Challenging Tribunal Judgments – when to apply for reconsideration and when to appeal

In Ebury Partners UK Ltd v Acton Davis [2023] EAT 40, the EAT held that the Employment Tribunal (“ET”) had erred in reconsidering its own decision on a new basis for which neither party had argued. The Employment Judge had in essence gone on a “frolic of his own” in doing so.

The EAT decision of Ebury Partners is significant, as it highlights the circumstances in which appealing a decision to the EAT on a point of law might be more appropriate than applying for reconsideration. This decision also demonstrates the issues that might arise when the ET fails to assess whether reconsidering a decision is in the interests of justice.

Facts of the case

The Claimant was a partner and Head of Sales for the Respondent. A large part of his remuneration comprised of commissions. During his employment, the Claimant was also seconded to work at the Respondent’s offices in Canada. In 2019, during his secondment, a decision was made to stop paying senior managers any commissions from 1 May 2019, but that the Claimant would be compensated by an increase in basic salary, a discretionary bonus and eligibility for equity. Dissatisfied with this change in remuneration, the Claimant resigned, arguing that the Respondent was in fundamental breach of contract and in breach of the implied term of trust and confidence. The Claimant then brought claims for unfair and wrongful constructive dismissal against the Respondent.

The Employment Tribunal (“ET”) held that the cessation of commission payments did not amount to a breach of the Claimant’s express contractual terms. Under the main contract, the Claimant’s entitlement to commission was discretionary.

The ET also rejected the Claimant’s argument that the cessation of commission payments amounted to a breach of the implied term of trust and confidence. This was because the Claimant had failed to put forward any counterproposals regarding his remuneration and because the Respondent had the contractual discretion to vary, or cease, the payment of commission.

ET’s reconsideration

The Claimant applied for reconsideration of the ET decision, stating that the Respondent had not pleaded that it was contractually entitled to stop payments of commission. The Claimant also referred to the proper interpretation of the contract and side letter and maintained that during his secondment he remained entitled to commission as part of his salary. On this basis, the Claimant contended that the ET should have found that the failure to pay commission was a clear repudiatory breach of an express contractual term.

The Respondent opposed the application, referring to the public interest in finality of litigation and maintained that it would not be in the interests of justice to have the case reconsidered as the Claimant was trying to have a “second bite at the cherry”. The Respondent denied that it was in breach of any express or implied contractual terms and argued that it was for the Claimant to establish such a breach by reference to the relevant contractual provisions.

At a hearing to consider the reconsideration application, the Employment Judge upheld his previous decision that it was open to the company to exercise its discretion to vary or cease to pay commission from November 2018.

However, the Employment Judge went on to state that “it would be appropriate to consider certain elements of the judgment with the effect that the outcome is varied”. Although acknowledging that this review would involve considerable prejudice to the Respondent, the Employment Judge considered that his judgment was not sustainable and that findings of wrongful and unfair dismissal should be substituted.

The judge stated the following at para 59:

“Whilst I retain my conclusion that [Ebury Partners] had the express contractual right under the Contract to make variations to the commission arrangements, I nevertheless consider that given the parties’ conduct in connection with the Side Letter, and specifically the continuing payment of UK based commission … after the initial 12 months of the secondment was such [as] to give rise to an expectation of [Mr Acton Davis] that the existing terms would continue unless varied by consent. It was incumbent upon [Ebury Partners], pursuant to the implied term of trust and confidence, to replace such arrangements with terms which looked at overall were no less favourable to an individual employee. In other words, a change, albeit one pursuant to a retained discretion, would nevertheless require either the consent of the employee or the change would be so obviously no less favourable that looked at objectively it would not breach the implied term of trust and confidence.”

The Employment Judge effectively rewrote parts of his original judgment and made a finding that the Claimant had been constructively dismissed and that his claims of unfair and wrongful dismissal succeeded.

Grounds of appeal

The Respondent appealed the reconsideration, stating that the Employment Judge should not have reconsidered his judgment at all and in any event should not have found for the Claimant on the basis that he did.

The Claimant cross-appealed, stating that it was appropriate for the Employment Judge to reconsider the proper interpretation of the contract between the parties but that he had reached the wrong conclusion on that issue.

The law

The power to reconsider a judgment is set out in rule 70 of the ET Rules of Procedure:

“A Tribunal may, either on its own initiative (which may reflect a request from the Employment Appeal Tribunal) or on the application of a party, reconsider any judgment where it is necessary in the interests of justice to do so. On reconsideration, the decision (“the original decision”) may be confirmed, varied or revoked. If it is revoked it may be taken again”

Rule 71 goes on to state:

“Except where it is made in the course of a hearing, an application for reconsideration shall be presented in writing (and copied to all the other parties) within 14 days of the date on which the written record, or other written communication, of the original decision was sent to the parties or within 14 days of the date that the written reasons were sent (if later) and shall set out why reconsideration of the original decision is necessary”.

The ET can only reconsider a decision if it is necessary to do so “in the interests of justice”, which includes the public interest requirement, where possible, for finality of litigation.

