Veitch Penny LLP - Exeter | Crediton, Devon

Case

CEX Ltd v Mark Lewis
Employment Appeal Tribunal - 10 August 2007

Issues

(1) Statutory Dispute Resolution Regulations
(2) Compensatory award
(3) Application of 10/50% uplift or reduction

Facts

These two cases both address the assessment of the appropriate uplift or reduction in compensation as a consequence of a party failing to complete the statutory procedure.
In CEX Ltd v Lewis, the employer had dismissed Mr Lewis who had been in a senior management position. The employer had gone through a restructuring exercise during the course of which Mr Lewis’ position was identified as being at risk. He was encouraged to apply for one of the new restructured posts. He was unsuccessful in his application and was subsequently dismissed on the grounds of redundancy. At first instance, the Tribunal found that his employer was totally unaware of the Statutory Dispute Resolution Regulations and due to the total failure to use the statutory process, that his dismissal was therefore automatically unfair. In the Tribunal’s view, if a proper procedure had been followed then Mr Lewis would have had a 100% chance of being retained. The Tribunal increased the compensatory award payable to Mr Lewis by the minimum uplift of 10%.

Mr Lewis appealed, contending that by increasing the award by only 10% the Tribunal had been incorrect as it had failed to take into account the employer’s ignorance of the law and its wholesale failure to complete the statutory procedure.

In Aptuit (Edinburgh) Ltd v Kennedy, Mrs Kennedy worked at one of the employer’s three sites in Edinburgh. The company started to go through a costs exercise, during which a number of redundancies were proposed. Mrs Kennedy was told that her job was at risk and she attended a meeting with a representative of the employer’s HR department. She was subsequently dismissed by reason of redundancy but her redundancy letter made no mention of her right of appeal. She claimed unfair dismissal and the Tribunal found that her dismissal was unfair on the basis that the employer had failed to offer her an appeal against the decision to dismiss her. The Tribunal found that because the employer was a large company, there had been no consultation and that it had treated her poorly, the Tribunal awarded a compensation uplift of 40%.

In this case, the employer appealed regarding the level of uplift which was applied.

Decision

In Cex Ltd v Lewis, the Employment Appeal Tribunal (EAT) upheld the Tribunal’s decision to make the minimum uplift of 10%. The EAT found that the Tribunal had a broad discretion to assess an appropriate percentage based on the facts of each particular case. In this particular case the Tribunal was entitled to take into account the employer’s ignorance of the statutory procedure as distinct from a deliberate disregard of them when deciding to impose the minimum uplift.

Contrastingly, in Aptuit (Edinburgh) Ltd v Kennedy the EAT found that the Tribunal should not have taken into account surrounding circumstances. In this case, the EAT stated that Tribunals should only have regard to matters that relate to the failure to complete the statutory procedure. As a result, the 40% uplift was quashed.

Comments

This issue still has not been clarified to any satisfaction although the statutory procedures may be due to be repealed in the next year or so. Some Tribunals approach the matter by applying a 10% uplift, increasing the uplift where fair to do so. Others suggest starting at 50% and working from there. It is therefore vital that employers (and employees) continue to comply with the statutory procedures because failure to do so may lead to an expensive uplift in compensation.


Rachel Billen - Associate Solicitor, Commercial Department at Veitch Penny.
Tel: 01392 278381, Fax: 01392 410247, Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

This Employment Law Update does not constitute legal or other professional advice and should not be relied on as such. You should take specific advice regarding your circumstances before taking any action based on the information contained within this Update.