Factual and Procedural Background
The claimant was an employee of Company A who was dismissed on grounds of redundancy in March 2009. Company A entered administration by order of the English High Court on 14 January 2009. This administration remains ongoing. Company A was part of a larger corporate group, which undertook coordinated insolvency proceedings across multiple jurisdictions, including filings under Canadian bankruptcy law and Chapter 11 of the United States Bankruptcy Code.
In March and June 2009, Company A made redundant a significant number of employees at its premises in The City, including the claimant. Many employees received protective awards and payments from the statutory guarantor for holiday pay, notice pay, redundancy pay, and protective awards, but unfair dismissal compensation was excluded from this guarantee.
The claimant brought an unfair dismissal claim pursuant to Article 145 of the Employment Rights (Northern Ireland) Order 1996. A concurrent breach of contract claim relating to an alleged contractual redundancy entitlement above the statutory amount remains pending but is expected to be resolved through the insolvency process without tribunal adjudication. Initially, the administrators refused permission for employees to pursue claims, but following litigation and subsequent consent, permission was granted to pursue employment tribunal complaints, including unfair dismissal claims, after resolution of related procedural issues concerning TUPE transferees.
The claimant’s unfair dismissal claim was uncontested by the respondent. The hearing took place on 5 August 2014 before Employment Judge Buggy, with the claimant represented by Attorney Stephens, and the respondent unrepresented.
Legal Issues Presented
- Whether the claimant’s dismissal was unfair due to non-compliance with statutory dismissal procedures.
- How to quantify past loss suffered by the claimant as a result of the unfair dismissal.
- What impact mitigation and causation rules have on the assessment of loss.
- Whether the claimant is entitled to compensation for future loss and how to quantify it.
- Whether the compensatory award should be reduced under the Polkey principle.
- Whether the compensatory award should be increased pursuant to Article 17 of the Employment (Northern Ireland) Order 2003 and by what amount.
- Whether the compensatory award should be grossed up for tax purposes.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Mathews and Others v Company A (in administration) [2014] NIIT 06598 009IT |
Contextual background on administration and employee claims |
Provided general context for the administration and employee redundancy situation |
| Unite the Union v Company A (in administration) [2010] IRLR 1042 |
Permission to pursue employment claims during administration |
Explained litigation that led to administrators granting consent to pursue claims |
| Dench v Flynn and Partners [1998] IRLR 653 |
Assessment of loss attributable to dismissal under Article 157(1) |
Guided the court’s common sense approach to causation and just and equitable compensation |
| Whelan v Richardson [1998] IRLR 114 |
Assessment of loss at date of hearing including future loss considerations |
Informed the court’s approach to calculating past and future loss based on facts at hearing date |
| Software 2000 Ltd v Andrews [2007] IRLR 568 |
Explanation of the Polkey principle and approach to reduction of compensation |
Provided judicial guidance on assessing what would have happened if dismissal had been fair |
| Compass Group PLC v Ayodele [2011] IRLR 802 |
Burden of proof and raising Polkey points |
Clarified evidential burdens related to Polkey reductions |
| Pinewood Repro Ltd (t/a Country Print) v Page [2011] ICR 508 |
Rejection of speculative Polkey reduction based on redundancy chance |
Supported refusal to reduce award absent cogent evidence of likely dismissal |
| Wardle v Credit Agricole Corporate and Investment Bank [2011] IRLR 604 & (No.2) [2011] IRLR 819 |
Application and scope of Article 17 uplift for failure to follow statutory procedures |
Guided the court in determining appropriate percentage uplift for breach severity |
| Vento v Chief Constable of West Yorkshire [2003] IRLR 102 |
Reference point for aggravated damages and proportionality in uplifts |
Used as a benchmark for proportionality in increasing compensatory awards |
Court's Reasoning and Analysis
The court began by confirming jurisdiction given the respondent’s concession not to contest the unfair dismissal claim. The dismissal was held to be unfair due to failure to comply with statutory dismissal procedures, including lack of individual consultation.
In assessing compensation, the court applied Article 157 of the Employment Rights (Northern Ireland) Order 1996, focusing on loss sustained as a consequence of the dismissal and attributable to the employer. The claimant’s past loss was quantified at £38,472, reflecting lost earnings after mitigation, excluding the initial 12-week notice period already compensated by the statutory guarantor. Future loss was assessed at £4,966, based on the claimant’s continuing reduced earnings and economic conditions.
The court considered the Polkey principle, which allows reduction of compensation if the dismissal would have occurred fairly regardless of procedural defects. However, no cogent evidence was presented to support any reduction. The court acknowledged that the compensation might have been reduced if such evidence existed but declined to speculate without a factual basis.
Regarding an uplift under Article 17 of the Employment (Northern Ireland) Order 2003, the court found the respondent’s failure to follow statutory procedures was serious and deliberate, justifying a 45% increase to the compensatory award, reflecting the breach’s gravity and proportionality considerations informed by precedent.
The issue of grossing up the award for tax purposes was addressed with some reservations, acknowledging the claimant might never receive the full amount due to insolvency dividend uncertainties. Nonetheless, the court grossed up the award following recommended guidance, capping it at the statutory maximum of £66,200.
The court also noted the application of recoupment regulations relating to other benefits received by the claimant during a specified prescribed period.
Holding and Implications
The court’s final ruling is that the claimant’s unfair dismissal claim is well-founded, and the respondent is ordered to pay a compensatory award of £66,200, the statutory maximum. This award reflects past and future losses, increased by 45% due to the serious procedural breaches and grossed up for tax purposes.
The direct effect is that the claimant receives compensation for unfair dismissal despite the respondent’s administration status and non-participation. No new legal precedent is established; the decision applies established principles on unfair dismissal compensation, Polkey reductions, procedural breach uplifts, and grossing up within the statutory framework.