Re-Engagement After Unfair Dismissal
Re-engagement after Unfair Dismissal
Where the old job has ceased to exist, the Tribunal can order that the employer gives the employee a different job. Again, the Tribunal will order compensation for lost wages over the period before re-engagement. The Tribunal must consider the same criteria as for reinstatement.
Additional awards
An additional award is awarded when the employer unreasonably refuses to comply with an order for reinstatement or re-engagement. By s.117 ERA 1996, an award of 26-52 weeks’ gross pay can be awarded.
Reinstatement and Re-engagement Orders
Nature and Rarity
If unfair dismissal is upheld, the tribunal must explain and ask the claimant if they desire reinstatement or re-engagement. These orders are extremely rare, made in less than 1% of cases.
Reinstatement
Requires the employer to treat the employee "in all respects as if they had never been dismissed," with no loss of pay, pension rights, or continuity of employment, and with the benefit of any pay rises. The tribunal specifies lost benefits, restored rights, and the compliance date.
Re-engagement
An order for the claimant to be engaged by the employer, its successor, or an associated employer in comparable or suitable employment, on terms as favourable as reinstatement, unless there's contributory fault. The tribunal must specify the new employer, nature of employment, remuneration, lost benefits, and compliance date. Tribunals must not delegate details to the parties, but specify them clearly.
Practicability and Other Factors Affecting Re-engagement
When deciding, the tribunal considers the employee's wishes, whether it is practicable for the employer to comply, and the employee's contribution to dismissal. "Practicable" means "capable of being carried into effect with success".
Trust and Confidence
A breakdown in trust and confidence often makes orders impracticable. The employer's belief must be genuine and rational; the tribunal must not substitute its own view. This applies even if the belief is based on a flawed investigation.
Permanent Replacements
The hiring of a permanent replacement is generally irrelevant to practicability, unless it was impracticable to operate without one or a reasonable period passed without the employee requesting reinstatement/re-engagement.
Redundancy Situations
Practicability is assessed at the date the order takes effect (usually the remedies hearing), not dismissal. The fact that an order might lead to a redundancy process is a factor, but not necessarily a bar.
No Mitigation Duty during Reinstatement/Re-engagement consideration
The fact that the employee made no attempt to mitigate loss is not a reason to withhold the order, as 100% of lost salary would be reimbursed, and mitigation is irrelevant here.
Making Up Lost Salary
Orders generally require employers to pay all lost salary and benefits between dismissal and reinstatement/re-engagement, offsetting sums already received. This sum is not subject to the statutory cap on compensatory awards. Polkey findings do not reduce this sum if reinstatement is ordered.
When an employment tribunal finds that an employee has been unfairly dismissed, it has the power to order reinstatement or re-engagement of the claimant. In practice, these orders are rarely made, occurring in less than 1% of cases.
Consideration of Re-engagement
If a tribunal upholds a complaint of unfair dismissal, it is legally obliged to explain the available remedies, including reinstatement and re-engagement, and ask the claimant if they wish for either order to be made. This duty applies regardless of what the claimant initially stated on their ET1 form. If the claimant expresses a wish for these remedies, the tribunal must first consider reinstatement. Only if it decides that reinstatement is not appropriate will it then proceed to consider whether to make a re-engagement order and on what specific terms. Failure by a tribunal to consider re-engagement after discounting reinstatement is considered an error of law. If neither reinstatement nor re-engagement is ordered, the tribunal must instead award compensation.
Claimants may be more inclined to seek re-engagement if they are high earners, as the statutory cap on compensation does not apply to lost salary awards made through re-engagement, or if they anticipate difficulty in finding alternative employment due to factors like age or a lack of suitable positions.
Nature and Terms of a Re-engagement Order
A re-engagement order mandates that the claimant be employed by the original employer, its successor, or an associated employer in a role that is either comparable to their dismissed job or in other suitable employment. Unless there has been contributory fault by the employee, the terms of the re-engagement order must be as favourable as reinstatement, so far as reasonably practicable.
When issuing a re-engagement order, the tribunal must specify a range of terms, including:
The identity of the employer (which could be the original employer, a successor, or an associated employer).
The nature of the employment (the specific role).
The remuneration for the employment.
Any amount payable by the employer for benefits the claimant would have received but for the dismissal, covering the period between the dismissal date and the re-engagement date (including arrears of pay). This sum for lost salary and benefits is not subject to the usual statutory cap on unfair dismissal compensation.
Any rights and privileges (such as seniority and pension rights) that must be restored to the employee.
The date by which the order must be complied with.
It is important that the tribunal sets out these terms with sufficient detail and precision, as an order merely setting out a "process of re-engagement" or a general requirement for "comparable" employment is inadequate. Tribunals have the flexibility to be "quite creative" with re-engagement orders, such as restoring old salary levels but freezing future increases until other employees catch up, even if the employee had signed a new contract with reduced terms.
Financial Consequences of Re-engagement Orders
A re-engagement order typically requires the employer to make up all the employee's lost salary and benefits for the period between dismissal and re-engagement, taking into account any sums already received, like payment in lieu of notice or ex gratia payments. This sum is not subject to the usual statutory cap on unfair dismissal compensation. No deduction for failure to mitigate is made from this sum.
If an employer fails to comply with a reinstatement or re-engagement order, the tribunal may make an additional award of between 26 and 52 weeks' pay. This additional award is penal in nature, intended to punish the employer for non-compliance, rather than compensate the employee for loss. It is made in addition to any basic and compensatory award that the employee is entitled to. The additional award is subject to the statutory cap on a week's pay, but this cap can be exceeded if necessary for the total compensatory and additional awards to reflect the full amount specified as payable for lost salary in the original re-engagement order. An employer can avoid this additional award if it satisfies the tribunal that it was not practicable to comply with the order.
It is clarified that a re-engagement order does not impose an absolute, indefeasible obligation on the employer to re-engage, but rather creates a situation where the employer must either re-engage or become liable for the specified awards, including the additional award. The statutory scheme for employment protection is self-contained and falls under the exclusive jurisdiction of the employment tribunal.
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