Uplifting awards

Tribunals have stated for many years that interest cannot be awarded in unfair dismissal cases.

However, in Melia v Magna Kansei Ltd the employment appeal tribunal (EAT) has just said that tribunals can award an uplift of 2.5 per cent to compensate claimants whose payments are delayed.

What were the facts?

After making a successful claim for unfair dismissal, the tribunal awarded Mr Melia £6,000 compensation for being subjected to a "detriment" (in other words, a disadvantage), as a result of having blown the whistle on his employer. He was also awarded just over £12,000 for unfair dismissal (£840 basic and £11,601.85 compensatory).

Why did Mr Melia Appeal?

Loss of pension rights: Mr Melia appealed against the decision to compensate him solely for the loss of pension rights up to the point when he started making contributions to his new employer's fund, arguing that his loss continued after that. The EAT said the tribunal had not made any errors in law, and so could not alter its decision.
Loss of benefit rights: Mr Melia argued that he would have stayed with the company until 2014; the company said he would probably have left in about 2004. The tribunal decided on 2007, awarding him just over £1,700 for his loss.
However, it then reduced this by 2.5 per cent per annum on the basis that he would receive it as a lump sum and therefore benefit from an "accelerated payment".
Mr Melia argued that as the sum awarded already made allowance for accelerated payment, he was being penalised twice. The EAT said he was not.
Delayed receipt: Mr Melia then argued that if his award was to be subject to a deduction of 2.5 per cent, then he should receive an increase of 2.5 per cent for delayed payments.

The EAT agreed and said there was nothing to stop it from doing so, as part of awarding him with compensation that is "just and equitable", even though interest is not awardable under the statute (see box, below). Basically this allowed him to receive interest on payments awarded to him, but not yet paid.

Injury to feelings: Mr Melia argued that compensation for his injury to feelings should have been calculated until the date his contract was terminated - 9 November 2001.
However, because tribunals cannot award compensation for injury to feelings in unfair dismissal cases, it had to distinguish between the date when the detrimental treatment ended and "moved to become a matter of dismissal". It said this was in late June, and the EAT agreed.

Reduction of awards: Mr Melia argued that the tribunal should not have reduced his compensatory and basic awards by 50 per cent, on the basis that he accessed confidential personnel files without his employer's permission. He also knew that one of his subordinates had done the same and he had not reported him.

Although his resignation was not connected to this (he was constructively dismissed), the tribunal felt that, as a result of this misconduct and its discovery, Mr Melia would have been dismissed fairly. It therefore felt it was just and equitable to reduce the awards.

The EAT agreed, relying on the House of Lords decision of Devis v Atkins (1977, ICR 662) which "allowed a tribunal to take into account evidence of misconduct prior to termination which came to light after the dismissal, and reduce the compensation which would otherwise have been awarded to a nominal or nil amount."