Toni & Guys (St Paul’s) Ltd v Georgiou looks at the proper calculation of a week’s pay for the purposes of both the basic and compensatory awards following a finding of unfair dismissal and addresses the impact of the employer’s conduct on compensation.
The familiar hairdressing brand operates its business on a franchised basis. In 2002 Mrs Giorgiou took on a franchise for a business based at premises in Newgate Street, London EC1. In 2011 the franchised business was sold to a Ms Law. As part of the deal it was agreed that Mrs Giorgiou would be employed as a hairstylist. Her statement of terms and conditions described her remuneration as follows:
Your earnings are variable and are on a commission only basis and you will receive 34% all your net takings payable monthly in arrears by cheque/credit transfer as detailed on your pay statement. We, however guarantee that your earnings will not fall short of the current minimum wage in force for the hours worked.
Mrs Giorgiou and Ms Law disagreed about what constituted a week’s pay. At the Employment Tribunal it was noted that her payslip showed pay for July 2011 in the sum of £741.57 net. This suggested a net weekly rate of about £220. However Mrs Giorgiou claimed, and it was accepted by the Tribunal, that the pay was artificially low because the period included two lengthy suspensions, during which she had her name blackened and lost goodwill with her own personal clients. Ms Law had capriciously diverted work away from her and, ultimately, sacked her. Without these factors her pay would have been £265 net per week equating to £294 gross.
However, was it right to take into account the employer’s conduct when calculating a week’s pay?
The normal basis for calculating a week’s pay is to establish actual earnings for a 12 week period prior to termination and then work out the average. That is a week’s pay as a matter of fact and there is no room for speculation or variation. That was the correct approach for calculation of the basic award.
However, there is no equivalent provision for ascertaining the level of net pay for the purpose of a compensatory award. In nearly all cases the same calculation is used but there is no requirement to do so. This opens up the possibility of exercising discretion, particularly taking into account actions by the employer. His Honour Judge Peter Clark observed that “it would not be just and equitable to permit the Respondent to benefit from behaviour that formed part of the unfairness of the dismissal”.
