THE INDUSTRIAL TRIBUNALS

CASE REF:      1186/10

CLAIMANT:			Angeline Hamill

RESPONDENTS:		Redundancy Payments Service 

DECISION
The decision of the tribunal is that the respondent was entitled to reduce the payment made to the claimant under Article 229(1)(b) of the Employment Rights ( Northern Ireland Order ) 1996 in respect of the amount which the claimant’s employer was liable to pay her  for the statutory minimum period of notice required to be given, by the amount of benefit she would have received in that notice period if she had made a claim for it on termination of her employment and dismisses the claimant’s claim. 

Constitution of Tribunal:
Chairman (Sitting Alone):		 Ms M Bell
Appearances:
The claimant did not appear and was not represented.  
The respondent was represented by Ms P Baird of the Redundancy Payments Service, Department for Employment and Learning.

1.	The claimant in her claim complained that the respondent should not have made a notional deduction in respect of benefits of £80.06 from the notice payment claim paid to her on 22 April 2010 because she had not made a claim for benefits, was actively seeking work, and was never informed that she may have been entitled to a benefit payment. 

2.	The respondent in its response resisted the claimant’s claim on the basis that an employer who fails to give minimum statutory notice incurs a liability in respect of damages, that the payment which an employer should make is subject to the common law of damages which means that it is mitigated or reduced by income which the employee received or could have received during what should have been the notice period, and that the respondent calculates insolvency notice pay on that basis expecting employees who have been made redundant to reduce their losses by claiming benefit or finding alternative work. The respondent referred to case law in support of its authority to deduct benefit/new earnings from pay in lieu of notice as Secretary of State V Westwood for Employment (1984) IRLR 209 HL, for the deduction of notional tax as Secretary of State for Employment V Cooper (1987) ICR 776 CA, and for the deduction of notional benefit where an employee has failed to mitigate for no good reason as Secretary of State for Employment V Stewart (1996) IRLR 334 EAT.

3.	The tribunal proceeded with the hearing in the absence of attendance by the claimant or representation on her behalf under Rule 27 of the Industrial Tribunal Rules of Procedure in Schedule 1 of The Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005. 

Issues

4.	The issue for the tribunal was whether the respondent was entitled to reduce the payment made to the claimant under Article 229(1) (b) of the Employment Rights (Northern Ireland) Order 1996 in respect of the amount the claimant’s employer was liable to pay the employee for the statutory minimum period of notice required to be given by the amount of benefit she would have received in that notice period if she had made a claim for it on termination of her employment?

Evidence

5.	The tribunal considered the claim form, the response, bundle of documentation handed in by the respondent and heard submissions from Ms Baird. 

Findings of Fact

6.	The claimant was employed by a company, Kiltagh Ltd, which went into administration on 10 August 2009, the claimant’s employment was subsequently terminated by the administrator on 16 March 2010.

7.	The claimant received an application form entitled ‘CLAIM FOR PAYMENTS FROM THE NATIONAL INSURANCE FUND’ which she completed and dated 15 March 2010 for submission to the respondent. The respondent received the claimant’s completed application form on 28 March 2010. Page 5 of the application form sets out notes to claimants about claiming redundancy and insolvency payments, including;

‘Calculation

Your payment may be affected by legal limits that vary according to each type of payment.

•	……………..
•	Notice pay- this is based on length of service and rate of pay. This is limited to a maximum 12 week payment. ( You are obliged to keep your loss to a minimum by claiming all the benefits to which you are entitled; by doing your best to find a new job; and by taking your full wages or salary during the notice period in any new job you find)
•	You are obliged to reduce your losses during your notice period by claiming benefit or by finding alternative employment’.

8.	The respondent issued the claimant a redundancy payment on 12 April 2010.

9.	The claimant did not make a benefit claim, receive any benefits or succeed in obtaining a new job in the period 17 March to 30 March 2010, the statutory minimum notice period which the claimant’s employer should have given her. 

10.	The respondent wrote to the claimant on 22 April 2010 in respect of the compensation applied for by her because her former employer did not give her proper statutory notice. The respondent set out its calculation of compensation payable to the claimant which included a deduction of ‘Notional Benefit’ of £80.06, and in explanatory notes on its calculation and income deductions again referred to the obligation for a claimant to mitigate their loss as much as possible, and explained that ‘[i]f you had no income during the notice period we may have deducted the amount of benefit which would have been payable if you had made a claim.’ A payment was then issued to the claimant in accordance with the calculation provided by the respondent.

11.	If the claimant had claimed benefit on termination of her employment she should have received benefit of £80.06 for the statutory minimum notice period required to be given.

