Compensation awards in Tribunals

In the recent case of Laing v Allma Construction Limited (UKEATS/ 0041/11/BI), the Employment Appeal Tribunal (EAT) has given useful guidance on the questions that Employment Tribunals should ask themselves when considering whether a compensation award should be reduced or increased.

The Employment Tribunal, having found that the Claimant had been unfairly dismissed, reduced the Claimant’s compensation by 5% for contributory fault and had increased it by 25% because of the employer’s failure to follow the ACAS Code of Practice.

When the Employer appealed, the EAT took the opportunity to set out the following guidance.

In relation to an uplift for failure to follow the ACAS Code, a Tribunal should not simply award 25%, instead it should ask itself:

  • Does a relevant Code of Practice apply?
  • Has the employer failed to comply with that Code in any respect and, if so, in what respect?
  • Do we consider that failure was unreasonable and, if so, why?
  • Do we consider it just and equitable, in all the circumstances, to increase the Claimant’s award and, if so, why is it just and equitable to do so?
  • If we consider that the award ought to be increased, by how much ought it to be increased?
  • Why do we consider that that increase is appropriate? 

The EAT also looked at how compensation should be affected where it is argued that the employee’s actions contributed to his own dismissal.  The EAT noted that a Tribunal should ask:

  • What did the employee do?
  • Did it cause or contribute to his dismissal?
  • Is it just and equitable that, in the light of that conduct, his basic award and compensation be reduced?

Where an employee is guilty of misconduct but a procedural mistake was made with the dismissal, it is helpful to have an understanding of what the Tribunal should consider when it comes to awarding compensation.