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EVERYDAY LAW: Compensation for unfair dismissal


Cecil McCarthy

EVERYDAY LAW: Compensation for unfair dismissal

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The Fifth Schedule of the Employment Rights Act, 2012 provides that part of the award for compensation for unfair dismissal shall include “an amount such as the Tribunal thinks fit in respect of any benefit which the employee might reasonably be expected to have had but for the dismissal”.
The above provision will be part of the calculation of compensation in cases where the Tribunal finds that an employee has been unfairly dismissed and no order for reinstatement or re-engagement is made or where an order for the reinstatement of an employee or for his re-engagement is made but the employee is not reinstated or re-engaged.
In appropriate cases, therefore, it will be relevant to consider what is comprehended by the benefits which the “employee might reasonably be expected to have had but for the dismissal”.
In England, the Employment Tribunals have had to consider provisions in their employment rights legislation and based on their decisions it may be said that as a matter of principle any benefit can be claimed provided it is a loss that arises from the dismissal and the recovery of the benefit is fair and equitable.
Some of the benefits comprehended are loss of the benefit of a company car, loss of free accommodation or free meals, loss of the use of a mobile phone and loss of pension benefits.
Under the English legislation, the loss of pension rights has presented the greatest challenges for the Tribunal with respect to quantification.
Indeed, in arriving at the calculation of compensation for loss of pension rights, Tribunals in England have been assisted by guidelines prepared by two employment judges and two actuaries in a publication called: Compensation for Loss of Pension Rights.
The guidelines take into account the two main types of occupational pension schemes namely: deferred benefit and defined contribution.
I do not intend to discuss these two schemes except to say that under a defined benefit scheme the pension is determined by reference to the employee’s final salary and length of service while under the defined contribution scheme the pension is determined by the contributions made to the scheme by the employer and employee over the period of employment.
Beyond this, I believe the accurate etermination of pension loss is a matter for actuaries. In appropriate cases, the Employment Tribunal may need to engage the assistance of an actuary.
I should point out that the publication: Compensation for Loss of Pension Rights does not have the force of law and therefore need not be followed even though the position in England seems to be that if they are not followed the Tribunal ought to explain what guided its decision.
In the case of Greenhoff v Barnsley MBC (2006), the Employment Appeals Tribunal recommended that the approach of the Tribunal where the issue of loss of pension was being considered should consist of:
“(a) identifying possible benefits that the employee could obtain under the pension scheme;
(b) setting out the terms of the pension relevant to each possible benefit;
(c) considering in respect of each possible benefit first the advantages and disadvantages of applying what we have described as ‘the simplified approach’ or ‘the substantial loss approach’ and also any other approach that might be considered appropriate by the Tribunal or by the parties;
(d) explaining why they have adopted a particular approach and rejected any other possible approach; and
(e) setting out their conclusions and explaining the compensation they have arrived at in respect of each head of claim so that the parties and this Appeal Tribunal can then ascertain if they had made an error.”
The loss of other benefits is usually easier to quantify bearing in mind that the Tribunal has a discretion to exercise in these matters.
From the above discussion, it is clear that an employee making a claim for unfair dismissal, in most cases, will require legal representation.
• Cecil McCarthy is a Queen’s Counsel.

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