International Petroleum Ltd & Ors v Osipov & Ors

An Employment Tribunal may determine a grossed-up compensation award using the evidence and calculations properly before it. It need not decide an abstract tax-law issue where a party, having been refused an adjournment, has not supplied evidence or calculations capable of applying its contention to the award.

Case-management discretion and the public interest in finality may justify rejecting a late attempt to reopen the factual basis of a grossing-up exercise. This is so even if the unadjudicated legal contention might otherwise have merit.

The Employment Tribunal had made a provisional compensatory award to Mr Osipov and directed the parties to agree, or provide the information needed to determine, the tax gross-up. After a further hearing it adopted the claimant's United Kingdom tax calculation and made a final grossed-up award.

The employer respondents appealed. They contended that the UK/US Double Tax Convention required United States tax law to be applied, or alternatively that foreign service relief should have reduced United Kingdom tax. They had sought an adjournment and had produced no calculation applying either contention when ordered to provide grossing-up calculations.

The central issue was whether the Tribunal erred by completing the exercise on the available United Kingdom tax calculations without deciding those tax-law questions.

1. Appeal dismissed. The Employment Tribunal made no error of law in proceeding with the grossing-up exercise on the material and calculations supplied by the parties.

2. The Tribunal's implicit refusal of an adjournment was a case-management decision within the range of reasonable decisions. The respondents had declined the proposed joint-expert process, had not sought specific disclosure, delayed in obtaining tax evidence, and produced equivocal material only immediately before the hearing.

3. After refusing an adjournment, the Tribunal ordered calculations. The respondents' only responsive calculation proceeded on United Kingdom tax law and did not calculate the effect of the UK/US Double Tax Convention or foreign service relief. The Tribunal was entitled to choose between the two calculations available.

4. It was neither necessary nor appropriate to determine the treaty or foreign-service-relief issues in principle. Without evidence and calculations capable of applying either argument to the award, such a determination would have been academic and would not have achieved a final payable award.

5. Finality was especially material because the claimant had been kept out of payment and the respondents were responsible for the absence of the necessary material. The public interest in finality applies even where the legal basis of an earlier decision may prove wrong. The tax calculation was nevertheless to be recalculated in light of the earlier judgment, using the Tribunal's unchallenged method.

• Employment Appeal Tribunal: dismissed the respondents' appeal against the Employment Tribunal's tax gross-up decision.
• Employment Tribunal: made a provisional compensation award, then made a final grossed-up award after a further hearing. No citation for either Tribunal judgment is stated.