Following a new case, employers should be aware that there does not necessarily need to be the prospect of a financial compensation in cases of unfair dismissal following a recent decision by the Employment Appeal Tribunal (EAT).
Financially motivated claims?
Although reinstatement and re-engagement are both possible, unfair dismissal is usually linked to an employee being awarded financial compensation by the Employment Tribunal (ET).
This financial compensation is primarily based on lost earnings, which can amount to a significant figure, which is why the majority of employees pursue a claim – to be financially compensated for their lost employment.
This financial compensation can, however, be significantly reduced for a variety of reasons. Examples of these reasons include the employee contributing towards their own dismissal, or the dismissal being inevitable despite unfairness in the dismissal process. Such reductions may even result in the financial compensation being reduced to zero.
If this is the case, surely a claim for unfair dismissal should fail for lack of obvious remedy?
Impact of Evans v London Borough of Brent
The EAT recently disagreed with this view, however, as they stated there can be other reasons for an employee to pursue a claim of unfair dismissal. In the matter of Evans v London Borough of Brent, the EAT upheld a claim for unfair dismissal despite there being no financial compensation payable.
The ET had initially held that while the employer had failed to follow correct procedures for dismissing the employee, the employee had contributed to his own dismissal to such an extent that there was no financial compensation payable. As a result of not having any obvious remedy, the ET had dismissed the unfair dismissal claim.
On appeal, however, the EAT held that this was incorrect, as there could be other reasons for an unfair dismissal claim to be upheld – primarily points of principle. The EAT stated that the unfair dismissal claim could be upheld solely to highlight that the employer had failed to follow the correct procedure when dismissing the employee, in order that the same failures would not repeat themselves.
Comment
Although each case will be determined on its own facts, this case suggests that employees cannot be penalised for bringing a claim despite there being no real prospect of financial compensation, provided the claim has other merits. Previously employers have been able to offer employees financial settlements or warn them that a costs order may be made against them if they pursue a financially pointless claim, but these options may no longer be effective. Employees may be able to pursue claims purely on points of principle.
For employers, unfair dismissal claims can be an expensive exercise, both in terms of costs and time. The decision in Evans v London Borough of Brent highlights the importance of dismissing employees in the correct manner, and obtaining legal advice beforehand is advisable to help reduce the possibility of unfair dismissal claims.
For further information, or to discuss the issues raised by this article, please contact Herrington Carmichael’s Employment group on 0118 977 4045 or employment@herrington-carmichael.com
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
