Those constructively dismissed can claim notice pay without needing to offset the compenstation against income from the new job

Peters Ltd v Bell EAT [2009]

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  • where a claimant is unfairly constructively dismissed and thus received no notice, he can recover a payment in lieu of notice as well as keep any monies earned during this time from his new job.
  • It is argued by employers that this 'double recovery' that only applies to unfair dismissal cases is not in accord with s 123 of the Employment Rights Act 1996 as an employee receives more the financial loss suffered. So this anomaly is expected to be revoked when the House of Lords eventually gets round to it. Until then unfairly dismissed workers can be grateful for the oversight that led to this rare dispensing of a little extra bit of justice.
  • When settling with employers don't allow employers reps to convince you to reduce the notice compensation in line with monies earned since in a new job (mitigation). Unless and until the HoL rules, the notice money is due come what may.
The employee in this case was unfairly constructively dismissed. There having been no notice meant the claimant was awarded payment in lieu of notice. That work was found elsewhere did not affect the entitlement to receiving the usual rate of pay for the notice period without deductions in mitigation.

The respondent in this case attempted to argue that the Norton Tool Ltd v Tewson [1972] decision should be distinguished (that the rule in Norton should not be followed because of a difference in facts of the cases). In the Norton case a dismissed employee received an award that gave him his full net pay during the notice period despite having found alternative employment.

But here the respondent argued, the employee terminated the contractual relationship when the employer's repudiatory breach of contract was accepted.

The EAT did not however accept this argument because previous cases (House of Lords in Dunnachie v Kingston upon Hull City Council [2004],Langley v Burlo [2007]) had recognised that under s 123 of the Employment Rights Act 1996 compensation was awarded for unfair dismissal, not for dismissal. The unfair dismissal could be direct or constructive. Here it was constructive but still a dismissal. The statutory demand of a tribunal was that it award what was just and equitable. Ms Bell would therefore be entitled to the 6 months notice pay in her contract in addition to income from her new job.

Although Section 123(4) of the ERA requires claimants to mitigate loss as is the case with claims for damages under common law, under the so-called the "narrow principle" in Norton Tools it was held that an employee should be receive notice pay. Any such payment should not be offset against earnings come by through employment found during the notice period.

The EAT and the Court of Appeal in Langley and Carter v Burlo approved the "narrow principle" by the time the Bell case came to the ET even though in Dunnachie v Kingston upon Hull County Council the House of Lords in 2004 appeared to say that awards were limited to compensating employees for actual loss.

With the EAT and CA decisions, the ET in Bell decided that constructive unfair dismissal and direct unfair dismissal were effectively the same when it came to awards of compensation. The EAT agreed that the "narrow principle" had not been expanded by allowing constructive dismissal to fall within it.

The present state of the law is that after Burlo and unless and until the HoL has an opportunity to decide (the Norton principle not being challenged in this case) there is nothing in constructive dismissal to hinder an award that amounts to double recovery. Just as is the case with a case of direct unfair dismissal.

The Burlo case can be found here:- Double Recovery in Unfair Dismissal allowed - Norton Tool confirmed
Burlo v Langley and Carter [2006] EWCA Civ 1778

The transcript of this case can be found  Here

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