In Outasight VB Ltd v Brown [2015] ICR D11, HHJ Eady QC accepted that the words “necessary in the interests of justice” in rule 70 allow the ET to exercise a broad discretion, however, such discretion must be exercised judicially, which means “having regard not only to the interests of the party seeking the review or reconsideration, but also to the interests of the other party to the litigation and to the public interest requirement that there should, so far as possible, be finality of litigation”.

EAT decision

HHJ Shanks held at para 24 that “A central aspect of the interests of justice is that there should be finality in litigation. It is therefore unusual for a litigant to be allowed a “second bite of the cherry” and the jurisdiction to reconsider should be exercised with caution. In general, while it may be appropriate to reconsider a decision where there has been some procedural mishap such that a party had been denied a fair and proper opportunity to present his case, the jurisdiction should not be invoked to correct a supposed error made by the ET after the parties have had a fair opportunity to present their cases on the relevant issue. This is particularly the case where the error alleged is one of law which is more appropriately corrected by the EAT”.

The EAT noted that the basis for the application for reconsideration was the contention that the ET had decided the main contractual issue against the Claimant on a basis which had not been pleaded or argued for by either party. The onus was on the Claimant to prove his case and put forward any arguments which supported the Claimant’s interpretation of the relevant contractual provision. On the facts, there was no “procedural mishap” that meant that the Claimant was deprived of a fair opportunity to present his case at the ET. The EAT further noted that the issue which the Claimant was asking to have reconsidered (namely, the proper interpretation of contractual provisions) is traditionally regarded as one of law and that it would have been open for the Claimant to bring an appeal in the EAT on this issue. The Employment Judge should not, of his own accord, have reconsidered a different aspect of the judgment, especially when the Claimant had not presented any argument about it.

The Employment Judge had also failed to assess the interests of justice at all before proceeding to reconsider the construction point. He had decided to carry out a reconsideration because he had reached a new conclusion based entirely on material which was before him at the time of his original judgment, which is not generally considered a good ground for reconsidering a judgment.

It was therefore inappropriate for the Employment Judge to reconsider his original decision and he had made an error of law in doing so.

The EAT went on to dismiss the cross-appeal, stating that the proper way to challenge the decision on the interpretation of the contract would have been by a timeous appeal to the EAT on a point of law. HHJ Shanks commented that “[o]n that appeal it would have been open to the EAT to consider the proper interpretation of the contractual documents in the light of the factual matrix as found by the judge and to reach a firm conclusion on the interpretation issue”.

What to take away

The Ebury Partners decision is a cautionary tale for both litigants and the ET of the risks of choosing to apply for reconsideration as opposed to appealing an ET decision to the EAT on a point of law.

Where new evidence emerges relating to a crucial finding of fact, the appropriate course of action is to apply for a reconsideration rather than to appeal to the EAT. In Adegbuji v Meteor Parking Ltd EAT 1570/09, the EAT stated that the correct course for a party seeking to challenge an ET decision based on fresh evidence would be to apply for reconsideration rather than to appeal the decision.

Similarly, reconsideration is appropriate where the ET overlooked an issue altogether and therefore did not determine it. Under such circumstances, the ET should reconsider its judgment, as it is necessary in the interests of justice that the issue be determined; see AB v Home Office EAT 0363/13.

It follows that pursuing an appeal is more appropriate than applying for reconsideration where the litigant is challenging the ET’s decision on a point of law, as opposed to challenging the decision on grounds such as where fresh evidence is adduced (which was not available to the ET at the time it had made its judgment) or where events occurred following the ET decision which may justify a reconsideration in the interests of justice. An example would be, where a Claimant obtains employment after a remedies hearing in which the ET awarded future loss of earnings on the basis that the Claimant was unlikely to find another job (see, for example, Help the Aged Housing Association (Scotland) Ltd v Vidler [1977] IRLR 104). An application for reconsideration in Ebury Partners was inappropriate, as the Claimant was attempting to challenge the ET’s decision on the basis that the Claimant disagreed with the manner in which the ET construed the terms of his contract of employment. This is a point of law and should therefore have been advanced by way of an appeal.

The Ebury Partners decision should be carefully distinguished from Banerjee v Royal Bank of Canada [2021] ICR 359, where the ET at a remedies hearing reconsidered on its own initiative an issue decided at the liability hearing (the ACAS uplift of 25%) after the Respondent made submissions to the effect that the issue had to be reconsidered given that it related to an aspect of compensation that the ET had decided at the liability hearing. Lord Summers commented in Banerjee that reconsidering the ACAS uplift did not undermine the principle of finality as this did not involve the Respondent having “second bites at the cherry”, as “no new arguments were placed before the Tribunal at the Remedies Hearing. The Respondent had stated the law accurately in its written submission at the Liability Hearing…[t]he question of a new legal argument does not arise, and the principle of finality is not in play”.

This is to be contrasted with Ebury Partners, where the Claimant’s application for reconsideration involved arguments that the Claimant had not pleaded or argued in the final merits hearing.