12.	The claimant emailed the respondent on 25 April 2010 requesting a refund of the notional benefit deduction it had made. 

13.	The respondent replied to the claimant by letter on 26 April 2010 stating that ‘[a]s you could have reduced your loss and did not do so we were obliged to reduce your compensation by the value of the unclaimed benefits.’ The respondent informed the claimant that if she were unhappy with its decision she could lodge a claim with the Industrial Tribunal, which the claimant did on 26 April 2010.

The Law

14.	The Department for Employment and Learning for Northern Ireland has a role as Statutory Guarantor in making payments to employees in respect of unpaid debts owed to them in their capacity as an employee, if the employer cannot or will not pay these debts. Article 227 of The Employment Rights (Northern Ireland) Order 1996 provides where satisfied as to certain pre-conditions, that the Department  shall, subject to limits set out therein, pay the employee out of the Northern Ireland National Insurance Fund the amount to which, in the opinion of the Department, the employee is entitled in respect of the debt. Applicable debts include under Article 229(1) (b) any amount which the employer is liable to pay the employee for the statutory minimum period of notice required to be given.

15.	In Secretary of State V Westwood for Employment (1984) IRLR 209 HL, the House of Lord’s held that an employee dismissed without the minimum statutory notice to which he was entitled may recover damages for the breach of contract   subject to the duty to mitigate so as to make social security benefits which he had received deductable from compensation payable to him by the employer or Secretary of State where the employer is insolvent.

16.	The English Court of Appeal held in Secretary of State for Employment V Cooper (1987) ICR 776 CA, that the Secretary of State was right to deduct notional tax from a payment made in lieu of notice.

17.	In Secretary of State for Employment V Stewart (1996) IRLR 334 EAT, the EAT set out its view that, at common law, there is a duty to mitigate loss by reasonable means, and accordingly what has to be taken into account is not merely any sum which the employee has actually recovered under the head, for example, unemployment benefit, but any sum which would have been recovered if reasonable steps had been taken. Acknowledgement is also made however that in certain circumstances, set out therein, if an employee either from his own understanding of the working of the benefits system or on any advice that he might have received in relation to benefit regulations, thought that a claim for unemployment benefit would not be successful, it would be very hard to say that the employee’s view was unreasonable, or, consequently, that any failure to apply for benefit was unreasonable. 

Applying the Law to the Facts Found

18.	On consideration of all the evidence before it, submissions made and case law referred to, the tribunal is satisfied on a balance of probabilities that common law principles apply which impose a duty upon a claimant to mitigate loss by reasonable means. Clearly any benefit actually received by a claimant must be deducted from the amount of a claim, however, in circumstances such as this where the claimant has not made a claim for benefits the tribunal considers that the question to be first answered to enable it to determine the issue before it, whether the respondent was entitled to make the deduction of notional benefit, is, whether the claimant acted reasonably in failing to apply on termination of her employment for benefit which she would have been entitled to receive? The claimant set out in her claim to the tribunal that she was actively seeking work, and was never informed that she may have been entitled to a benefit payment. The application  form however completed by the claimant entitled ‘CLAIM FOR PAYMENTS FROM THE NATIONAL INSURANCE FUND’, dated 15 March 2010, clearly states ‘[y]ou are obliged to keep your loss to a minimum by claiming all the benefits to which you are entitled; by doing your best to find a new job; and by taking your full wages or salary during the notice period in any new job you find’ and ‘[y]ou are obliged to reduce your losses during your notice period by claiming benefit or by finding alternative employment’. In the absence of any evidence before the tribunal to satisfy it that the claimant acted reasonably in failing to apply for benefits during the statutory minimum notice period, in light of the notes provided to the claimant by the respondent in its application form, ‘CLAIM FOR PAYMENTS FROM THE NATIONAL INSURANCE FUND’ which was completed by the claimant on termination of her employment seeking compensation from the respondent, the tribunal is not persuaded that the claimant acted reasonably in failing to apply on termination of her employment for benefit which she would have been entitled to receive in the circumstances. The tribunal accordingly finds that the respondent was entitled to make the deduction of notional benefit made from compensation paid in respect of notice pay.

Conclusion

19.	The tribunal finds that the respondent was entitled to reduce the payment made to the claimant under Article 229(1) (b) of the Employment Rights (Northern Ireland) Order 1996 in respect of the amount which the claimant’s employer was liable to pay her  for the statutory minimum period of notice required to be given, by the amount of benefit she would have received in the statutory minimum notice period if she had made a claim for it on termination of her employment and dismisses the claimant’s claim. 

Chairman:

Date and place of hearing:         27 July 2010, Belfast		

Date decision recorded in register and issued to parties: