Dunelm (Soft Furnishings) Ltd v Baker & Anor

An Employment Tribunal must decide the issues put before it. If it proposes to determine a material issue which neither party has raised, it must first give both parties notice and a fair opportunity to make representations. A procedural failure of that kind is not excused merely because the tribunal may have reached the legally correct result.

When considering a late amendment which introduces a new claim, the tribunal must exercise its discretion by reference to all the circumstances, including prejudice, reasonable practicability and delay. It must give adequate reasons. Prejudice to the respondent cannot properly be deferred to a possible later review; where a fair opportunity to meet the new claim is required, an adjournment should be granted.

The employer appealed two decisions of the Cardiff Employment Tribunal concerning two former at-home consultants. The Tribunal had found that both were employees, that Mrs Baker had been unfairly and wrongfully dismissed, and that Mrs Wood had been wrongfully dismissed.

Although the parties had proceeded on the basis that employment ended on 17 February 2011, the Tribunal found in its reserved liability decision that dismissal occurred on 1 February 2011. It also awarded three months' contractual damages despite an express one-month notice term. At the subsequent remedies hearing, it permitted oral amendments adding substantially late claims for unpaid mileage allowances and awarded compensation.

The central questions were whether the Tribunal could determine unraised issues without hearing the parties, and whether it had lawfully exercised its discretion to permit the late amendments.

1. Appeal allowed in part; cross-appeal dismissed. The liability and remedies decisions could not stand to the extent challenged. The unfair dismissal and wrongful dismissal claims, and the applications to amend for mileage allowances, were remitted to a fresh Employment Tribunal.

2. The Tribunal acted contrary to natural justice by deciding, without notice or submissions, that the dismissals occurred on 1 February rather than the date of 17 February advanced by both parties. The date was material to limitation, the alleged fundamental breach, consultation, and wrongful dismissal. Although Chapman v Simon [1994] IRLR 124 concerned an unmade claim, the same requirement of procedural fairness applied to this material issue within an existing unfair dismissal claim.

3. The employees' submission that the result should nevertheless be upheld as inevitable was rejected. A tribunal's grave departure from fairness is not cured simply because it may ultimately have reached the correct legal answer. In any event, whether the facts required a finding of dismissal on 1 February was arguable. The fairness of the dismissal, including any Polkey deduction, therefore had to be determined afresh.

4. The award of three months' notice pay was also procedurally unfair. The claims and evidence sought only one month's notice. The Tribunal raised and resolved for itself the possible implication of an additional redundancy-consultation term, on a legally contestable issue, without notifying the parties or receiving their evidence and argument.

5. The Tribunal's permission for late mileage claims was vitiated by errors of fact and law. It had to apply the established amendment principles, including the balance of injustice and hardship identified in Cocking v Sandhurst Stationers Ltd [1974] ICR 650 and Selkent Bus Co Ltd v Moore [1996] ICR 586. Its treatment of the claimants as wholly unrepresented, its reliance on the absence of an ET1 box, its County Court reasoning, and its unexplained conclusions on reasonable practicability and reasonable time were erroneous. Any immediate prejudice from the new claims required an adjournment, not relegation to a possible review application.

• Employment Appeal Tribunal: By this judgment, [2012] UKEAT 0142_12_3010, the employer's appeal was allowed in part. The cross-appeal was dismissed and the relevant claims were remitted to a fresh Tribunal.

• Employment Tribunal, Cardiff: Liability reasons sent on 28 November 2011 found Mrs Baker unfairly and wrongfully dismissed and Mrs Wood wrongfully dismissed. Remedies reasons sent on 18 April 2012 permitted late mileage-allowance amendments and awarded compensation.