If the tribunal finds unfair dismissal it can order re-instatement (old job back) or re
engagement(new job), and/or compensation. Compensation Compensation mainly consists of a "basic award" equivalent to statutory redundancy pay of, as at 2009, up to £10,500, plus a "compensatory award" for loss of earnings, statutory rights and benefits and for expenses, of up to £66,200, or unlimited where the dismissal was due to health and safety, whistleblowing or union work. So even in an accidental unfair dismissal, the employer could be ordered to pay up to £76,700.
If the employee adds a claim for breach of contract, up to a further £25,000 could be awarded, taking the total potential compensation to £101,700.
Risk factors Mainly though, the compensatory award depends on what the employee earned before it all went wrong, and how long they will take to get back similarly paid work. Factoring in the smaller basic award, the nightmare scenario in a tribunal for the employer is therefore ruining a 41-year old high flier’s career after they have been with them for 20 years. "Big money" cases tend to be restricted to discrimination, where the tribunal’s unfair dismissal cap is lifted, or breach of contract or psychiatric injury, where there is no limit to what can be claimed in court.
So a worse case scenario overall for the employer is not just ruining a high flier’s career, but a man doing so by bullying a woman and giving her a nervous breakdown.
Compensation tends to roughly double in disability or race discrimination cases, so
it can be even worse. Tribunal statistics The reality of tribunals is that the average
award of £4,000 does not cover the time and money spent by the employee on the
claim, and consequently the employer - who also spends about £5,000 on legal fees usually merely avoids paying less than it loses on lawyers, publicity, management
time and staff penning witness statements and testifying. It is generally in both par-
ties’ interests to settle. The risks of being sucked into a tribunal are real 40,000
unfair dismissal cases are heard every year. 69% of claims are settled; of the other
31%, 19% are thrown out and 12% win. So claimants may be aware they have an
81% chance of extracting some cash. 31% of cases that proceed to a full hearing
result in compensation. The median award is £4,000 and mean is £8,058. Costs
are awarded to employers in fewer than 0.2% of cases and to employees in fewer
than 0.1% of cases, and average a median of £1,000 and mean of £2,095. Three
quarters of claimants are represented. Factors for & against settling However, the
employer may worry that compromising undermines the decision to dismiss and
thus the authority of management, or that it would create a precedent for everyone
who leaves to demand "a bit extra to go quietly". The employee may simply want
his day in court. The employer may have little economic option but to offer a few months’ wages ex gratia to get rid of the nuisance. It often costs that anyway to keep a disgruntled employee whilst working through grievances and disciplinary hearings, sometimes dragged out even longer by sick leave, so two months’ wages is not really an "extra" cost. By offering an apology, a good reference, tax free lump sum and avoidance of the time and cost and risk of losing, the employer may persuade the employee to make a similarly economic decision to drop the claim,
sign a compromise agreement and empty his desk into a bin bag (wine boxes are
now the custom in the City). It can be essential that the employee feels the employer
has lost hence the apology and payment.
Titany answered the question on December 3, 2021 at 05:24