Although tribunals can exceed the statutory limit set down for compensatory awards if the employer fails to comply with an order for reinstatement, the Employment Appeal Tribunal (EAT) has made clear in University of Huddersfield v Duxbury that they can only do so in situations where the aggregated total would be less than the sum that would otherwise have been payable.
Basic facts
Mr Duxbury was dismissed from his post as a senior lecturer in January 2020. He then lodged tribunal proceedings for unfair dismissal.
Tribunal decision
After upholding his complaint, the tribunal ordered the university to reinstate him and pay him compensation of £67,469.78. When the university refused to take him back, the tribunal granted him a basic award of £11,025; a compensatory award of £67,469.78; and an additional award of £27,300.
With regard to the compensatory award, the tribunal relied on section 124(4) of the Employment Rights Act 1996 (ERA) to disapply the statutory cap to ensure that Mr Duxbury would have received the same amount, had he been reinstated. In other words, £67,469.78.
The university appealed, arguing that under section 124(1ZA)(b) ERA, the tribunal was required to cap the compensatory award at one year’s gross pay. In other words, £63,532.81.
Relevant law
Section 114(2)(a) ERA states that when making an order for reinstatement, tribunals should include “any amount payable by the employer in respect of any benefit which the complainant might reasonably be expected to have had but for the dismissal” for the period between termination and reinstatement.
Section 124(1ZA)(b) ERA states that the amount of any compensatory award shall not exceed “52 multiplied by a week’s pay of the person concerned”.
Section 124(4) ERA states that tribunals can exceed the limit on the compensatory award “to the extent necessary to enable the aggregate of the compensatory and additional awards fully to reflect the amount specified as payable under section 114(2)(a)”.
EAT decision
The EAT agreed with the tribunal that, had Mr Duxbury been reinstated, the amount that would have been due to him under section 114(2) would have been treated as part and parcel of his compensatory award.
Although this would usually be subject to a statutory cap (one year’s gross salary in this case), tribunals have the power to increase the award if the employer fails to comply with the order for reinstatement.
The point of this is to ensure that the aggregate of the compensatory and additional awards reflect the amount that would otherwise have been payable and to avoid the perverse situation where employers would be positively disincentivised from complying with a reinstatement order. In other words, to avoid a situation where the employer ends up paying less to the employee who they dismissed than if they had complied with the order to reinstate them.
However, although the statutory cap can be exceeded, the EAT noted that this was only to the “extent necessary” to ensure that the aggregate total of the compensatory award and the additional award reflect the section 114(2) sum.
In the present case, aggregating the compensatory award at what would otherwise have been the statutory maximum (£63,532.81) with the additional award (£27,300) produced a total sum of £90,832.81. This was considerably more than the sum identified as payable under section 114(2)(a), namely £67,469.78.
The EAT concluded that it is only where the aggregated total falls short of the sum that would have been payable under section 114(2) that it will be “necessary” for the statutory limit otherwise imposed on the compensatory award to be exceeded.
It, therefore, allowed the university’s appeal.