The employer's ability to pay is irrelevant

Tao Herbs & Acupuncture Ltd v Jin [2010] UKEAT 1477_09_1407

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• When assessing loss under s123 of the Employment Rights Act 1996 an ET does not need to take account of the employer's ability to pay.
• No bias or arguable point of law was found in the case, therefore section 21 precluded the EAT from hearing the case.
• Polkey should always be considered (Not good for claimants as it can reduce compensation to zero)

The Claimant alleged (and the employment tribunal found that)she was unfairly dismissed for assertion of a statutory right statutory rights to be paid the National Minimum Wage and had suffered unlawful deductions from wages.

Haritaki v South East England Development Agency UKEATPA0006/08 (paragraph 1 to 13) was followed as to the approach taken under rule 3 of "no trace of the arguments as to deductions ever having been raised before the ET and it is far too late to raise them now". The EAT found that the ET was right to find that the Claimant had passed the probationary period, that the Claimant dismissed because she had asserted her statutory rights to be paid the National Minimum Wage and that the Respondent could not attempt to reargue the reasons for the Claimant's dismissal.

The dismissal was consequnetly automatically unfair and the Claimant was thereby allowed to claim for unfair dismissal despite lacking 12 months service.

As no bias was found in the case, the Claimant's evidence being preferred to the respondents, JUDGE McMULLEN QC decided that no point of law was found and thus section 21 precluded the EAT from hearing the case.

There were arguments as to whether the Claimant could bring the case as under the Employment Act 2002, no longer in force, a grievance needed to be made by the Claimant regarding unlawful deductions.

The Respondent claimed that the Employment Tribunal erred in law because the Tribunal had held that the Claimant had raised an issue relating to minimum pay. The EAT found that it wasn't clear whether the Claimant had explicitly raised a claim under the National Minimum Wage Act 1998 but that as the Respondent had accepted that the claim was of not having been paid in full amounted to an allegation under the National Minimum Wage Act 1998 and that there were unlawful deductions.

The EAT criticised the Employment Tribunal for not addressing Polkey regarding the losses suffered by the Claimant. " It should in every case of unfair dismissal do so."

The respondent argued that the Tribunal erred in law by failing to implement the proposition advanced in Polkey v AE Dayton Services Ltd [1987] IRLR 503, to enquire what would have happened had the Claimant not been unfairly dismissed.

The respondent further argued for the application of Software 2000 Limited v Andrews UKEAT/0533/06, that the Tribunal should have considered whether to make a Polkey reduction (Although the judgment doesn't spell this out it seems that the argument was that, as the business was trading in difficulties in the recession and was possibly faced with bankruptcy; if the business went bankrupt the Claimant might get nothing, so the award should be reduced accordingly). After Prowes-Piper v Anglian Windows Ltd [2010] EWCA Civ 428 the respondent claimed that the Tribunal has failed to make a finding on an obvious issue. The Polkey argument was rejected by the EAT.

The EAT found that an award for unfair dismissal is not based on the ability of the employer to pay, unlike the case with costs. Where damages are assessed for a statutory tort an employer's problems in paying are not relevant.

The EAT therefore dismissed the respondent's case and disallowed any further appeal.