Vesuvius Plc & Ors v Glenn Cowie

An appellate court may refuse to permit a new point of law even where the point is correct, requires no further evidence, and could be corrected without remission. The question is whether it is just to allow the point, assessed by reference to all relevant circumstances, particularly the nature of the lower proceedings, the nature of the point, responsibility for the error, finality, and prejudice to the respondent.

Substantial practical prejudice may arise where an award has been paid and taxed in more than one jurisdiction, so that reducing it would be difficult and stressful to unravel. An obvious point omitted below should ordinarily be raised promptly by reconsideration where that procedure may avoid such prejudice.

Following a liability hearing, the Employment Tribunal found that Mr Cowie had been unfairly dismissed and subjected to age discrimination. At remedy it awarded him £3.171 million. The award was grossed up for United Kingdom income tax, South Carolina tax, and employee national insurance contributions.

Vesuvius paid the judgment sum, less United Kingdom income tax, and later appealed. It accepted that national insurance contributions were not payable on the compensation and that their inclusion in the grossing-up calculation was an error of law. Mr Cowie contended that Vesuvius was advancing a new point which should not be permitted because of finality and the tax consequences of reopening the award.

The central issue was whether the EAT should allow that new point to be taken.

1. Appeal dismissed. Although it was an error of law to gross up the compensatory award for employee national insurance contributions, Vesuvius was seeking to raise a new point on appeal and the EAT declined to permit it.

2. Payments connected with termination were subject to United Kingdom income tax under Income Tax (Earnings and Pensions) Act 2003, sections 401–416. Grossing up for that tax was therefore necessary to achieve full compensation. There was no equivalent statutory basis for national insurance contributions, which were not payable on this compensation; their inclusion was consequently erroneous.

3. The issue had not been properly raised below. The absence of a national-insurance line in Vesuvius’s spreadsheet did not suffice. The agreed issues, written submissions and oral submissions did not expressly identify the objection, even after Mr Cowie’s solicitors had raised it in correspondence. The Tribunal and claimant bore some responsibility, but Vesuvius’s omission was the principal cause of the error.

4. The point was a pure legal point which could in principle be corrected by the EAT using a rough-and-ready grossing-up calculation. That did not end the matter. Following the approach described in [2024] AC 727 and [2019] EWCA Civ 1337, the court retained a discretion, exercised by considering all relevant factors and whether allowing the point would cause prejudice.

5. Allowing the point would cause substantial prejudice. Mr Cowie had received and paid tax on the award in the United Kingdom and South Carolina, including a South Carolina penalty. Recovering or adjusting those sums would be difficult, expensive and stressful. The long and hard-fought litigation, the claimant’s legitimate belief that it had ended, the relatively modest size of the disputed sum compared with the award, and Vesuvius’s failure to seek reconsideration reinforced that conclusion.

• Employment Appeal Tribunal: Vesuvius’s appeal against the London Central Employment Tribunal remedy judgment of 20 June 2024 was dismissed. The Employment Tribunal’s award stands.
• Employment Tribunal: Following a liability hearing, the Tribunal upheld claims of unfair dismissal and age discrimination. It later made the remedy award challenged on appeal.