Remedies For Unfair Dismissal

Remedies for Unfair Dismissal

Once a finding of unfair dismissal has been reached, the Tribunal has the discretion to make the following orders:

1. Basic Award; (loss of notice period and a payment similar to redundancy payment);

2. Compensatory Award (further loss of employment);

3. Reinstatement Order;

4. Re-engagement Order; and

5. Addition Award (where the employer refuses to comply with a reinstatement or re-engagement order).

Orders for reinstatement or re-engagement are rare. Barristers will advise you that a reinstatement order is only granted in 1% of cases. I represented a Claimant in the Employment Tribunal where the Claimant was granted a reinstatement order and was awarded £85,000 for a unfair redundancy dismissal. So it is possible. Read more about how to get a reinstatement order.

When an employment tribunal determines that an employee has been unfairly dismissed, it then proceeds to consider the appropriate remedies. This often happens in a separate "liability-only" hearing, where the tribunal first decides if unfair dismissal occurred before assessing compensation. This approach saves tribunal time, as a remedies hearing is not needed if the claim fails, and allows parties to reach an agreement on remedy if liability is established.

When the Tribunal Deals with Remedy

Employment tribunals frequently defer consideration of remedies until after they have decided the question of liability, especially in longer or more complex cases. However, this is not always the case, and parties should be prepared with all relevant evidence for assessing basic and compensatory awards, such as payslips and job application records. Employers should also bring supporting evidence to counter the claimant's claims, like job listings.

Role of the Schedule of Loss

It is generally preferable for the parties to identify and, if possible, agree upon the potential bases and calculation of awards in advance, often by using a schedule of loss. The ET1 claim form specifically invites claimants to detail the remedy sought and how it has been calculated, though this section is not obligatory to complete. Many employers will request an assessment of loss from the claimant early in the proceedings to understand expectations and clarify necessary evidence. Tribunals frequently include such requests in standard orders for directions. While a tribunal is not necessarily in error if it awards more than claimed in a schedule of loss, it should provide parties with an opportunity to make submissions if it intends to do so, especially when both parties are represented.

Unfair Dismissal Compensation

The Employment Rights Act 1996 (ERA 1996) outlines several possible remedies available when a tribunal finds an employee has been unfairly dismissed:

Reinstatement or Re-engagement Orders

These orders require the employer to either treat the employee as if they were never dismissed (reinstatement) or re-employ them in a comparable or suitable role (re-engagement). These are rare in practice, occurring in less than 1% of cases, but I have managed to get this for a client. Read more. If you get such an order and an employer fails to comply, an additional award may be made. When a finding of unfair dismissal is made, the tribunal is legally obliged to explain these orders to the claimant, their circumstances, and ask if the claimant wishes for either to be made. If the claimant expresses a wish, the tribunal must first consider reinstatement, and only if that is deemed inappropriate, will it consider re-engagement.

Basic Award

This is a statutory award calculated similarly to a statutory redundancy payment, based on the employee's age, length of continuous service, and a week's pay (subject to a statutory cap). In certain automatically unfair dismissal cases, a minimum basic award is set. Tribunals have discretion to reduce the basic award based on the employee's conduct before dismissal, even if that conduct did not contribute to the dismissal or was unknown to the employer at the time.

Compensatory Award

This award aims to compensate the employee fully for the financial loss sustained due to the unfair dismissal, provided that the loss is attributable to the employer's actions and is considered "just and equitable" in all circumstances. It covers losses such as lost earnings, pension rights, and other benefits. Unlike the basic award, its calculation does not rely on a prescribed formula. It is subject to a statutory upper limit, or "cap," unless the dismissal was for certain automatically unfair reasons like whistleblowing or health and safety. The compensatory award may be reduced for reasons such as the employee's failure to mitigate their loss, the likelihood of a fair dismissal occurring anyway (Polkey deduction), or the employee's contributory fault.

Additional Award for Non-Compliance

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 award is penal in nature, intended to punish the employer for non-compliance, rather than compensate the employee for loss, and is made in addition to any basic and compensatory award. An employer can avoid this additional award if it proves that compliance with the order was not practicable.

Interim Relief

In a very limited category of automatically unfair dismissals (chiefly whistleblowing claims and trade union membership claims), a tribunal can grant interim relief. This order requires the employer to continue paying the former employee's salary and benefits from the date of termination until the final determination or settlement of their claim. Interim relief is rarely sought and even more rarely granted, and is only available if the tribunal decides, at an interim hearing, that the claimant is "likely" to win at the full hearing. The Labour government had consulted on expanding the categories for interim relief but decided not to proceed with these changes.