Appeal No. UKEAT/0536/12/BA

EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

	At the Tribunal
	On 1 March 2013

Before
HIS HONOUR JUDGE PETER CLARK
MR G LEWIS
MR D NORMAN

OXFORD HEALTH NHS FOUNDATION TRUST	APPELLANT

(1) DR V LAAKKONEN
(2) DR S TAYLOR
(3) DR M COLE	RESPONDENTS

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR MOHINDERPAL SETHI
(of Counsel)
Instructed by:
DAC Beachcroft LLP
Portwall Place
Portwall Lane
Portwall
Bristol
BS99 7UD
	
For the Respondents	MS SARAH LIPPOLD
(of Counsel)
Instructed by:
Gateley (Manchester) LLP
Ship Canal House
98 King Street
Manchester
M2 4WU

SUMMARY
UNFAIR DISMISSAL – Compensation

Respondent’s appeal allowed only in relation to Employment Tribunal’s making of a basic award coupled with an order for reinstatement.  The two are mutually exclusive: see Employment Rights Act ss.112(4) and 118(1).

HIS HONOUR JUDGE PETER CLARK

1.	This case has been proceeding in the Southampton Employment Tribunal.  The parties are Dr Victoria Laakkonen, Dr Sarah Taylor, Dr Mary Cole, Claimants and Oxford Health NHS Foundation Trust, Respondent.  We shall so describe them.

2.	We have before us for full hearing, on the directions of HHJ McMullen QC on the paper sift, an appeal by the Respondent against the judgment of a Tribunal chaired by Employment Judge Simpson promulgated with reasons on 13 July 2012.  There are six grounds of appeal to which we shall return.  The sixth ground adds nothing to the first five.

The facts
3.	All three Claimants are Consultant Child Psychiatrists, formerly employed by Salisbury Health Care NHS Trust (Salisbury).  Each of them worked part-time; all have child care responsibilities.  It was an express term of their contracts of employment with Salisbury that each was not required to perform out of hours on-call duties.

4.	In about October 2008 the Respondent tendered to provide child and adolescent psychiatric services, then provided by three separate authorities including Salisbury.  Their tender was successful and the contract awarded to the Respondent required it to provide emergency and crisis care 365 per days per year and 24 hours per day.  The employment of the Claimants transferred to the Respondent under the provisions of the TUPE Regulations 2006 on 1 April 2010.  Thereafter an issue arose between the Respondent and the Claimants.  The Respondent wished to apply shared out of hours duties on all 11 consultants in the wider area, formerly covered by the three authorities prior to the transfer date.   The Claimants did not agree to that alteration in their pre-transfer terms and conditions, citing child care responsibilities.  

5.	A consultation process then followed which the Tribunal, having heard the evidence on both sides, concluded was, “insincere, not genuine and pre-determined”; reasons paragraph 21.  Ultimately, absent agreement, the Respondent served three months notice of dismissal on the Claimants on 25 January 2011, coupled with an offer of re-engagement on the same terms as before, save for a requirement to perform out of hours duties.  Upon expiry of the notice period on 19 April 2011 the Claimants accepted the new terms under protest and continued in the Respondent’s employment.

6.	On 18 July 2011 the Claimants, supported by their professional association, the BMA, presented complaints of unfair dismissal and in the case of two Claimants indirect sex discrimination against the Respondent to the Employment Tribunal.

The Tribunal decision
Unfair dismissal
7.	The Tribunal found, at paragraph 10, that the Claimants were dismissed for a reason connected with the transfer, namely the Claimants’ refusal to accept variations to their contracts of employment requiring them to accept out of hours on-call duties equally with all other consultants extending over the whole of the Respondent’s territory; see Regulation 7(1)(b) TUPE.  However, the Tribunal was not satisfied that the reason was an economic, technical or organisational (ETO) reason; paragraphs 11 to 15.  Accordingly, the dismissals were automatically unfair.  In the alternative they went on to consider whether if an ETO reason was made out and the reason for dismissal was the potentially fair reason of some other substantial reason, that the dismissals were fair applying the test in section 98(4) of the Employment Rights Act 1996.  They found that they were not; there was no genuine consultation; paragraph 18.  Dismissal, they found, was both substantively and procedurally unfair; paragraph 24.

