Every year the Government reviews and uprates the level of employment protection payments. The new rates come into effect on 6 April each year.
This year is no exception: for anyone who was dismissed after 6 April 2016, the maximum statutory redundancy payment is £14,370, the maximum basic award for unfair dismissal is also £14,370, the maximum compensatory award for unfair dismissal is 52 weeks gross pay or £78,962 (whichever is the lower) and, in those relatively rare cases where the tribunal orders reinstatement or re-engagement, and the employer fails to comply with the order in circumstances where it is ‘practicable’, an ‘additional’ award is made of between 26 and 52 weeks’ pay, that is between £12,454 and £24,908.
In discrimination and whistleblowing cases, there is no cap on the amount a tribunal can award. In addition, in discrimination cases, it can award compensation for injury to feelings in accordance with the Vento guidelines: cases falling in the highest bracket may attract an award well in excess of £30,000; injury to health (normally any psychological damage caused by the discriminatory act); aggravated damages (normally aggravating factors in the way the employer has handled the complaint of discrimination or, in more unusual cases, the way the litigation has been conducted); and exceptionally so called exemplary or punitive damages.
Compensation claims can be brought for loss of earnings and loss of benefits including loss of pension rights. For older employers who have worked in the public sector, compensation for loss of pension rights may involve very substantial sums indeed and the calculation is extremely complex. The Presidents of Employment Tribunals in both England and Wales and Scotland are about to issue ‘Guidelines’ as to how these claims should be calculated but in the run of the mill case, the calculation will be based on the loss of employer contributions to the pension pot over the period covered by the award.
But contrary to the impression given by some newspapers, actually awards by employment tribunals are relatively low, particularly in unfair dismissal cases. There are three reasons for this: first of all, anyone who is dismissed is under a duty to mitigate his or her loss by trying to find a new job. When economic times are bad, this can take quite a long time but when economic times a good, jobs are easier to come by. Also, as time goes by, tribunals will expect claimants to adopt a more flexible attitude to the types of jobs they are prepared to accept in terms of accepting jobs on a lower salary, although compensation may still be awarded for loss of earnings and benefits, if a claimant accepts a less well paid job. It is always important to remember that any income received from new employment will be set off against the compensation award. Secondly, particularly in misconduct cases, tribunals may reduce the award for contributory fault that is blameworthy conduct on the part of the claimant which contributed to the dismissal, in rare cases by as much as 100%! Thirdly, and perhaps most importantly, tribunals will often make a so called Polkey reduction that it where a tribunal concludes that although the dismissal is unfair for procedural reasons, had the employer followed a fair procedure the outcome would have been the same.
To give an example: a dismissal will normally be found to be unfair where an employer is found to have failed to consult prior to a redundancy dismissal but if the employer is able to show that consultation would not have made any difference to the final outcome (i.e. the employee would have been made redundant anyway), then tribunals will limit the award to the period it would have taken for the employer to have followed a consultation process, normally a minimum of 14 days and a maximum of around 1 month. So the award will be substantially less than the maximum referred to above.
This principle has also been held to apply to discrimination cases, so for example in a redundancy case if it is shown that the individual was selected for redundancy for a discriminatory reason, it may still be open to the employer to argue that the individual would have been selected for redundancy anyway, particularly where there are a large number of redundancies.
It is now standard practice in all cases for tribunals to order the claimant to prepare and submit a ‘schedule of loss’ setting out his or her compensation claim. This is not ‘rocket science’, the claimant is simply required to set out the sums he or she is claiming from his or her former employer. This is not set in stone and can and often is updated before the tribunal hearing. But in more complex cases advice may be necessary to determine both the length of the period over which compensation should be claimed and the amounts claimed for lost benefits. In practice, Tribunals will often limit the period of claim to 1 year but there is nothing in law which requires them to do so. Advice may be needed in tricky cases.
This article was written by No5 Chambers Employment Barrister Anthony Korn.
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