Scope v Thornett

When assessing compensation for future loss after unfair dismissal, an employment tribunal must predict what would probably have happened, even though the exercise involves uncertainty. Evidence that employment might have ended must be taken into account, but speculation does not remove the tribunal’s statutory duty to reach a just and equitable assessment. The tribunal may assess a future period of loss or apply a percentage reduction where appropriate. Its reasons must identify the factors relied on and explain how they support the conclusion reached. An appellate court should not substitute its own assessment merely because prediction is difficult, but it may remit where the tribunal’s reasoning is insufficiently clear.

Scope appealed from the Employment Appeal Tribunal, which had allowed Dr Carol Thornett’s appeal against an employment tribunal’s assessment of compensation following her conceded unfair dismissal. The employment tribunal had found the dismissal unfair, made a 25% reduction for contributory fault, and limited future loss to six months. The EAT removed that limitation, holding that the tribunal could not sensibly reconstruct the counterfactual position and should not have reduced the loss.

The central issue in the Court of Appeal was whether the employment tribunal was entitled to assess a finite period of future loss and, if so, whether its reasons adequately explained the six-month assessment.

1. Appeal allowed in part and remitted. The finding of unfair dismissal, the basis for it, the finding of 25% contributory fault, and the agreed quantum figures stood. The six-month limitation was remitted for reconsideration.
2. Under Employment Rights Act 1996, section 123, the tribunal must award such compensation as is just and equitable having regard to loss caused by the dismissal. Assessing future loss necessarily involves prediction and may involve speculation. That difficulty does not permit a tribunal to decline its statutory task.
3. The tribunal must consider evidence that employment might not have continued indefinitely. It may predict a finite period of continued employment where the evidence creates a material risk of an earlier ending. Conversely, where countervailing evidence is slight, indefinite continuation may be the appropriate prediction. The assessment may also be expressed through a percentage reduction.
4. The parties should place before the tribunal the material bearing on how long employment would have continued. The tribunal should adopt a flexible approach and scrutinise that evidence carefully. An appellate court should tread warily before substituting its own impression for that of the fact-finding tribunal.
5. The employment tribunal’s reasons were inadequate. Although material might have justified six months, paragraph 18 relied on factors favouring a longer period and did not explain how the contrary factors led to the six-month conclusion. It did not identify how the employment was expected to end, and its description of the issue as highly speculative weakened the assessment.
6. The remission was at large on the six-month issue, subject to preserved basic credibility findings. The tribunal could reassess the future period, or adopt a percentage reduction if required for a just and equitable result. Six months was not to be treated as a starting point, and evidence about the future of the MTS operation at Vranch House was admissible.

• Court of Appeal (Civil Division): appeal from the Employment Appeal Tribunal allowed only to the extent indicated; the compensation issue was remitted.
• Employment Appeal Tribunal (EAT/477/05/CK): appeal from the employment tribunal allowed; the six-month limitation on future loss was removed and the case remitted.
• Employment Tribunal: dismissal found unfair; compensation was reduced by 25% for contributory fault and future loss was assessed on a six-month basis.