Indirect sex discrimination
8.	The Tribunal found in the case of Drs Laakkonen and Taylor only that the Respondent applied a PCP which also applied to male consultants, namely a requirement to provide out of hours on-call cover which placed women at a greater disadvantage when compared with men.  That since women consultants as a group bore greater responsibility for child care than men, the PCP had a disproportionate impact on women and, in particular, the two Claimants to whom we have referred.  As to justification, the Tribunal balanced the legitimate aim of the Respondent to provide year round, 24/7 coverage divided equally amongst all consultants against the adverse impact on these two Claimants of the PCP and concluded that the requirement for equal participation among consultants was not proportionate; see paragraph 33.  Having failed to discharge the burden of proving justification, the Respondent indirectly discriminated against those two Claimants on the grounds of their sex.

Remedy
9.	The Tribunal ordered the Respondent to reinstate each Claimant on the pre-transfer terms; in particular preserving their exemption from out of hours on-call duties.  In addition, the Respondent was ordered to make a basic award to each Claimant based on the statutory formula and in the case of Dr Laakkonen made an award of £298.95 for additional child care costs incurred in undertaking rota duties under the new contract.

10.	In relation to the finding of unlawful discrimination, the Tribunal awarded each Claimant £5,000 compensation for injury to feelings by reference to the Vento guidelines.  There is no challenge to that figure if the Tribunal’s liability finding is upheld.

The appeal 
Unfair dismissal
11.	The Respondent challenges, a) the finding that the reason or principal reason for dismissal was connected with the transfer; b) that if it was it was not for an ETO and; c) if it was for an ETO reason the dismissal was unfair under section 98(4).  It necessarily follows that even if the Respondent is correct on the first two grounds of appeal the liability appeal will nevertheless fail if the third challenge cannot be made out.  We therefore, without opposition from the Bar, began with the question of fairness under section 98(4), the Tribunal’s alternative finding.

12.	The fourth ground of appeal focuses on the Tribunal finding that the Respondent failed to carry out a genuine consultation exercise.  We have considered that challenge and conclude that it raises no error of law on the part of the Tribunal.  The principles to be found in R v British Coal Corporation ex-parte Price [1994] IRLR 72 were properly applied by the Tribunal.

13.	The perversity challenge in our Judgment comes nowhere the high threshold identified by Mummery LJ in Yeboah v Crofton [2002] IRLR 634.  Thus, even if the dismissals were for an ETO reason connected with the transfer, the challenge to the finding of unfair dismissal fails on reasonableness.  We remind ourselves that it is not for this Tribunal to substitute its view for that of the Employment Tribunal; see Bowater v North West London Hospitals [2011] IRLR 331 paragraph 19 per Longmore LJ.  That is effectively, it seems to us, what the Respondent asked us to do under the guise of setting aside the Tribunal’s finding on the basis that they wrongly substituted their view for that of the employer.  We do not accept that the Tribunal fell into that error.  We uphold the finding of unfair dismissal.  In these circumstances it is unnecessary for us to decide grounds two and three of the appeal.

Indirect sex discrimination
14.	We do not accept the Respondents’ attempt to reargue the factual question of the PCP.  The arguments on both sides were considered below and the Tribunal reached, in our view, a permissible finding as to the PCP.  We are reminded by Ms Lippold that a PCP may exist notwithstanding that there may be exceptions to it; see the Judgment of the EAT delivered by Burton P in British Airways Plc v Starmer [2005] IRLR 862 at paragraph 17.  In our view the Tribunal were entitled to identify the PCP we have described as the relevant PCP in this case and further, that that requirement for all consultants to perform out of hours duty had an adverse impact on the female group to which the Claimants belong when compared with male consultants for the reasons given by the Tribunal.  The particular disadvantage suffered by the two relevant Claimants is fully explained by the Tribunal at paragraphs 25, 26 and 29.  

