Office Equipment Systems Ltd v Hughes

The Court of Appeal allowed the employer's appeal insofar as the Employment Tribunal's draft decision on remedy was set aside and the matter remitted for reconsideration. The court held that, although a respondent who has been debarred from defending liability is not automatically entitled to a hearing on remedy, a tribunal exercising its case-management powers under Rule 21 of the Employment Tribunal Rules of Procedure 2013 should, in a substantial or complex case, ordinarily invite written submissions from the debarred respondent and consider whether an oral hearing is required. The court applied the overriding objective and proportionality, distinguishing situations involving small, single‑hearing claims from cases requiring a separate remedies hearing. The remittal followed because this claim was sufficiently substantial (draft compensation approaching £75,000) that the employer ought to have been invited to make submissions on quantum.

Background and parties: Ms Hughes issued tribunal claims for unfair dismissal, sex discrimination, notice pay, holiday pay and arrears of pay against Office Equipment Systems Ltd. The respondent employer failed to file a timely ET3 and was debarred under Rule 21. Following liability being decided against the employer on default, the tribunal proceeded to prepare draft findings on remedy without allowing the employer to participate. The employer appealed to the Employment Appeal Tribunal and then to the Court of Appeal.

Procedural history:

• The employer sought an extension of time and filed an out‑of‑time ET3; Employment Judge Emery refused the extension and dismissed the application. A liability decision was issued by Employment Judge Cadney under Rule 21. The employer appealed to the EAT; Judge Eady allowed the EAT appeal on liability only, remitting the question of the employer's alternative defence to the ET for reconsideration on the existing papers. The EAT dismissed the employer's appeal against the tribunal decision (in an email) to exclude the employer from participating at the remedy stage. Permission to appeal to the Court of Appeal was granted by Lewison LJ.

Nature of the application and issues: (i) Whether, having entered judgment on liability under Rule 21(2)-(3) because the respondent had not filed a response in time, the tribunal was required or obliged to invite the respondent to make written submissions (and/or to allow participation at an oral hearing) on remedy; (ii) how the overriding objective and proportionality should be applied to case management in remedies hearings following default judgments; and (iii) whether the draft remedy decision should stand.

Court's reasoning and conclusion: The Court of Appeal analysed Rule 21 and principles in prior authorities and concluded there is no absolute rule that a debarred respondent must be allowed to participate in remedy determinations, but in substantial or complex cases it will usually be inappropriate to exclude the respondent entirely. The tribunal should ordinarily invite written submissions from a defaulting respondent and then decide whether an oral hearing is needed. Given the size and complexity of the draft award (just under 75,000), the employer should have been invited to make submissions on quantum. The appeal was therefore allowed to the extent of setting aside the draft remedy decision and remitting the matter for reconsideration. The court also exercised its costs discretion and ordered the respondent to pay 12,500 towards the employer's costs of the appeal plus the court fee of 1,727, with enforcement stayed until the tribunal has determined remedy.

Appeal allowed. The Court of Appeal held that while a respondent debarred under Rule 21 is not automatically entitled to participate in remedy proceedings, in a substantial or complex remedies case the tribunal should normally invite written submissions from the respondent and consider whether an oral hearing is required. Because the draft remedy award was substantial, the tribunal should have permitted the employer to make submissions; the draft decision on remedy was set aside and the matter remitted for reconsideration.

Appeal to the Court of Appeal from the Employment Appeal Tribunal. Permission to appeal to the Court of Appeal was granted by Lewison LJ on 22 May 2017. The EAT (Judge Eady QC) had earlier allowed the employer's appeal on a point of liability and dismissed the employer's appeal against exclusion from the remedy stage; the Court of Appeal gave the final decision in [2018] EWCA Civ 1842.