(Timothy James Consulting Ltd v Wilton)
Ms Wilton worked for Timothy James Consulting (TJC) as head of sales from January 2007 until December 2012 when she resigned. In May 2011, Ms Wilton had a personal relationship with one of the owners of TJC, Mr O’Connell. Two months later, she was promoted to be a director of TJC.
Ms Wilton and Mr O’Connell’s relationship ended in early 2012. Mr O’Connell then had a personal relationship with another employee, Ms Docker.
A series of events unfolded between Ms Wilton and Mr O’Connell, which included arguments over Ms Docker’s allegation that she was subject to bullying by Ms Wilton. On 15 November, Mr O’Connell met with Ms Wilson to put their differences aside. Ms Wilton asked Mr O’Connell whether he believed the bullying accusation, and when he did not reply, she resigned on 9 December that year. She brought claims for constructive unfair dismissal, harassment, victimisation and unlawful deduction from wages.
The tribunal upheld her claims. In relation to harassment, the tribunal reasoned that the act of constructive dismissal in itself had amounted to an act of harassment of Ms Wilton. TJC appealed the harassment findings, and the decision to not tax the injury to feelings award.
The EAT dismissed the appeal on harassment, but allowed the appeal in relation to constructive dismissal and taxation. The EAT argued that, as a matter of law, the act of constructive dismissal could not itself fall within the meaning of harassment under the EqA 2010. It was not, therefore, open to the tribunal to make this finding. The EAT also acknowledged that there was conflicting authority on the award for injury to feelings, but followed the case of Orthet, to decide that the award should be given after tax, and thus varied the award accordingly.
So what could this case mean for you?
Stephen Calderbank Says: Harassment can of course result in a constructive dismissal but it is quite another thing to say the act of constructive dismissal is itself capable of constituting harassment. These concepts are statutory creatures and therefore have precise statutory definitions. The EAT rightly concluded that, as a matter of law, the act of constructive dismissal cannot in itself fall within the definition of harassment under the Equality Act and that it was not, therefore, open to the tribunal to make this finding.
Although the EAT gave short shrift to the constructive dismissal/harassment side of this case it did spend more time focussing on the troublesome issue of taxation. Whilst the EAT view on this occasion was that it should not be taxable, the case is not perhaps ultimately of great practical significance..
The case does not mean that all awards for injury to feelings will not be taxable. It simply represents the EAT’s view, which unfortunately is not binding on HMRC.
The employer in this case made a concession that if HMRC demanded that the employee pay tax on her award of injury to feelings, it would indemnify her.
Until this issue is resolved by HMRC, claimants will most likely be asking respondents during any settlement negotiations to give them such an indemnity.
In this fifth webinar of gunnercooke’s People Hour series, Partner Carl Atkinson covers how employers could avoid 5 costly mistakes for reasonable adjustment claims Download the slides hereContinue reading