Assessing future loss of earnings

The EAT has recently had the opportunity to consider the law applicable to future loss of earnings; Q Qu v. Landis & Gyr Limited UKEAT/0016/19/RN, UKEAT/0159/18/RN.

Facts

The Claimant was unfairly dismissed from his position as engineer after 3 ½ years’ employment with the Respondent.  After dismissal, the Claimant was signed off as unfit for work for several months and was on anti-depressant medication.   Thereafter, he had temporary work for several months and applied for nearly 150 jobs and registered with 39 Employment Agencies. He then obtained a permanent position with a salary of £45,000 per annum and pension based on a 1% contribution from his employer. Had the Claimant remained employed by the Respondent his salary would have increased to £51,300, so there was a continuing partial loss of salary.

The Tribunal found the Claimant’s performance with the Respondent was not such as would have led to his promotion. The Tribunal accepted the evidence as to turnover of staff and, in particular that, typically, engineers move on from the Respondent after five years in order to further their careers.

ET decision regarding future loss of earnings

The Claimant amended his schedule of loss after succeeding on liability and claimed full career loss.  The Tribunal held that:

“…the Claimant is not entitled to compensation for career loss. This is not one of those rare cases referred to in Wardle. The Claimant now has a similar permanent job to the one that he had at Landis and Gyr, that of senior electronics engineer. His employment may or may not be as secure as it was at Landis and Gyr, but it is difficult to reach any conclusion on this. We do not know enough about the circumstances of the Claimant’s current employer, Cosworth. However, we do take into account the Claimant’s employment history, which was that he only had two years maximum in any job before he arrived at Landis & Gyr, and had five jobs in six years…

Doing the best we can, we conclude that the Claimant will be able to fully mitigate his loss in three years’ time and should be compensated on that basis. We therefore award him three years loss of net earnings and benefits from the date of remedy hearing, as well of course as the uncontested past financial loss.”

Appeal

The Claimant appealed, contending that the Employment Tribunal wrongly took a balance of probabilities approach to the assessment of future loss and in doing so, placed undue weight on the fact that the Claimant had provided the Employment Tribunal with updated schedules of loss that moved from a position of claiming two years’ future loss to a position of claiming long-term or career long loss. Relying on Abbey National v Chagger [2010] ICR 397, the Claimant contended that the correct approach is to consider what the chance was of the Claimant obtaining suitable employment at a remuneration package equivalent at least to that offered by the Respondent and when that was likely to happen.

EAT’s decision

The EAT rejected the appeal. The ET made no error in its assessment that the Claimant would have fully mitigated his losses within 3 years of his dismissal.

Applicable law

As regards the claim for career loss of earnings, the EAT held that only rarely would career loss awards be made. Rather:

“The usual approach is to assess loss up to a point where a Tribunal is satisfied, having regard to all the uncertainties and vagaries of life, that the individual is likely to get an equivalent job. The speculative nature of the exercise means that it is possible that the individual will in fact get an equivalent job sooner or might be unlucky and take longer to do so. Thus, the Tribunal’s prediction will not necessarily be right, but those outcomes are inevitably factored into its assessment. Since the calculation of compensation for future loss is both speculative and predictive, there is no certainty about what will happen, but rather a range of possibilities and chances of different things occurring. The assessment is not a question of fact but a question of carrying out an assessment on the basis of the Tribunal’s best estimate about the future.

It noted Elias LJ’s comments regarding relevant factors for assessing future loss:

“…the starting point in the case of a discriminatory dismissal will be the period for which the employee would have been employed by the discriminating employer. For example, if the employer can show that the dismissal would have occurred in any event after a specific period of time, for example because of redundancies or the closing down of the business, then this will normally set the limit to the compensation payable. If there is a chance as opposed to a certainty of this occurring, that should be assessed and factored into the calculation of future loss as the answer to the first question indicates. In such a case, the employee would have been on the labour market in any event once the employment had ceased, and the usual effect of the discriminatory dismissal would simply have been to put him on the labour market earlier than would otherwise have been the case.

Similarly, there may be circumstances…where the evidence is that the employee would voluntarily have left in the near future… It would be wrong to award compensation beyond the point when he would have left because there would be no loss with respect to any subsequent period of employment.”

The EAT also stated that, in Chagger, the Court of Appeal made clear, following well established principles, that when looking at future loss the assessment must be made by focusing on the degree of chance and not on a balance of probabilities approach; in other words, it would be wrong to conclude that something was more likely than not to have happened and then to deem it to have happened rather than considering the chance of it happening and applying a percentage factor to reflect that chance.

Comment

Taking the opportunity to reconfirm Chagger, the EAT clarifies that determining such future loss is to be done on a loss of chance basis, but that that does not mean starting from a position that the Claimant either might or is likely to suffer a loss over the remainder of their careers.  Rather, depending on the evidence, the Tribunal is to try to determine a point at which the Claimant would find equivalent employment/mitigate their loss.

When assessing the loss, the Tribunal should take into account the chance of events occurring and make an award on the basis of that lost chance.  The Tribunal is entitled to treat the chance as nil, or certain, if the facts support it.

View Gareth Price’s profile on this link.