07 September 2008
Department for Innovation, Universities and Skills (DIUS)
 
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Unfairly dismissed? Part C

URN No: 07/828/A3

Contents

Making a complaint

Settling a dispute

An employee who believes that he or she is entitled to make a complaint to an employment tribunal should first seek to resolve the dispute by mutual agreement with the employer - perhaps through the business's own grievance or appeals procedure, where one exists. The Employment Tribunal may reduce any award of compensation if no such steps have been taken. The employee and the employer may also seek advice from a conciliator of the Advisory, Conciliation and Arbitration Service (Acas). However, it should be noted that the time limit for making a complaint to an employment tribunal (see below) will not normally be extended to allow for the fact that attempts have been made to settle the dispute in advance.

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Time-limit: unfair dismissal

An application to an employment tribunal should normally be made as soon as the employer has given notice of dismissal and should be received within the period of three months beginning with the employee's effective date of termination (see Effective date of termination and note particularly that the two exceptions described at the end of that section do not apply for this purpose). If the application is received any later than that date the tribunal will consider the complaint only if they believe it was not reasonably practicable for the employee to have made the complaint within the three-month period and that it has been made within such further period as they consider reasonable.

However, the time limit will be extended by a further three months where the employee has reasonable grounds for believing that a dismissal or disciplinary procedure (statutory or otherwise) is still in progress at the point where the normal time limit would have expired.

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Time-limit: interim relief

An application for interim relief must be received by an employment tribunal not later than seven days after the effective date of termination of the employee's employment. Where the employee is complaining that his or her dismissal was because of trade union membership or activities the application must be accompanied by a signed certificate from an authorized official of the trade union concerned supporting the complaint. The document Union membership: rights of members and non-members explains the procedure for applying for interim relief in greater detail.

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Application to an employment tribunal

The application form ET 1 (E/W) or ET 1(Scot) is in the booklet Making a claim to an Employment Tribunal available from Jobcentre Plus offices, Citizens Advice Bureaux, from the DTI Publications Orderline on 0845 015 0010, or from the Employment Tribunals Service website. The employee should send the completed form to the appropriate employment tribunal office as explained in the booklet. Copies of the completed application form will be sent to the employer and to a conciliator from the Advisory, Conciliation and Arbitration Service (Acas). It is particularly important for them to know whether or not the employee would like to continue to work for the employer and the employee should therefore specify on the application form which of the remedies is preferred. Copies of the employer's reply will be sent to the employee and to the conciliator.

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Remedies

There are three possible remedies for unfair dismissal, two of which involve re-employment of the applicant by the employer:

  • reinstatement (the employee is to be treated in all respects as though the dismissal had not occurred);
  • re-engagement (the employee is to be re-employed but not necessarily in the same job or on the same terms and conditions of employment);
  • compensation.

Orders for reinstatement or re-engagement normally include an award of compensation for the loss of earnings.

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Conciliation

The conciliator receives a copy of the employee's application to the tribunal and will in most cases contact one or both of the parties involved. The conciliator will then establish whether or not the parties wish to try to reach a voluntary settlement without the need for a tribunal hearing. Conciliation can be attempted at the request of either party (or their representatives) or, where there is no such request, if the conciliator considers there is a reasonable chance of success. If a settlement seems possible the parties may apply to the tribunal for a postponement of the hearing.

The employee or employer may seek the services of an Acas conciliator without waiting for the officer to approach them first. They may also seek the services of a conciliator before any application has been made to an employment tribunal. However, it is important to remember that the time-limit for applying to an employment tribunal is not extended because of any such discussions.

Conciliators will encourage employees to use any procedures that exist within their employer's organization for appeal against their dismissal. While these procedures are running their course, the employee should ask the conciliator not to take any further action on the complaint and should also ask the tribunal not to proceed with arrangements for the hearing, temporarily, pending the outcome of such an appeal.

