Uncertainty over damages for unfair dismissals

COURTNEY McNISH

Section 10(5) of the Industrial Relations Act (IRA) provides the court with a wide range of powers to formulate awards for quantum of damages. This section states that the court may make an assessment that is in its opinion, fair and appropriate in the circumstances where it is determined that a worker has been dismissed in a manner that was harsh and oppressive and not in accordance with good industrial practices.

There has been a long-standing discussion on the calculation of the award of damages for unfair termination. Sometime in 2012, I offered an opinion at the Employers Solution Centre (ESC) forum on whether a tariff (a fixed system of payment or a table of fixed rates) should be set for dismissals.

Prior to the existence of the Industrial Court, when employment disputes were determined by the High Court, the assessment of damages would only be guided by common-law principles of the law of contract.

However, the Industrial Court is not so restricted and is free to assess damages on the basis of the principles of equity as contemplated by Section 10 of the IRA.

His Honour Addison Khan issued a landmark judgement in TD 02/2001, between the Banking and General Insurance Workers' Union and Hindu Credit Union Co-operative Society Ltd which is considered precedent and is now widely referred to.

In that judgement, Khan laid out the following headings of damages as: manner of dismissal; immediate loss of wages; loss of the benefit of past service; loss of future wages; loss of fringe benefits; loss of pension rights; and any other loss suffered because of the dismissal. However, there was no guidance on how value should be assessed under the "manner of dismissal" heading, or even how punitive or exemplary damages should be determined.

TD 118/ 2006, between Illuminat and Communication Workers Union, was another landmark, “game-changing" judgement that was delivered in 2011. This dealt with considerations of compensation and application of the common-law principle that requires a worker to mitigate his losses.

In that case, after the company was found liable, the parties were asked to make oral submissions on the quantum of damages before the court. The judgement stated that “the Court is troubled by the need for a dismissed worker to mitigate his or her circumstance in making a diligent effort to find another job in the quickest possible time.”

In common law, the principle of “mitigation of loss” means that the onus is on the employee to find work as quickly as possible and to mitigate his loss as best as he can. Indeed, this was the harshness of the common law against an individual who was wronged, and which was clearly addressed by the powers given to the Industrial Court in Section 10.

In the Illuminat case, the court asked whether the concept of mitigation of loss in dismissal cases was permitted to cross from its proper province in common law, particularly in contract and tort, and into the field of industrial relations in a way which was inconsistent with the purposive approach of the legislation in general and Section 10 of the IRA in particular.

The court opined that the nature of industrial relations law, as set out in the IRA, requires great care in incorporating into its principles that which has traditionally found its way into other branches of contract law. Further, the court went on to express the view that the antiquity of these common-law principles contains a certain attractiveness which, on deeper probing, may be found to be out of sync with the relatively new approaches to industrial relations.

The late president of the court, His Honour Cecil Bernard, expressed the view that over the years the court may have misled itself on the question of mitigation of loss in dismissal cases, and it is not for the court to continue to labour under that error, or to apply that common-law rule only for the reason that it was applied in the past.

Both advocates spoke to tariffs in their submissions. The company’s advocate suggested a calculation based on the number of years of service that would limit the quantum of damages to a straightforward calculation, similar to that in the Retrenchment and Severance Benefit Act (RSBA). This to my mind is unacceptable, as it would eliminate the court’s ability to exercise its discretion as a case so merits.

The worker’s advocate advanced nothing new but relied on the principles expounded by Khan in the Hindu Credit Union case.

Khan opined that “In a small society like TT, dismissal is considered to be 'capital punishment' in the sense that it is often very difficult for a dismissed worker to obtain suitable and comparable employment easily. Accordingly, I share the view that to have that worker mitigate his losses is tantamount to being punished twice."

Given that the RSBA sets out a calculation for retrenchment, then maybe it is time for IRA or even new legislation to formally lay out a prescription that is fair to the parties in unfair-dismissal cases, while still giving the court the powers set out in Section 10 of the IRA.

I believe that a fixed calculation for dismissal may unclog the court’s schedule, as it may push employers and unions to settle such disputes before trial once they can better assess financial liability.