Hall & Anor v Durham County Council & Ors

Where an award is intended to leave a claimant with a specified net sum after tax, the taxable elements must be grossed up by calculating the amount which, after tax, produces that net sum. Adding the tax calculated on the intended net award is erroneous, because the added amount is itself taxable.

Future-loss compensation remains a broad assessment. A tribunal may ordinarily use a multiplier/multiplicand method, or exceptionally make a Blamire-type lump-sum assessment where uncertainty makes the conventional method artificially precise. Its assessment should not be disturbed unless it is wrong in principle or manifestly excessive.

The claimant was a teacher whose employment career and health were found to have been seriously affected by the respondents' treatment. Following an earlier remedies decision, a redundancy and a review of compensation, the Employment Tribunal made a substantial compensatory award. It assessed future earnings and pension loss on the basis that the claimant would not return to teaching and would have progressed to headship but for the wrongs.

On reconsideration, the Tribunal reduced the overall award but maintained its approach to tax grossing-up. Both sides appealed. The claimant challenged that calculation. The respondents advanced numerous complaints about the assessment of compensation, including future promotion prospects and pension calculations.

1. The claimant's appeal was allowed. The Tribunal correctly stated that it had to award a sum which would leave the claimant with the intended compensation after tax. It did not apply that principle. It calculated the tax on a sum equal to the intended compensation and added that tax to the award. Since the whole payment was then taxable, the claimant would receive less than the intended net sum. The taxable elements must instead be calculated by working backwards to identify the gross sum which, after tax, yields the intended net amount (paras 71-74).
2. At the preliminary hearing, the respondents' complaints generally disclosed no reasonably arguable error of law. Assessment of future loss is a broad exercise directed to restoring the claimant, so far as money can, to the position absent the unlawful treatment. A tribunal may use a multiplier/multiplicand method, or may exceptionally adopt a lump-sum approach where uncertainties are too great. An appellate court should not isolate minor aspects of a detailed assessment or interfere unless the result is wrong in principle or manifestly excessive (paras 12-14, 33-38).
3. The Tribunal was unarguably entitled to use the substantial-loss approach to pension loss. The claimant's length of service, the stability of teaching employment and the finding that she would not seek new employment supported that choice (paras 35-36).
4. The respondents were nevertheless permitted to proceed to a full hearing on two issues: whether a 100% chance of the claimant obtaining headship by age 50 was insufficiently explained or perverse, and whether the multiplier for pension already accrued wrongly assumed payment from age 65 rather than age 60. Any alteration to the headship percentage could require consequential reconsideration of pension loss (paras 49, 61-62, 70, 79).
5. The Tribunal's awards for injury to feelings and the consequences of redundancy were confined to the continuing effects of the original wrongs. Any overlap with a separate outstanding victimisation claim would be a matter for the tribunal deciding that claim (paras 75-78).

• Employment Appeal Tribunal: The claimant's appeal against the tax grossing-up method was allowed. The respondents obtained permission for a full hearing on the headship-prospects issue and the accrued-pension multiplier issue.
• Employment Tribunal at Newcastle: A Review Decision dated 23 December 2013 assessed compensation following a February 2011 review hearing. A Reconsideration Decision dated 24 April 2014 amended aspects of that award.
• Employment Tribunal at Newcastle: The claimant's original claim succeeded in May 2008. Compensation was first assessed in December 2008.