Appeal No. UKEAT/0139/10/LA

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 6 July 2010

Before
THE HONOURABLE MR JUSTICE KEITH
MS J L P DRAKE CBE
MR J R RIVERS CBE

DR C KELLY	APPELLANT

UNIVERSITY OF SOUTHAMPTON	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR KEITH BRYANT
(of Counsel)
Instructed by:
Messrs Fieldhouse & Co LLP
Abbey House
25 Clarendon Road
Redhill
RH1 1QZ	
For the Respondent	MR THOMAS LINDEN QC
(of Counsel)
Instructed by:
Messrs Beachcroft LLP Solicitors
100 Fetter Lane
London 
EC4A 1BN	

SUMMARY
UNFAIR DISMISSAL – Mitigation of loss

Unfair dismissal – compensation – failure to take reasonable steps to mitigate loss – whether Tribunal’s finding that employee’s failure to take reasonable steps to mitigate loss was perverse.

THE HONOURABLE MR JUSTICE KEITH

1.	The Claimant, Dr Colleen Kelly, was employed by the University of Southampton as a senior lecturer in its School of Biological Sciences from 1 January 2001.  She was summarily dismissed with effect from 8 January 2005 in circumstances which the Employment Appeal Tribunal was subsequently to hold had made her dismissal both wrongful and unfair.  When her case was reconsidered by a differently constituted Employment Tribunal, she was found to have failed to take reasonable steps to mitigate her loss.  She now appeals against the findings which the Employment Tribunal made on that topic.

2.	Dr Kelly is a US citizen.  Her employment by the university had to be approved by the Department for Education and Employment.  In January 2001 the Department approved her employment by the university for 60 months, i.e. up to January 2006.  Accordingly, the contract of employment which the university issued to her was a fixed term contract expiring on 31 December 2005.  However, when it came to her leave to remain in the UK having to be endorsed on her passport, she was given leave to remain in the UK only until 8 January 2005.  Whether that had been a mistake or whether it had been intended to limit Dr Kelly's leave to remain in the UK to 4 years was not something which has ever been decided, but it was the mismatch between (a) the time for which her employment had been approved (and which resulted in her fixed term contract continuing to 31 December 2005), and (b) her leave to remain in the UK expiring at the beginning of 2005 which caused the problems which culminated in her dismissal.

3.	It was on 11 January 2005 that the university's expert on work permits and immigration rights learned that Dr Kelly's leave to remain in the UK had expired.  There was concern that the university might be employing her illegally, so Dr Kelly was suspended without pay while she attempted to regularise her position.  With the support of the university, she applied for indefinite leave to remain in the UK.  That application was granted on 7 February 2005, but by then the university's legal department had advised that her employment after the expiry of her leave to remain on 8 January 2005 had been illegal, and on 27 January 2005 she had been informed that her employment was being terminated with effect from 8 January 2005.  The finding of the Employment Tribunal that her dismissal had been fair, on the basis that continuing to employ her would have resulted in the university acting illegally, was set aside by the Employment Appeal Tribunal (Judge Richardson presiding) because on a proper construction of the relevant provisions in the Asylum and Immigration Act 1996, the university would not have been committing a criminal offence if it had continued to employ her in the circumstances which were prevailing.  The case was therefore remitted to a differently constituted tribunal to address Dr Kelly's remedies.  Dr Kelly limited her remedy to compensation.

4.	The Tribunal made two key findings.  The first was that Dr Kelly had failed to mitigate her loss by failing to apply for either of two vacant posts in the university's School of Biological Sciences.  Those were posts for which she was qualified.  The Tribunal found that had she applied for them, she would have been appointed to one of them by the end of June 2005.  Her award for loss of earnings was therefore limited to the period up to then, even though she remained unemployed for long after that.  The Tribunal's finding on that issue made its consideration of a second issue raised by the university academic, namely, whether she had failed to mitigate her loss by failing after June 2005 to apply for a number of vacant jobs which the university had identified at other universities.  However, the Tribunal addressed that issue as well, and found that Dr Kelly had failed to mitigate her loss by failing to apply for many of the posts identified by the university.  It found that had she approached the search for alternative employment with the appropriate urgency and flexibility, she would have been appointed to a post at a similar salary to that which she had earned at the university by 31 January 2006.  Accordingly, had her award for loss of earnings not already been limited to the period up to 30 June 2005, the Tribunal would have limited it to the period up to 31 January 2006.  Those are the two findings which Dr Kelly challenges on this appeal.

