In unfair dismissal claims, tribunals can make basic awards of up to £8,400, as well as compensatory awards of up to £56,800 for current and future financial loss.
However, the employment appeal tribunal (EAT) has just said in Port of Tilbury (London) Ltd v Birch and ors (2005, IRLR 92), that tribunals must not ignore the evidence in front of them, particularly if they want to award more than has been claimed, before deciding on the amount of compensation.
What were the basic facts?
Mr Birch and three other employees made successful claims of unfair dismissal against their former employer, Port of Tilbury (London) Ltd. However, the tribunal decided that because each had contributed to their own dismissals, their compensation should be reduced by 25 per cent.
The tribunal then made awards to each of the men of between £28,000 and £39,000 (before the reduction was applied), which included loss of pension rights for three of them. In coming to its decision, the tribunal relied entirely on a booklet called "Compensation for loss of pension rights: Employment Tribunals", although both parties made detailed written submissions about how they should be assessed.
The tribunal rejected their suggestions "on the basis that neither approach was included in the booklet." It awarded one of the men - Mr Talbot - more than he had even asked for. The employers appealed, saying that both decisions represented errors in law.
What did the EAT decide?
And the EAT agreed. It said that, in general terms, assessing awards of compensation in unfair dismissals is essentially a matter for the employment tribunal, unless, as in this case, it becomes clear that the tribunal has gone wrong somewhere.
It said that the booklet was there simply to "help tribunals when there is little forthcoming from the parties as to how to approach...assessing a proper compensation of loss of pension rights." There was no duty on it to follow the guidelines in the booklet, particularly in situations where the parties put forward credible evidence.
Indeed, in those circumstances, the tribunal was under a duty to consider that evidence first. It therefore allowed the employer's appeals in respect of the assessment of loss of pension rights, and remitted the matter to the tribunal.
What about Mr Talbot's loss?
The EAT then looked at the appeal in respect of Mr Talbot. The employment tribunal awarded him a sum for future loss based on a period of five years. This was not only in excess of that proposed by the employer, it was also in excess of that asked for in Mr Talbot's schedule of loss.
The employers argued that it was wrong for an employment tribunal to award more than the employee had claimed for. The trouble was that their legal representatives could not find a case that supported this assertion.
The EAT decided that although employment tribunals are unlikely to award more than an applicant claims, it is not necessarily an error of law to do so (particularly if a claimant is not legally represented).
However, when both parties have the benefit of legal representation (as in this case), the EAT said employment tribunals should only award more than was claimed after having given both sides an opportunity of making submissions.
That was not done in this case and so the EAT allowed the appeal and again remitted the matter back to the same employment tribunal.