Scope v Thornett

The Court of Appeal considered whether an employment tribunal had properly limited a compensatory award for future loss to six months when assessing compensation for unfair dismissal under section 123 of the Employment Rights Act 1996. The tribunal had found the dismissal unfair and apportioned 25% contributory fault to the claimant. The Employment Appeal Tribunal had set aside the six-month limitation as based on impermissible speculation. The Court of Appeal held that tribunals may make predictive assessments about future loss (applying the principles in Polkey and related authorities) but must give adequate reasons linking the evidence to the period chosen. The tribunal's reasons for the six-month limitation were not sufficiently clear, so the Court remitted the case to the employment tribunal to reassess compensatory loss while leaving the findings of unfair dismissal and contributory fault intact.

This was an appeal from a decision of the Employment Appeal Tribunal. At first instance an employment tribunal at Exeter held that Dr Thornett had been unfairly dismissed by Scope, apportioned 25% contributory fault to her conduct and awarded a basic and compensatory award calculated on the basis that the employment would have continued for some six months but no longer. The Employment Appeal Tribunal allowed the respondent's appeal on quantum, set aside the six-month limitation and remitted the case.

Nature of the claim: claim for unfair dismissal and an award of compensation under section 123 of the Employment Rights Act 1996.

Procedural history: Employment Tribunal (1 April 2005) found unfair dismissal, contributory fault 25% and awarded £11,600.25 limited to six months future loss; EAT (8 March 2006) set aside the six-month limitation; Court of Appeal (27 November 2006) considered the proper approach to assessing future loss.

Issues framed:

• Whether the employment tribunal was entitled to limit the compensatory award for future loss to six months in light of the evidence.
• Whether the employment tribunal's reasons for that limitation were adequate.
• Whether the EAT was correct to set aside the limitation as being impermissibly speculative.

Court's reasoning and decision: The Court reviewed statutory guidance in section 123 ERA 1996 and authorities including Polkey, Lambe, King, Gover and others. It held that tribunals are required to make just and equitable assessments of future loss and may necessarily involve prediction; such predictions are not excluded merely because they involve speculation. However, where a tribunal concludes that the employment would have ended within a fixed period, it must set out sufficiently clear reasons linking the evidence to that conclusion and explaining the mechanism by which the employment would have ended. The tribunal's reasons for the six-month limit were unclear and did not analyse how the employment would have ended after six months; consequently the Court remitted the matter to the employment tribunal to reassess future loss. The findings of unfair dismissal, contributory fault (25%) and agreed arithmetic of the components of the award were to stand.

Appeal allowed in part. The Court of Appeal held that an employment tribunal may lawfully make a predictive assessment of how long employment would have continued and so limit compensatory damages, but the tribunal must give adequate reasons linking the evidence to the period adopted. The tribunal's reasons for limiting compensation to six months were insufficiently clear, so the Court remitted the compensation question to the employment tribunal for rehearing; the findings of unfair dismissal and 25% contributory fault were to remain intact.

Employment Tribunal, Exeter (1 April 2005): found unfair dismissal, apportioned 25% contributory fault and awarded £11,600.25 with compensatory loss limited to six months. Employment Appeal Tribunal (8 March 2006): allowed respondent's appeal on quantum, set aside the six-month limitation and remitted. Court of Appeal (27 November 2006): allowed Scope's appeal in part and remitted the compensatory award issue to the employment tribunal for reconsideration ([2006] EWCA Civ 1600).