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September 11, 2018

A debarring order will not always extend to a remedy hearing

The Court of Appeal has ruled, in Office Equipment Systems Ltd v Hughes, that a company blocked from defending its liability in an employment tribunal should still be able to contest the compensation remedy.

Ms Hughes had issued claims for unfair dismissal, unpaid holiday pay and wages, sex discrimination and breach of contract.

The Defendant had failed to respond to the claim against it within the required timeframe, resulting in its ability to participate in any hearing being limited. Despite filing for an extension based upon the fact that the delay was due to staff sickness, at a preliminary hearing, Judge Emery found that the delay was unreasonable and refused to grant an extension.

The Claimant was eventually awarded £75,000 in total at tribunal, with claims of unfair dismissal, unpaid holiday pay, unpaid wages, sex discrimination and breach of contract being upheld.

The Defendant then launched an appeal against the decision on liability, as well as submitting an appeal against its exclusion from participating in the remedy hearing. Despite the liability appeal failing, the Court of Appeal determined that such a debarring order should not extend to a remedy hearing in such a significant claim. The Court of Appeal held that to allow a defendant to participate in a remedies hearing, albeit that liability had been determined against it was in accordance with the overriding objective of dealing with cases justly.

However, Lord Justice Bean clarified that it should not be an automatic right for a party precluded from defending liability to participate in the determination of quantum. Such a scenario should only arise exceptionally, where the level of compensation and complexity of the case can justify it.

This is an important decision for employers who are out of time to defend a claim as they could still be able to play a part in the level of compensation awarded to the Claimant.

This decision confirms that debarred defendants have a last opportunity to reduce the potential damage of a default judgment. However, this decision is of limited value in cases where the tribunal issued a default judgment covering both liability and remedy.

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