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Preliminary hearing

This may be arranged, before the substantive case is heard, to enable a tribunal to determine any issue relating to the entitlement of any party to bring or contest proceedings to which the originating application applies. Any of the parties may apply for such a hearing, or it may be convened at the decision of the tribunal, but notice must be given to all the parties in writing and an opportunity given to advance oral argument before the tribunal.

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Pre-hearing review

A full tribunal or a chairman sitting alone may conduct a pre-hearing review of a case in advance of the full tribunal hearing.

If it appears that the case has little prospect of success, either party may be ordered to pay a deposit of up to £500 as a condition of continuing to proceed with, or defend, the case.

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Tribunal hearing

If a settlement is not reached or the application is not withdrawn, the employee's application will proceed to a full hearing by an employment tribunal. Tribunals hold most of their hearings in their own offices in the larger towns and cities. Each tribunal normally consists of a legally qualified chairman and two lay members. In certain circumstances however the chairman may sit alone or with just one lay member. At the hearing, tribunals try to keep their proceedings as simple and informal as possible. Many applicants and respondents put their own cases to the tribunal although some may choose to have a representative, who may be a lawyer, trade union official, representative of an employers organisation, or simply a friend or colleague. Legal Aid is not available at Employment Tribunals but some applicants may be eligible for a limited amount of legal advice and assistance in preparing their case. The scheme does not cover legal representation at the hearing. Further details about the scheme can be obtained from your local Citizen Advice Bureau.

If the employer claims that the employee was not dismissed, the tribunal must first be satisfied by the employee that there was a dismissal. Once dismissal is established, it is normally for the employer to show that dismissal was for one of the reasons specified under the legislation (see Fair dismissal). Having established the reason for dismissal, the tribunal must then in most cases decide whether in the circumstances (including the size and administrative resources of the undertaking) the employer acted reasonably in treating that reason as a sufficient reason for dismissing the employee. However, if the employee claims that dismissal was on one of the grounds that are automatically unfair, it is for the employee to persuade the tribunal that this was so. If the tribunal agrees, it will find the dismissal unfair without needing to consider the reasonableness of the employer's actions. If the employee resigned but claims that the employer's conduct entitled him or her to resign, the onus is on the employee to prove that this was so.

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Joinder

An employer who faces a complaint of unfair dismissal may have dismissed the employee concerned as a result of pressure, in the form of actual or threatened industrial action, exercised by a trade union because the employee was not a member of a trade union. If the employer or the employee making the complaint claims this is so, either of them may request that the union concerned be 'joined', or in Scotland 'sisted' (that is, brought in as a party), to the proceedings. If the tribunal finds the dismissal unfair, and the claim of pressure well founded, it may make any award of compensation wholly or partly against the union concerned, instead of against the employer. A request by either an employer or a dismissed employee to join a trade union or other person in unfair dismissal proceedings in this way will be granted by the tribunal if it is made before the hearing begins, but may be refused if it is not made until after the hearing has started.

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Reinstatement and re-engagement

When a tribunal finds that an employee has been unfairly dismissed it will explain what orders it can make for the employee to be reinstated or re-engaged and will ask the employee whether he or she wants such an order. In deciding whether or not to make an order for reinstatement or re-engagement, the tribunal will take into account:

  • the employee's wishes;
  • the practicability of the employee returning to work for the employer;
  • in cases where the employee was partly to blame for the dismissal, whether or not it would be just to make such an order.

Where a tribunal orders re-engagement it will be on terms which are, wherever possible, as favourable as if the employee had been reinstated, unless the employee was partly to blame for the dismissal.

Where a tribunal orders the reinstatement or re-engagement of an employee who was dismissed without statutory dismissal and disciplinary procedures having been followed where they should have been, and where failure to follow them was wholly or mainly the employer's fault, it will also award four weeks' pay to the employee (unless it considers that this would result in injustice to the employer). This sum will be deducted from any subsequent award of compensation made because the employer has failed to comply with the terms of a reinstatement or re-engagement order.

