusual in that she obtained alternative employment with another company, Just Retirement Limited, which took effect immediately following her dismissal on 15 January 2007. The total remuneration in that new employment, not taking into account pension loss, was worth £136 per week net more than her package with Aegon. This took account not only of salary but also of other benefits such as the value of a car and car insurance, and permanent health insurance.

3

Under the pension arrangement with Aegon, she was a member of a final salary pension scheme. When she joined Just Retirement she was subject to a money purchase scheme which was significantly less favourable. However, the loss in pension benefits was more than offset by the other more favourable remuneration terms. Overall, therefore, she was better off at Just Retirement than she had been at Aegon.

4

Before the tribunal came to consider its remedies award, Ms Roberts lost her job with Just Retirement. She had completed the six months' probationary period successfully, but shortly thereafter her employers told her that they were unhappy with her performance and they gave her the option of either being dismissed or choosing to resign. She resigned and raised a grievance alleging both constructive dismissal and disability discrimination. The latter arose out of the fact that she had just endured two eye operations, having had eye problems from early childhood, and it was her belief that any shortfall in performance was attributable to her health difficulties. That grievance was compromised on 11 October 2007 on terms that Ms Roberts was paid three months' pay in lieu of notice, an accrued bonus, holiday pay and an ex-gratia payment of £10,000. The contract was deemed to have ended on 3 September 2007.

5

The tribunal conducted the remedies hearing in February 2008. At that point Ms Roberts was still unemployed. The tribunal made a number of findings potentially relevant to the calculation of future loss. They concluded that had Ms Roberts not been dismissed, she would have remained in employment with Aegon until the age of 50. They also found that she would secure employment within six months and that her future earnings pattern would broadly reflect what it would have been with Aegon, save that she would not in any future employment be offered the benefit of a final salary pension scheme.

The law

6

There are two elements in the calculation of unfair dismissal compensation: the basic award, which in this case was met by the statutory redundancy payment, and the compensatory award. The latter is assessed in accordance with section 123(1) of the Employments Rights Act which provides that, subject to certain exceptions which are not material in this case,

“…the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.”

7

The two key elements are therefore loss and causation. As to the question of loss, the House of Lords has affirmed in Dunnachie v Kingston Upon Hull CC [2004] ICR 1052 that this restricts compensation to financial loss and it is not legitimate to award a larger sum than the loss actually sustained. (The principle established in Norton Tool v Tewson [1972] ICR 501 is a limited exception to that principle but is not relevant in this case). As Lord Steyn pointed out, the just and equitable formula does not permit a tribunal to award compensation on an unprincipled or arbitrary basis. It may justify a tribunal awarding less than the loss actually incurred (see for example Devis v Atkins [1977] ICR 662) and it gives a degree of flexibility to proving and assessing the items of loss, but it cannot justify paying more than the loss so assessed.

8

The relevant loss is, however, only that which is attributable to the dismissal by the employer. When assessing future loss, a tribunal is sometimes faced, as in this case, with a situation where an employee has been employed in fresh employment and dismissed prior to the hearing. Where that is the position, it has to determine whether the original employer remains liable for the loss which continues after the second dismissal. Can the loss be attributed to the first dismissal or should the second employment be treated as having broken the chain of causation? As the Court of Appeal pointed out in Dench v Flynn and Partners [1998] IRLR 653, it does not necessarily follow that loss consequent upon an unfair dismissal must be deemed to have ceased once someone has obtained permanent employment on the same or more favourable terms. Beldam LJ, with whose judgment Mummery LJ and Sir Christopher Staughton agreed, said this:

“19. No doubt in many cases a loss consequent upon unfair dismissal will cease when an applicant gets employment of a permanent nature at an equivalent or higher level of salary or wage than the employee enjoyed when dismissed. But to regard such an event as always and in all cases putting an end to the attribution of the loss to the termination of employment cannot lead in some cases to an award which is just and equitable.”

His Lordship emphasised that it would be for the tribunal as a tribunal of fact to consider in any particular case whether the effect of the second employment was to break the chain of causation or not.

The tribunal's assessment

9

Having made its findings of fact, and having expressly referred to the Dench case, the tribunal turned to determine the financial loss attributable to the dismissal. They noted that they had to ask themselves:

“… whether we can, fairly and equitably, attribute to the Respondent the loss of earnings suffered by the Claimant subsequent to the dismissal by Just Retirement Ltd.”

10

They were satisfied that the employment with Just Retirement was intended to be permanent...

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7 cases
  • Dumfries & Galloway Council v Mr George Carroll & General Teaching Council of Scotland - Intervenor
    • United Kingdom
    • Employment Appeal Tribunal
    • 7 August 2019
    ...the Claimant reached the age of 57. Reliance is placed upon the decision of the Court of Appeal in Aegon UK Corp Services Ltd v Roberts [2010] ICR 596. In that case, the employee was a member of a final salary pension scheme at the time of her dismissal, which was found to be unfair. She su......
  • Taylor vs Crawfordsburn Inn Limited
    • United Kingdom
    • Industrial Tribunal (NI)
    • 31 October 2012
    ...Ltd [2012] UKEAT/0059 where the decision in Whelan and the decision in Dench were cited with approval. In Aegon UK Corp Ltd v Roberts [2009] IRLR 1042, the Court of Appeal emphasised that it is not open to the tribunal to award compensation for any loss that arises subsequently as a result ......
  • Somerset County Council v Ms H R Chaloner
    • United Kingdom
    • Employment Appeal Tribunal
    • 23 June 2014
    ...in terms of its liability for basic pay but had no impact on pension loss (and see per Elias LJ in Aegon UK Corp Services Ltd v Roberts[2009] IRLR 1042, If the Tribunal was really holding that there was no break in the chain of causation but this was all about mitigation, the reasoning woul......
  • Ms H R Chaloner v Somerset County Council
    • United Kingdom
    • Employment Appeal Tribunal
    • 23 June 2014
    ...in terms of its liability for basic pay but had no impact on pension loss (and see per Elias LJ in Aegon UK Corp Services Ltd v Roberts[2009] IRLR 1042, If the Tribunal was really holding that there was no break in the chain of causation but this was all about mitigation, the reasoning woul......
  • Request a trial to view additional results

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