Factual and Procedural Background
The case concerns an unfair dismissal claim brought by the Plaintiff, who was employed as a flight nurse by Company A from 1996 until her resignation effective 2 February 2006. The Plaintiff worked irregular hours and was paid on a day-worked basis, with some weeks having no work offered. From 2002 to 2004, she worked approximately six days per month, but work diminished significantly from 2005 onwards due to suspensions and contractual disputes initiated by Company A.
The Plaintiff alleged constructive dismissal and breach of contract due to the failure of Company A to provide work from mid-2005. Company A initially resisted the claim, disputing employment status and continuous service, but conceded unfair dismissal on the morning of the substantive hearing. The Employment Tribunal subsequently awarded the Plaintiff a monetary sum comprising a basic award, compensatory award, uplift for breach of statutory procedures, and breach of contract compensation.
Company A appealed the Tribunal's calculation of the basic and compensatory awards, contending the Tribunal misapplied section 224 of the Employment Rights Act 1996 (ERA) in calculating the Plaintiff's average weekly pay. The Employment Appeal Tribunal (EAT) heard the appeal.
Legal Issues Presented
- Whether the Employment Tribunal correctly applied section 224 of the Employment Rights Act 1996 in calculating the Plaintiff's average weekly pay for the basic award in an unfair dismissal claim.
- Whether the Tribunal's calculation of the compensatory award was properly based on the average weekly pay figure derived under section 224 or if a different approach was required.
- Whether the compensatory award should have been adjusted to reflect net rather than gross pay.
Arguments of the Parties
Appellant's Arguments
- The Appellant argued that the Tribunal should calculate the average weekly pay by taking the last week in which the Plaintiff was paid and the immediately preceding 11 weeks, including weeks with no pay, thus lowering the average weekly pay figure.
- The Appellant contended that the Tribunal erred by excluding weeks with no remuneration and by effectively "cherry-picking" weeks advantageous to the Plaintiff.
- The Appellant asserted that the compensatory award should be linked to the statutory calculation of average weekly pay under section 224.
- Additionally, the Appellant raised a late argument that the compensatory award should have been calculated on a net pay basis rather than gross.
Respondent's Arguments
- The Respondent maintained that the Tribunal correctly applied section 224(3) by excluding weeks with no remuneration and including earlier weeks to complete the 12-week period necessary for the calculation.
- The Respondent argued that the compensatory award is a separate assessment under section 123 of the ERA and need not be linked directly to the basic award calculation.
- The Respondent submitted that the Tribunal's factual findings regarding the Plaintiff's expected future work justified the compensatory award as calculated.
- The Respondent opposed the late net pay argument on procedural grounds, noting it was not included in the Notice of Appeal and was trivial in amount.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Norton Tool v Tewson |
Calculation of compensatory award including netting off tax and national insurance |
The court acknowledged the principle but held the issue was not before it due to procedural default and triviality. |
| Paggetti v Cobb [2002] IRLR 861 |
Assessment of compensatory awards and netting of gross amounts |
The court recognized the authority but declined to consider the issue for the same reasons as above. |
Court's Reasoning and Analysis
The Court began by affirming that section 224 of the Employment Rights Act 1996 clearly governs the calculation of a week's pay where the employee has no normal working hours. The statute requires calculating the average weekly remuneration over a 12-week period ending with the week of termination or the last complete week before it, excluding any weeks where no remuneration was payable. In such cases, earlier weeks with pay must be included to complete the 12-week calculation.
The Court rejected the Appellant's argument that the Tribunal should have taken a consecutive 12-week period immediately preceding the last week worked, including unpaid weeks, reasoning that section 224(3) expressly excludes weeks with no remuneration and mandates inclusion of earlier paid weeks to maintain a 12-week average.
Regarding the compensatory award, the Court explained that it is assessed under section 123 of the ERA on a just and equitable basis, independent from the statutory calculation used for the basic award. The Tribunal was entitled to use its factual findings about the Plaintiff's expected future work to calculate loss of earnings. Since the Plaintiff had not worked since June 2005 due to the employer's breach, the Tribunal reasonably took the daily pay rate and multiplied by the number of weeks of loss, resulting in a faultless compensatory award.
The Court also addressed the late argument regarding netting off tax and national insurance from the compensatory award. It held that this issue was not properly before it due to procedural default and, even if it were, the amount involved was trivial and did not warrant further consideration.
Finally, the Court found the appeal to be without merit, misconceived, and unreasonably pursued, justifying an order for costs against the Appellant.
Holding and Implications
The Court DISMISSED THE APPEAL, upholding the Employment Tribunal's calculation of both the basic and compensatory awards.
The direct consequence is that the Respondent employers must pay the Plaintiff the monetary awards as previously determined, including costs. No new legal precedents were established, and the decision reinforces the clear statutory interpretation of section 224 of the Employment Rights Act 1996 regarding the calculation of average weekly pay in cases of irregular work patterns.