Where a tribunal orders the reinstatement or re-engagement of an employee who was found to be unfairly dismissed as a result of the employer having failed to comply with the procedure related to the duty to consider the employee’s request to continue working beyond retirement, the tribunal will also award four weeks’ pay to the employee (unless it considers that this would result in injustice to the employer).

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Award of compensation

Where the tribunal finds that an employee has been unfairly dismissed it will provide the alternative remedy of an award of compensation. Such an award will usually consist of:

  • a basic award, based on the employee's age, length of service and weekly pay and calculated in a similar way to a redundancy payment;
  • a compensatory award, which is an amount which the tribunal considers just and equitable for the loss which the employee has suffered because of the dismissal.

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Basic award

The basic award is calculated by adding up the following amounts, but only continuous employment within the last 20 years can count:

  • 1½ weeks' pay for each complete year of employment when an employee was between the ages of 41 and 65 inclusive;
  • 1 week's pay for each complete year of employment when an employee was between the ages of 22 and 40 inclusive;
  • half a weeks' pay for each complete year of employment when an employee was below the age of 22.

The maximum number of week's' pay that may be awarded is 30. There is also a maximum week's pay that can be used to calculate the award. (The limit on a week's pay may vary from year to year: the current figure is given in Limits on payments and awards). In trade union, health and safety, employee representative, workforce representative and occupational pension scheme trustee cases (see Interim Relief) there is a minimum figure for the basic award. (This minimum may vary from year to year: the current figure is also given in Limits on payments and awards).

The basic award, including the minimum award in trade union, health and safety, employee representative, workforce representative and occupational pension scheme trustee cases, will be reduced if:

  • the tribunal considers that the employee's conduct before dismissal justifies a reduction; or
  • the employee has unreasonably refused an offer of reinstatement from the employer, or has unreasonably prevented the employer from complying with an order for reinstatement; or
  • the employee has already been awarded or has received a redundancy payment; or
  • the employee has been awarded any amount in respect of the dismissal under a designated dismissal procedures agreement.

Where an employee has been dismissed without statutory dismissal and disciplinary procedures having been followed (if failure to follow them was wholly or mainly the employer's fault) and the amount of the basic award is less than four weeks' pay (before any reduction for the last two reasons above), the tribunal will increase it to four weeks' pay unless it considers that this would result in injustice to the employer. Such an increase will also be made where it is found that an employee has been unfairly dismissed as a result  of the employer having failed to comply with the duty to consider procedure in connection with an employee’s request to continue working beyond retirement.

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Compensatory award

This award compensates the employee for the loss suffered as a result of the dismissal insofar as the employer is responsible for this loss. As well as covering the loss of earnings between the dismissal and the hearing and an estimate of future loss, the tribunal will also consider matters such as loss of pension and other rights and any reasonable expenses incurred by the employee as a result of the dismissal.

The compensatory award is an amount the tribunal considers just and equitable in the circumstances, but there is a maximum compensatory award except in cases where the reason for the dismissal is that the employee made a protected disclosure under the Public Interest Disclosure Act 1998 or took action relating to health and safety. (The maximum compensatory award may vary from year to year: the current figure is given in Limits on payments and awards). In particular, the tribunal will reduce the award if it finds that the employee was partly to blame for the dismissal or because the employee did not mitigate his or her loss - for example, by failing to make reasonable efforts to obtain another job. Certain payments made by the employer to the employee - for example, wages in lieu of notice or an ex gratia payment - will normally be offset against any compensatory award. The compensatory award will also be reduced by the amount of the employee's earnings from any other employment between the dismissal and the tribunal hearing.

If an employer dismisses an employee without statutory dismissal and disciplinary procedures having been completed, where they applied and are not treated as having been complied with, and the failure to complete them was wholly or mainly the employer's fault, any compensatory award will be increased by at least 10 per cent and up to 50 per cent. Similarly, if the procedure was not completed and the fault lay wholly or mainly with the employee, any compensatory award will be reduced by 10 to 50 per cent. At what point on the scale between 10 and 50 per cent to make the increase or reduction will be at the tribunal's discretion, and in exceptional cases it will be able to make one or less than 10 per cent or none at all.

