Melia v Magna Kansei Ltd

The Court of Appeal considered the interaction between the whistleblower protections added by the Public Interest Disclosure Act 1998 (as incorporated into the Employment Rights Act 1996) and the unfair dismissal provisions in Part X of the Employment Rights Act 1996. The court held that the phrase in section 47B(2) that a detriment "amounts to dismissal (within the meaning of Part X)" excludes only those losses that are compensable under Part X (unfair dismissal), not every act by an employer in the lead up to a dismissal. In consequence detriments suffered before the effective date of termination may remain compensable under section 49 (Part V) if they do not constitute loss recoverable under Part X. The court also affirmed that in quantifying a compensatory award under section 123 the tribunal may take into account delayed receipt of past earnings by adjusting the compensatory award (a premium for delayed payment) rather than by a separate statutory interest provision.

Background and parties: Mr Adrian Melia (appellant) resigned on 9 November 2001 and claimed constructive dismissal and unlawful detriment for making a protected disclosure against his employer, Magna Kansei Limited. The protected disclosure related to alleged health and safety failings and personal harm. The employer is a supplier in the automotive industry.

Procedural history: The Employment Tribunal (Newcastle) found the s.47B detriment complaint well founded and that the employee had been dismissed and unfairly dismissed; it reserved remedy. On 2 February 2004 the Tribunal assessed remedies and awarded sums under Part V (s.49) and Part X (unfair dismissal, s.118/123). The Employment Appeal Tribunal allowed parts of the appeal (ground 6(1) and 7(7)) and increased the award by £600. The appellant appealed to the Court of Appeal.

Nature of the claim and issues:

• The appellant sought compensation for detriment under s.47B/ s.49 (Part V) and for unfair dismissal under Part X. Key issues were (i) the correct construction of the phrase in s.47B(2) "the detriment in question amounts to dismissal (within the meaning of Part X)" and whether that excludes pre-termination detriments from Part V compensation; and (ii) whether an Employment Tribunal can reflect the late payment of sums due (past earnings) in the compensatory award under s.123 (i.e. whether a premium for delayed receipt is permissible in calculating compensation) in the absence of a statutory interest rule.

Court's reasoning: The court held that Parliament intended the limitation in s.47B(2) to exclude only those detriments which are compensable under Part X (losses sustained in consequence of dismissal). The effective date of dismissal for constructive dismissal remains the date on which the employee terminates the contract (here 9 November 2001) pursuant to s.97(1)(b) and s.95(1)(c). Detriments occurring before that date which are not compensable under Part X therefore remain within s.47B/ s.49. On the cross-appeal concerning the additional £300 awarded by the EAT to reflect delayed receipt of past sums, the Court of Appeal agreed that, where appropriate, the tribunal can reflect in the compensatory award the loss of the use of money (a premium for delayed payment) when assessing what is just and equitable under s.123.

Disposition: The appeal was allowed and the case remitted to the Employment Tribunal for reassessment of Part V compensation; the cross-appeal by the employer was dismissed. Costs were awarded to the appellant.

Appeal allowed. The Court of Appeal held that the limitation in section 47B(2) excludes only detriment that is compensable under Part X (i.e. loss sustained in consequence of dismissal) so that detriments suffered prior to the effective date of termination may remain compensable under Part V (section 49). The case was remitted to the Employment Tribunal to assess Part V compensation. The employer's cross-appeal was dismissed; the Court accepted that a tribunal, when assessing a compensatory award under section 123, may take into account delayed receipt of past earnings by adjusting the award (a premium) rather than by a statutory interest provision.

Employment Tribunal (Newcastle-upon-Tyne): decision entered 12 May 2003 (found s.47B detriment well founded and unfair dismissal); remedies ordered 2 February 2004. Employment Appeal Tribunal (Burton J, President, Mr Gammon MBE and Mr Singh): order dated 26 November 2004 allowed parts of the appeal (grounds 6(1) and 7(7)) and increased the award by £600. Court of Appeal [2005] EWCA Civ 1547: appeal allowed and Part V compensation remitted to the Employment Tribunal; cross-appeal dismissed.