Toni & Guys (St Paul's) Ltd v Georgiou

For the basic award following unfair dismissal, a week’s pay must be calculated under the mandatory statutory formula in Part XIV, Chapter II of the Employment Rights Act 1996. Where remuneration varies with work done, the Tribunal may not substitute a speculative figure for actual remuneration during the prescribed 12-week period.

By contrast, section 123(1) gives a Tribunal a broad just-and-equitable discretion when assessing the compensatory award. It may compensate lost post-dismissal commission by reference to earnings the employee would have received but for the employer’s conduct forming part of the unfair dismissal.

The claimant was employed as a commission-only hairstylist after selling her shares in the respondent company. Her commission was 34 per cent of net takings. Following her dismissal, the Employment Tribunal upheld her unfair-dismissal claim and assessed both the basic and compensatory awards using a higher weekly figure than her actual recent earnings.

The Tribunal found that the respondent had suspended the claimant, damaged her goodwill with clients and diverted work from her. The respondent appealed, contending that the statutory calculation of a week’s pay required the actual earnings in the relevant 12-week period to be averaged. The central issue was whether that statutory method governed both the basic award and the assessment of lost earnings within the compensatory award.

1. Appeal allowed in part. The Employment Tribunal erred in calculating the basic award. Under Part XIV, Chapter II of the Employment Rights Act 1996, section 220 requires a week’s pay to be calculated in accordance with that Chapter. Under sections 221(3) and 223(1), commission-based remuneration which varies with the work done must be calculated from the employee’s actual hours and remuneration in the prescribed 12-week period.

2. The Tribunal was therefore not entitled, for the basic award, to use a higher figure based on the work the claimant might have received if the respondent had not acted unfairly. There was no finding that the employer had contractually assured the claimant of a minimum amount of work or had breached an implied contractual term entitling her to that higher remuneration. Kinzley v Minories Finance Ltd was distinguishable.

3. The compensatory award stood. Section 123(1) contains no equivalent prescribed calculation of net weekly pay. It requires the amount which the Tribunal considers just and equitable, having regard to loss sustained in consequence of dismissal so far as attributable to the employer’s action.

4. The Tribunal could therefore assess post-dismissal loss on the basis of commission the claimant would have earned absent the respondent’s diversion of work. That conduct formed part of the unfairness found. It would not be just and equitable for the respondent to benefit from the resulting reduction in her pre-dismissal earnings.

5. The basic award was remitted to the Employment Tribunal for reassessment, unless the parties provided an agreed written variation within 14 days.

• Employment Appeal Tribunal: allowed the employer’s appeal concerning the basic award and remitted that issue; dismissed the appeal concerning the compensatory award.
• Employment Tribunal, London Central: upheld the claimant’s unfair-dismissal complaint and awarded compensation. The judgment and reasons were dated 18 June 2012.