Babcock FATA Ltd v Addison: CA 1987

The employee was unfairly dismissed for redundancy. He was given 5 weeks pay in lieu, a statutory redundancy payment and a severance payment under the employers’ own scheme. He did not obtain another job until well after his period of notice had expired. The tribunal assessed compensation on the basis that the factory was to close anyway he would have been made redundant. They awarded loss of earnings for the whole period and deducted the pay in lieu and made other adjustments. The EAT said that the severance payment should not have been deducted.
Held: The Norton principle should be upheld as it had been applied without operating unfairly for many years. Ex gratia payments were not recoverable where the judgment of the EAT on this topic was not the subject of an appeal by the employers.
Ralph Gibson LJ said that it was not always good industrial relations practice to make a full payment in lieu of notice: ‘It seems to me, however, that circumstances may arise in which, having regard to the length of notice required, and the known likelihood of the employee getting new employment within a short period of time, or for other sufficient reason, an employer may show that a payment less than the wages due over the full period of notice did not offend good industrial practice. The employer might tender two months’ in respect of a six-month period of notice and ask to be informed if the expected new job was for any reason not obtained. I am unable to accept that any rule of law exists which requires that in all circumstances, irrespective of the terms upon which a payment in lieu of notice was made, and of any jurisdiction for not making payment in full of wages in advance for the full period of notice, the employee is entitled in claiming a compensatory award under Section 74 to disregard wages earned from another employer during the notice period. The number of cases in which an employer will be able, in view of an industrial Tribunal, to justify departure from the general practice will probably be small. But in my view no rule of law exists to prevent the industrial Tribunal from considering such a case or from giving effect to it if it is so established.’
Sir John Donaldson MR considered that Norton was still good law, although emphasising that it was not ‘holy writ’. He explained its juridical basis: ‘If the Norton case was rightly decided, and I think it was, or, if it was not, it should not be disturbed because it had been so widely accepted as correct for so long, it does indeed lay down a rule of law, but one that is more limited than is sometimes appreciated. That rule, is that, in assessing compensation for unfair dismissal, it is just and equitable to regard a claimant as having suffered an additional loss if the employer in unfairly dismissing him did not otherwise act in accordance with good industrial practice. That there is nothing inconsistent in expecting an employer who dismisses unfairly so to act is well illustrated by the instant case, where an employer does just that. What the Norton case did not, and could not, decide as a rule of law, was that in all circumstances good industrial practice required that notice of dismissal should be accompanied by the payment of ‘money in lieu.’ Good industrial relations practice can change and, in any event, what is good industrial practice in relation to a weekly wage earner entitled to notice measured in weeks, may be quite different from that which is appropriate in the case of senior salaried staff entitled to notice measured in months or years.’


Ralph Gibson LJ, Donaldson MR and Bingham LJ


[1987] ICR 805, [1987] IRLR 173


England and Wales

Cited by:

CitedLangley and Another v Burso EAT 3-Mar-2006
The claimant had been dismissed shortly after becoming unable to work. She sought payment of her normal salary during the period of notice saying this was established good practice.
Held: ‘We are put in the invidious position of being bound by . .
CitedBurlo v Langley and Carter CA 21-Dec-2006
The claimant had been employed by the defendants as a nanny. She threatened to leave, but then was injured in a car acident and given a sick note. The employer immediately engaged someone else. She was found to have been unfairly dismissed. The . .
CitedKnapton and others v ECC Card Clothing Ltd EAT 7-Mar-2006
EAT Unfair Dismissal: Compensation
Reversing the Employment Tribunal, in the assessment of compensation for unfair dismissal under Employment Rights Act 1996 section 123, an employee who took early receipt . .
CitedStuart Peters Limited v Bell EAT 22-Oct-2008
EAT UNFAIR DISMISSAL: Compensation/Mitigation of loss
The employee was unfairly constructively dismissed. She was entitled to a 6 month notice period that was not paid by the employees in that period, . .
CitedStuart Peters Ltd v Bell CA 30-Jul-2009
The claimant had a contract entitling her to six month’s notice. She left claiming constructive dismissed, but found work shortly after. She still sought the full six months’ pay. The EAT found in her favour. The employer appealed.
Held: The . .
Lists of cited by and citing cases may be incomplete.


Updated: 01 May 2022; Ref: scu.240327