Wood v Mitchell SA Ltd

When assessing compensation for unfair dismissal, a tribunal must estimate the loss flowing from the dismissal, including employment benefits the claimant might reasonably have received. The usual starting point is the period for which the claimant would have remained employed had the dismissal not occurred.

Supervening illness unrelated to the dismissal will not generally mark the end of recoverable loss. The tribunal should consider how long employment would have continued, what sick pay or other benefits would have been received, whether the employee might have recovered and returned to work, and any notice or payment in lieu. Treating illness as a cut-off point is justified only in unusual circumstances.

The Employment Tribunal had upheld the claimant’s complaint of unfair dismissal and later awarded compensation of £5,842.14. It found that he would have remained on sick pay until returning to work on 1 February 2007, and accepted that his subsequent psychiatric illness was attributable to marital difficulties rather than the dismissal.

The tribunal nevertheless treated the psychiatric illness as ending the respondent’s responsibility for continuing loss. The claimant appealed, contending that the tribunal should have considered how long he would otherwise have remained employed and what employment benefits he would have received during the illness.

1. Appeal allowed and remedies remitted. The tribunal had adopted too narrow a view of loss attributable to the dismissal.
2. Under section 123(1) and (2)(b) of the Employment Rights Act 1996, compensation must reflect loss sustained in consequence of dismissal, including benefits the claimant might reasonably have expected to receive. The assessment generally requires an estimate of the period for which the claimant would have remained employed had there been no unfair dismissal.
3. The claimant’s illness was accepted to be unrelated to the dismissal. That finding did not determine when his employment would have ended or exclude loss arising after the illness began. Employment may confer valuable rights during unrelated sickness, including sick pay, investigation of fitness to return, the possibility of returning to work, and notice or payment in lieu if dismissal later became fair.
4. The tribunal should therefore have considered, on the evidence, how long employment would have continued, what pay or benefits would have accrued during the illness, and whether the claimant might have returned to work. The date on which illness supervened would not generally be the cut-off point.
5. There may be unusual cases where an employee has brought the illness upon himself to such an extent that it is just and equitable to treat it as a cut-off point. Psychiatric illness alone does not justify that approach. The tribunal had to reconsider the period after the claimant became unfit for work and make the necessary financial assessment.

• Employment Appeal Tribunal: allowed the appeal against the Employment Tribunal’s remedies judgment dated 9 October 2009 and remitted the matter for reconsideration.
• Employment Tribunal: had previously found the dismissal unfair and awarded compensation of £5,842.14.