5.	The relevant legal principles in this area are not in doubt.  An employee must take all reasonable steps to mitigate the loss which he or she has sustained as a result of being dismissed.  An employee cannot recover compensation for the earnings lost as a result of the dismissal if that loss was avoidable.  It would have been avoidable if reasonable steps could have been taken to avoid it.  However, the standard of reasonableness to be expected of an employee in these circumstances is not high because it was the employer who was the wrongdoer.  So said Wood P in Fyfe v Scientific Furnishings Ltd [1989] IRLR 331 at [3].  In that case, it was also held that the burden of proof was on the employer, so that whether an employee had failed to take reasonable steps to mitigate his or her loss was for the employer to establish.

6.	We deal first with the challenge to the Tribunal's finding that Dr Kelly had failed to mitigate her loss by failing to apply for either of the vacant posts in the university’s School of Biological Sciences.  The primary facts which the Tribunal found were that Dr Kelly was an academic in the field of biological sciences of great experience and considerable distinction.  Before her employment had come to an end, the possibility of recruiting additional members of staff to the School of Biological Sciences had been considered.  The Tribunal made no findings about when the decision to advertise those posts had been made, but the Tribunal found that interviews for the posts were held at the end of March 2005 for one of them and at the end of April 2005 for the other.  However, those posts had clearly been advertised by 23 February 2005 because that was the date of a letter from the Association of University Teachers (“the AUT”) to the university suggesting that Dr Kelly be re-appointed to her previous post or be appointed to one of the two vacant posts then being advertised.  The Tribunal found that that showed that at that stage Dr Kelly wished to continue or resume her employment in the School of Biological Studies.  Indeed, the Tribunal said that this was reinforced by a letter from her solicitors to the university dated 23 March 2005, in which they said that Dr Kelly was seeking to be reinstated in her old post, or to be re‑engaged in one of the new posts with her pay backdated to the date of her dismissal.

7.	We should add here that the Tribunal was in error in its description of the two posts.  The Tribunal thought that the two posts were for a senior lecturer and a lecturer.  It was presumably going on the witness statements of Professor Shepherd, the Head of the School of Biological Sciences, which spoke at paragraph 12 of the two posts in that way.  However, later on in his statement, Professor Shepherd referred to the two posts differently.  One was for the post of "Reader/Professor".  The other was for the post of "Senior Lecturer/Lecturer".  Indeed, that was how the two posts were described in the advertisements for the posts.  

8.	Although the university knew that Dr Kelly wanted to be reappointed to her previous post, or to be re‑engaged in one of the two vacant posts, the university insisted that she had to apply for the posts through the proper channels.  The university was not willing to consider her reinstatement or re‑engagement simply as a result of the letter from the AUT of 23 February, or the letter from her solicitors of 23 March.  The Tribunal concluded that this was a stance which the university was entitled to adopt.  All vacancies at the university had to be advertised and the university was therefore entitled to require Dr Kelly to submit an application for the vacant posts.  It would not have been appropriate, so the Tribunal found, for her simply to have been slotted into one of the two vacant posts.

9.	In the end, Dr Kelly did not submit an application for either of the vacant posts.  One of the questions which the Tribunal had to address was why that was.  It was not because she thought that she was not qualified to apply for either of the posts.  The Tribunal recorded her unchallenged evidence that she was totally qualified to apply for them.  Nor was it because she did not want them.  The letters from the AUT and her solicitors show that she did want them.  Indeed, the Tribunal noted her own evidence that if she had been offered one of the posts, she would have taken it.  Nor was it because Dr Kelly or the AUT had never been told that she had to apply for the posts herself.  That had been a submission made by Dr Kelly's solicitor, but the Tribunal rejected it for three reasons.  First, the Tribunal found that Dr Kelly had actually been told that if she wanted to be considered for the posts which were being advertised she had to apply for them.  Secondly, Dr Kelly acknowledged in her own evidence that this was what she had been told.  The Tribunal noted that her evidence had been that when the university’s Head of Legal Services had suggested to her that she should apply for the posts which were being advertised, Dr Kelly replied: "I have a job and my CV is on file."  In other words, she was not saying that she did not know that she had to apply for the post.  She was saying that she did not know why she had to.  Thirdly, in the university's response of 11 March to the AUT's letter of 23 February, the university's Head of Legal Services reminded the AUT of what she had previously told Dr Kelly, namely that there were two posts being advertised for which Dr Kelly might like to apply.  