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Non-compliance with the terms of an order for reinstatement or re-engagement: additional award

If the employer refuses to comply with the terms of an order for reinstatement or re-engagement, then the employee should notify the tribunal so that it can look into the matter. If the employee's complaint is upheld, an award of compensation will be made and if there has been a total failure to comply with the order there will be an additional award of compensation over and above the basic and compensatory awards, unless the employer can satisfy the tribunal that it was not practicable to comply with the order. The additional award will be between 26 and 52 weeks' pay.

There is a maximum week's pay that can be used to calculate the additional award. (The limit on a week's pay may vary from year to year: the current figure is given in Limits on payments and awards).

Note: Employment tribunals may however exceed these limits if the total compensation awarded (apart from the basic award) would otherwise be less than the arrears of pay element of the original award with which the employer failed to comply.

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Effect of Jobseeker's Allowance or income support on payment of award

An employment tribunal award may be affected by the requirement that Jobseeker's Allowance or income support already paid for the period of an award be recouped by Jobcentre Plus. If the employee has claimed or received such benefit for any part of the period covered by an award of arrears of pay (in the case of an order for reinstatement or re-engagement) or compensation for loss of earnings (in other cases) the tribunal will specify how much of the award represents arrears of pay or compensation for the period before the tribunal hearing. This part of the award is called the prescribed element, and no part of it can be paid to the employee until the employer has received from Jobcentre Plus a 'recoupment notice' requesting payment, or a letter saying there will be no recoupment. The tribunal will explain to the parties how much of the award the employer can pay to the employee at once, and how much (the prescribed element) cannot be paid until the employer has heard from Jobcentre Plus. The recoupment notice will ask the employer for a payment equal to all the benefit paid for the period covered by the prescribed element, or the amount of the prescribed element, if that is equal to or less than that benefit. If the benefit due for recoupment is less than the prescribed element, the employer can then pay the balance of the prescribed element to the employee. Jobseeker's Allowance recouped will be treated as a repayment by the employee, who will get credit for this by having the period for which benefit can be paid extended by an equivalent amount provided the other conditions for receiving benefit remain satisfied. Further information is available in Benefit repayment: a guide for employers).

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An employee's entitlement to benefit during the period of a tribunal award

Someone who is awarded compensation for future loss of earnings is not entitled to receive Jobseeker's Allowance for any part of the period covered by that award falling within the first year following the end of the employment. Income support, however, may still be payable, depending on the employee's circumstances.

Employees who are awarded compensation for unfair dismissal at employment tribunals should inform the Jobcentre Plus local office which has been dealing with their claim for benefit.

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Interest on tribunal awards

The Industrial Tribunal (Interest) Order 1990 (SI 1990 No 479) provides that an employer who does not pay the compensation awarded by the tribunal within 42 days of the tribunal's decision, is required to pay simple interest on the amount outstanding. However, in relation to awards in cases of discrimination on the grounds of sex, race, disability, sexual orientation, religion or belief or age, interest begins to accrue from the day after the day on which the tribunal's decision is sent to the parties. However no interest will be payable if the full amount of the award is paid to the complainant within 14 days of the decision being sent out.

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Costs

Costs (expenses in Scotland) can be awarded if the tribunal decides that a party has acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably, in bringing or conducting a case. Costs of an adjournment or postponement may also be awarded when the adjournment or postponement is requested at the last minute by either party with no good reason or where it is necessary because a party has not come prepared to deal with issues which may be expected to arise at the hearing.

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The Acas arbitration alternative to the tribunal

The Advisory, Conciliation and Arbitration Service (Acas) has been given the power to provide an arbitration scheme for unfair dismissal disputes. This scheme is a voluntary alternative to the tribunals. Separate guidance can be obtained from Acas.

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