The Jersey Employment and Discrimination Tribunal's jurisdiction to reduce a compensation award for unfair dismissal is now well established. Collas Crill acted for the successful party in one of the first applications for a reduction in 2011, where a discount of 65% was ordered, amounting to approximately £18,500.
The Tribunal's power to find that an employee has been unfairly dismissed, but then reduce the award the employee receives, is designed to ensure that justice is properly served. There are a number of specific circumstances where the Tribunal may reduce an award under the Employment (Jersey) Law 2003, but there is a deliberate 'sweep up' provision, which enables it to take into account any other circumstances which render it just an equitable to reduce the award. It is impossible to account for every eventuality in the Law, so the 'sweep up' provision is necessary.
When terminating an employee's employment, an employer must be wary of (1) following a fair and reasonable procedure and (2) reaching a fair and reasonable decision. If the employer does not satisfy both of these requirements, the termination will be unfair and the employer is liable to pay compensation in addition to any other amounts owed on a contractual and/or statutory basis.
A simple example of where the Tribunal may discount a compensation award for unfair dismissal is where a fair and reasonable decision has been reached by the employer to terminate the employee's employment, but the employer has slipped up with its procedure in arriving at that decision. Another example is where an ex gratia payment has been made to an individual on termination of his or her employment as a gesture of good will. As the employer has made the payment without being legally obliged to, this can be set off against any compensation the employee might be entitled to.
Last month the Royal Court, acting as the Employment and Discrimination Appeal Tribunal, overturned the Tribunal's decision to discount a compensation award by 100%. The Tribunal had decided that the employer had not followed a fair and reasonable process in making the employee redundant, but felt able to discount the compensation award by the maximum amount due to:
- the employee contributing to his dismissal; and
- on just and equitable grounds (the 'sweep up' provision).
In respect of (i), the Tribunal held that because the employee did not participate in the consultation process by coming up with any viable alternatives to his redundancy. However, the Royal Court held that there was no evidence that there was any such viable alternative and the employee couldn't have made something up.
In respect of (ii), the employer agreed to defer the termination of the employee's employment because of the difficulty he was having in finding alternative employment. As the employee was deemed to be redundant, the Royal Court noted that keeping him on for a further period would have cost the employer (as it was losing money on his position). However, the mere fact that an employer acts in a kind and considerate way does not necessarily justify a discounted compensation award.
In this case the Royal Court felt it would have been open to the Tribunal to make some reduction, arising from the cost of extending the employee's employment, but this was likely to be modest.
Ultimately, the Royal Court allowed the appeal and has remitted the matter back to the Tribunal to decide upon the award of compensation in light of its findings.
This case is another example of the judgement call the Tribunal has to make when deciding whether to reduce a compensation award and if so, by how much. In particular, making reductions under the 'sweep up' provision will always be accompanied by a degree of uncertainty given its wide ranging application.
The advice to employers is, of course, to avoid any debate over a reduction by not unfairly dismissing individuals in the first place. However, the Tribunal is clearly willing to assist employers where appropriate and the possibility of a reduction, potentially up to 100%, is a material consideration for individuals considering bringing an employment claim.
QUALIFYING PERIOD TO CLAIM UNFAIR DISMISSAL EXTENDED TO 52 WEEKS' CONTINUOUS SERVICE
From 1 January 2015 any employee starting work with an employer will have to accrue 52 weeks' continuous service in order to qualify for the right not to be unfairly dismissed instead of 26 weeks'. Any employee who started with their employer before 1 January 2015 will retain the right not to be unfairly dismissed after 26 weeks' continuous service.
For the avoidance of doubt, the new qualifying period does not affect an Employee's right to claim for any of the 'automatic unfair dismissals' under the Law which require no specific length of service.
Social Security Minister, Deputy Pinel, who made the decision, has come under significant pressure from political groups to reverse the amendment to the qualification period but, at the time of writing, appears to be standing firm.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.