South Tyneside Healthcare NHS Trust v Awotona

The Court of Appeal considered the correct approach to calculating compensation where an employment tribunal ordered reinstatement under the Employment Rights Act 1996 but the employer failed to comply. The court held that the assessment required by section 114(2) when making a reinstatement order is a different exercise from the later assessment of compensatory awards under sections 118 to 127 and the additional award regime in section 117(3) where reinstatement does not take place. The tribunal is not bound by an earlier section 114(2) calculation when carrying out the later "just and equitable" assessment under the unfair dismissal provisions, although the amount previously specified under section 114(2)(a) remains effective and must be taken into account for the limited purpose of calculating the statutory cap under section 124(4).

This is an appeal from the Employment Appeal Tribunal against an Employment Tribunal's remedies decision following findings that Dr Awotona had been unfairly dismissed and subjected to racial victimisation. The Employment Tribunal ordered reinstatement with a figure specified under section 114(2) of the Employment Rights Act 1996 and later, when the employer failed to reinstate, permitted the claimant to reopen evidence about lost income from family planning procedures. The respondent employer appealed to the EAT which held that losses for the period up to the reinstatement date, as specified under section 114(2), could not be reopened when calculating compensation under section 117(3).

Nature of the claim/application: Remedies after findings of unfair dismissal and discrimination; order for reinstatement and calculations of compensation where the reinstatement order was not complied with.

Procedural history: Employment Tribunal (Newcastle) found unfair dismissal and ordered reinstatement with an amount specified under section 114(2) (5 March 2003 and related reasons of 21 May 2003); EAT allowed the Trust's appeal (decision dated 29 June 2004); Court of Appeal allowed the claimant's appeal ([2005] EWCA Civ 217).

Issues framed by the court:

• Whether a tribunal may reopen or revisit sums specified under section 114(2) when subsequently calculating compensation under section 117(3) where reinstatement does not occur.
• How the figure specified under section 114(2) interacts with the calculation of the compensatory award and the statutory limit under section 124.

Reasoning: The court explained that section 114(2) contemplates assessment on the basis that reinstatement will occur and requires specification of benefits "which the complainant might reasonably be expected to have had but for the dismissal" for the period to reinstatement. By contrast, section 117(3)(a) and the compensatory regime in sections 118 to 127 require a later "just and equitable" assessment of unfair dismissal compensation when reinstatement does not happen. The earlier section 114(2) calculation does not bind the later compensatory assessment, though the section 114(2)(a) sum remains relevant for the narrow statutory purpose of allowing the section 124 limit to be exceeded to reflect that amount under section 124(4). The EAT was therefore wrong to hold that the tribunal could not reconsider losses for the whole period following dismissal.

Appeal allowed. The Court of Appeal held that the exercise under section 114(2) when ordering reinstatement is distinct from the later assessment under sections 118 to 127 and section 117(3) when reinstatement does not occur; a tribunal may reassess losses for the whole post-dismissal period when calculating compensatory awards, but the amount specified under section 114(2)(a) remains effective and is relevant only for determining whether the statutory limit in section 124 must be exceeded.

Employment Tribunal (Newcastle) found unfair dismissal and ordered reinstatement and specified sums under section 114(2) (decision sent 5 March 2003; extended reasons 21 May 2003). The Trust appealed to the Employment Appeal Tribunal, which allowed the Trust's appeal (EAT decision dated 29 June 2004). The claimant appealed to the Court of Appeal which allowed the appeal ([2005] EWCA Civ 217).