Melia v Magna Kansei Ltd.

For whistleblowing claims, the exclusion in section 47B(2) of the Employment Rights Act 1996 applies only to detriment compensable under the unfair dismissal provisions. In a constructive dismissal case, the dismissal occurs when the employee accepts the employer’s repudiatory breach and terminates the employment. Earlier detrimental treatment remains compensable under Part V, including, where proved, injury to feelings or personal injury.

A compensatory award for unfair dismissal may recognise the loss caused by receiving past earnings late. Where future loss is discounted for accelerated receipt, consistent treatment may require an increase for delayed receipt of past earnings. That increase measures the loss of use of money; it is not interest on the compensatory award.

The employee made protected disclosures and complained of detrimental treatment by his employer. He resigned without notice on 9 November 2001 and was found to have been unfairly constructively dismissed principally because of those disclosures. The Employment Tribunal awarded compensation under both Part V and Part X of the Employment Rights Act 1996, but treated the employer’s conduct as becoming dismissal in June 2001 and excluded later pre-resignation detriment from the Part V award.

The Employment Appeal Tribunal substantially upheld that approach, while adding £600 for legal expenses and delayed receipt of past earnings. The employee appealed against the restriction of Part V compensation. The employer cross-appealed against the element recognising delayed receipt of past earnings. The central issues concerned when detriment amounts to constructive dismissal under section 47B(2), and whether section 123 permits compensation for the loss caused by late receipt of past earnings.

1. The employee’s appeal was allowed. Sections 47B and 103A of the Employment Rights Act 1996 provide complementary protection. Parliament did not intend an employee to recover under both Part V and Part X for the same loss. Section 47B(2), however, excludes only detriment which can be compensated under the unfair dismissal provisions. Loss occurring before dismissal is not loss sustained in consequence of dismissal under section 123 and therefore remains within section 47B and section 49.

2. For section 95(1)(c), the employer’s repudiatory conduct does not itself constitute the dismissal. Dismissal occurs when the employee terminates the contract in circumstances entitling the employee to do so without notice. In this case that occurred on 9 November 2001. The earlier date on which the employer’s conduct first became a fundamental breach did not end the employee’s entitlement to Part V compensation. Lady Justice Smith agreed that section 47B compensation could cover all detrimental treatment up to acceptance of the repudiatory breach, including injury to feelings and personal injury where established.

3. The employer’s cross-appeal was dismissed. Section 123(1) requires a just and equitable compensatory award having regard to loss sustained in consequence of dismissal. Where future earnings are discounted because they are received early, the tribunal may consistently increase past earnings to reflect their late receipt. The increase is not interest on the award. It measures the claimant’s loss of the use of money which should have been received earlier.

4. The court left open whether the same approach to delayed payment should be adopted where no compensation for future loss is awarded. The case was remitted to the Employment Tribunal to assess Part V compensation. Costs of £6,332 were awarded to the employee.

1. Court of Appeal (Civil Division): The employee’s appeal was allowed and the employer’s cross-appeal was dismissed. The case was remitted to the Employment Tribunal to reassess Part V compensation.

2. Employment Appeal Tribunal: The employee’s appeal was allowed on two limited grounds and the award was increased by £600. The appeal was otherwise dismissed.

3. Employment Tribunal: The tribunal found unlawful detriment and unfair constructive dismissal because of protected disclosures. At the remedies hearing it awarded £6,000 for detriment and £12,441.85 for unfair dismissal, but restricted Part V compensation to detriment occurring before late June 2001.