15.	As to justification, applying the still relevant approach of the Court of Appeal in Allonby v Accrington & Rossendale College [2001] IRLR 364 when applied to section 19(2) of the Equality Act 2010 the Tribunal correctly balanced the legitimate aim of the Respondent, equal participation by consultants in the required out of hours on-call scheme, with the adverse effect of the PCP on these two Claimants and permissibly reached the conclusion (paragraph 33) that the Respondent had not discharged the burden of showing objective justification for the PCP; see also paragraph 35.

16.	We have carefully considered the “Meek” challenge to the reasoning at paragraph 33, argued by Mr Sethi today, but we are not persuaded that the Tribunal’s decision on justification is vitiated on that ground.  The parties have been told why they won or lost.

17.	Accordingly, the challenge to the finding of indirect sex discrimination fails and is dismissed.

Unfair dismissal remedy
18.	The order for reinstatement is not challenged and therefore stands.  However, the Respondent raises a challenge, ground one, to, a) the making of a basic award to all three Claimants and; b) reimbursement of £298.95 expenses incurred by Dr Laakkonen, described as a compensatory award.

19.	Dealing first with the basic award, Miss Lippold, who appeared below, contends the Respondent did not challenge the Claimants’ entitlement to a basic award which featured in the Claimants’ schedule of loss if the preferred remedy of reinstatement was ordered.  She submits it is not now open on appeal for the Respondent to take the point for the first time.  We have considered that submission and reject it.  The point is a hard edged question of law, a potential knock out point which requires no further fact finding.  It is a pure question of statutory interpretation and falls within the exception to the general rule identified by the Court of Appeal in Glennie v Independent Magazines (UK) Ltd [1999] IRLR 719 that a new point cannot be taken for the first time on appeal.  For a recent example of the Court of Appeal entertaining a whole new statutory point on appeal, not taken below either here or in the Employment Tribunal, see Clyde & Co v Bates Von Winkelhof [2012] IRLR 992, paragraphs 34 to 40 per Elias LJ.  

20.	Is it open to an Employment Tribunal to make a basic award when ordering reinstatement?  Plainly not.  The answer it seems to us lies first in section 118(1) ERA which provides:

“Where a Tribunal makes an award of compensation for unfair dismissal for unfair dismissal under section 112(4) or 117(3)(a) the award shall consist of:
(a) a basic award and;
(b) a compensatory award.”

21.	Section 112 sets out the remedies available for unfair dismissal.  Section 112(4) provides:

“If no order is made under section 113, the Tribunal shall make an award of compensation for unfair dismissal (calculated in accordance with section 118 to 126).”

22.	Section 113 orders are orders for reinstatement or re-engagement.

23.	It therefore follows that the Tribunal may only order a basic award and/or compensatory where no reinstatement or re-engagement order is made.  Conversely, where a reinstatement order is made, at that stage by, by a combination of section 118(1) and 112(4), no basic award or compensatory award may be ordered.  It will be different if subsequently a reinstatement order is not complied with by the Respondent; see section 117.

24.	That disposes of the basic awards made with reinstatement orders in this case.  They must be set aside.  That result it seems to us causes no injustice to the Claimants, who retain the benefit of their earlier continuous service should they be unfairly dismissed or made redundant following reinstatement.

25.	As to the small sum by way of expenses awarded to Dr Laakkonen, we accept that it also follows by parity of reasoning that such sum is not recoverable by way of a compensatory award, applying the statutory provisions we have earlier mentioned.  However, we agree with Ms Lippold that those expenses were properly ordered by the Tribunal under section 114.  The order for reinstatement shall specify any amount payable by the employer in respect of any benefit which the complainant might reasonably be expected to have had but for the dismissal between termination of employment and reinstatement.  

26.	Our analysis is that but for the dismissal she would have received her full salary without incurring the specified expenses.  In order to put her in the position in all respects as if she had not been dismissed; section 114(1) those expenses are recoverable under section 114(2)(a).

Disposal
27.	This appeal is allowed to the extent only that the Claimants’ basic awards are set aside.  No determination is made on grounds two and three of the Notice of Appeal which are moot.  All remaining grounds of appeal are dismissed.