10.	So if those were not the reasons why Dr Kelly did not apply for the vacant posts, what was the reason?  Her evidence was that she did not apply for the posts because she did not think it likely that she would be appointed to one or other of them.  The Tribunal found that explanation for why she did not apply for the posts wholly unconvincing, and added that “a moment's consideration at the time would have made clear that she was extremely likely to be appointed”.  The Tribunal accepted the evidence of Professor Shepherd that Dr Kelly was eminently suitable and qualified to apply for the posts, and it had in mind Dr Kelly's own unchallenged evidence that she was totally qualified to apply for them.  The Tribunal said that it would not be appropriate to speculate over the real reason why Dr Kelly did not apply for the posts, though it did note the university's suggestion that it may have been because she thought that she should have been slotted into one of the posts without having to apply for them in open competition, or perhaps because she thought that she had been so wronged by the university over the circumstances of her dismissal that it was just too much for her to return.

11.	Having said that, there was one other suggestion advanced on Dr Kelly's behalf at the hearing in the Tribunal as to why she did not apply for the posts, and that was that although she knew that she could not be slotted into either of them because the vacancies had to be considered in open competition, nevertheless she thought that she did not have to complete an application form because she had already said that she wanted to be considered for the posts.  The Tribunal did not deal with that suggestion.  That may have been because there was no evidential foundation for it.  It was not something that Dr Kelly had said in her witness statement.  Nor was it referred to in either Dr Kelly's solicitor’s notes or the university’s solicitor's notes of the evidence given at the hearing.  Indeed, if Dr Kelly had been saying that she had not submitted a formal application for the posts because she thought that she was already being considered for them, we have no doubt that in its meticulous and comprehensive decision the Tribunal would have addressed that part of her evidence.

12.	These, then, were the Tribunal's findings, and it stated its conclusion at paragraph 33 of the decision as follows:  

"We are … entirely satisfied that, given the circumstances of obtaining in February and March 2005, any reasonable and rational person in [Dr Kelly's] position would have made application for one or both of the vacancies and would have been appointed.  In his evidence in chief, Professor Shepherd said he was surprised that Dr Kelly decided not to apply for either of the vacancies and so are we.  If she had been acting in the way any reasonable person in her position would have done in the circumstances she would have applied and, what is more, she would have been appointed." 

The Tribunal then went on to consider when that appointment would have taken effect.  In paragraph 34 of its decision, it said:  

"We were told that the appointments were to take effect immediately. Since all the information necessary to effect an appointment would have been in the hands of the university, administrative procedures would have been brief and she could have been appointed by mid May.  Nevertheless taking account of possible administrative delays, we have taken a date at the end of June as being the date upon which she would have been appointed."

13.	The sole point, but no less compelling for that, which is taken on behalf of Dr Kelly is that it simply was not open to the Tribunal to find that she would have been appointed to one of the vacant posts had she applied for them.  The Tribunal's finding to the contrary is said to have been perverse.  The only evidence on the topic came from Professor Shepherd, and that was that Dr Kelly was eminently suitable and qualified to apply for the post, not that she was likely to be appointed to one of them.  The two are very different animals indeed.  Indeed, such evidence as there was before the Tribunal suggested that there was every chance that she would not have been appointed to either of the posts, bearing in mind that the university received an average of 30 to 60 applications for each post in the School of Biological Sciences which was advertised.  Moreover, the university is said to have argued in the Tribunal that any award made to Dr Kelly should be subject to a Polkey discount to reflect the prospect that Dr Kelly might have been disciplined for misconduct over a dispute about her supposed failure to carry out some of her teaching duties.  That could well have affected the renewal of her fixed term contract.  Accordingly, it is said that the possibility of her being disciplined over that dispute might well have disposed the selection panel to preferring one of the many other candidates over her.  Finally, it is said that in the light of the circumstances of Dr Kelly's dismissal – which included the university's volte face in first giving her time to regularise her position and then dismissing her before she had an opportunity to do so – the university could have made an exception to its procedures about advertising all vacancies, and either reappointed her to her old post or re-engaged her in one or other of the new ones.  The fact that the university chose not to treat her case as exceptional is said to show that she may well not have been appointed to either of the new posts in open competition.

14.	We can dispose of the last two points relatively quickly.  First, we acknowledge that the dispute over Dr Kelly's refusal to carry out certain teaching duties was referred to by Professor Shepherd in his witness statement.  We also note that the university suggested that any award made to Dr Kelly should be discounted to reflect the possibility that she might have been disciplined over that, though we also note that the principal basis on which it was being argued that there should be a Polkey discount was that there was a possibility that Dr Kelly's fixed term contract would not have been renewed in circumstances amounting to her redundancy.  However, the real point is that it was not suggested in the Employment Tribunal that the possibility of her being disciplined might have had an effect on how the selection panel would have viewed any application by her for the new posts had she made such an application.  We note that Professor Shepherd said that had Dr Kelly's employment continued, the university would have insisted on her undertaking her teaching commitments.  It may therefore have been the case that if she had applied for the new posts, she may have been required to give an undertaking that she would honour her teaching commitments.  But the point was not made that the possibility of her being disciplined might have had an effect on how the selection panel would have viewed any application by her for the new posts had she made such an application.  In those circumstances, it is too late now to argue that the Tribunal's finding of fact that any application for either of the vacant posts would have been successful is flawed on the basis of an argument which was not advanced at the time.  

15.	Secondly, there is no basis for saying that the Tribunal's finding of fact is flawed on the basis that the university should have treated Dr Kelly's case as exceptional simply because of the circumstances of her dismissal, and for that reason should have permitted her to bypass the normal recruitment processes.  The Tribunal was entitled to conclude that the university could not be criticised for applying even to her the requirement that all vacancies be advertised, and therefore for requiring Dr Kelly to apply for the vacant posts in open competition, despite the circumstances in which her employment had come to an end.  Since there was nothing perverse about that finding, it cannot be said that the fact that the university chose not to treat her exceptionally suggest that she may well not have been appointed to either of the vacant posts had she applied for them.  

16.	We return, then, to the core point which this aspect of Dr Kelly's appeal raises, namely that there was no evidence that Dr Kelly would have been appointed to either post had she applied for them.  Save for one area which could have been explored, there could have been no direct evidence on the topic because by not applying for the posts, the question whether Dr Kelly would have been appointed to them was never put to the test.  The avenue which could have been explored was for the university to disclose the number of applications it had received for the two posts, and to disclose the qualifications, experience and academic standing of the successful candidates.  Even that, though, might well not have been decisive.  True, an appointee less qualified than Dr Kelly would have suggested that Dr Kelly might have been appointed, but the obverse is not necessarily the case.  An appointee better qualified than her might not have been preferred to her in view of her time with the university.

17.	Ultimately, therefore, the question was whether, in the light of everything which the Tribunal knew of the history of Dr Kelly’s employment with the university, the circumstances of her dismissal, and her qualifications and suitability for the posts, she would have been offered them, even if she could only be considered for them in open competition, with perhaps many other candidates.  The Tribunal expressed itself robustly, perhaps more robustly than might have been appropriate, when it said that she would have been “extremely likely” or “overwhelmingly likely” to have been offered one or other of the posts, or indeed when the Tribunal said that she would have been offered them.  But the fact is that she was qualified for the posts, she had worked for the university in a similar post for 4 years, and she had only lost that post in circumstances which hardly reflected adversely on her at all.  All those were facts which in our judgment the Tribunal could have reasonably relied upon to reach the conclusion that Dr Kelly would have been offered, or at least was extremely likely or overwhelmingly likely to have been offered, the posts had she applied for them in open competition with others.  That assessment was a matter for the Tribunal's judgment.  The fact that there was no direct evidence that she would have been appointed to either of the posts, or any direct evidence from Professor Shepherd about whether he thought that she would have been appointed to them, did not in our judgment undermine the Tribunal's findings.

18.	That is sufficient for us to dispose of this aspect of the appeal, though we ought to mention the university's argument that it was just not open to Dr Kelly to argue on this appeal that the Tribunal’s finding that she would have been appointed to either post had she applied for them was perverse.  That is said to be because her case in the Tribunal was not that she would not have been appointed to either post had she applied for them.  True, that was her evidence, but only her evidence as a result of a question from the Tribunal.  Her case was that the university should have offered at least one of the posts to her, that it had been unreasonable for the university to have required her to apply for them in a competition with other candidates, and that for that reason it was reasonable for her not to have applied for them.

19.	That indeed was her case in the Tribunal.  But she was also seeking to compare herself with one of the successful candidates.  True, she was doing that in the context of an argument that the job he was doing was the job she had done, rather than in the context that he would have been preferred to her in open competition.  But the fact is that part of the university's case was that she was suitable and qualified to apply for the two posts.  Part of the university's case therefore was that she had failed to mitigate her loss by applying for the posts.  A relevant consideration there would have been whether, had she applied for the posts, she would have been offered them.  So although it may not have been part of her case that she would not have been appointed to either of the two posts had she applied for them, it was the university's case that she would have been, and to that extent the issue whether she would have been appointed to either of the two posts had been a live one.  

20.	Our finding on the first ground of appeal makes Dr Kelly's second ground of appeal academic.  It was necessary, of course, for the Employment Tribunal to address it, so that the relevant findings of fact could be made.  But it is not necessary for us to do so.  If there is a successful appeal to the Court of Appeal from our conclusion on the first ground of appeal, the Court of Appeal can address the second ground of appeal on the basis of the findings made by the Tribunal.  It follows that Dr Kelly's appeal must be dismissed.