Employers At Risk Of Paying More Than Statutory Cap On Unfair Dismissal Compensatory Awards In Some Cases

• Published date: 03 August 2022
• Subject Matter: Employment and HR, Unfair/ Wrongful Dismissal, Employee Rights/ Labour Relations
• Law Firm: Herbert Smith Freehills
• Author: Ms Anna Henderson

Employers face paying more than the statutory cap for unfair dismissal compensation in some cases, following a ruling of the Scottish EAT in Dafiaghor-Olomu v Community Integrated Care.

The statutory cap on unfair dismissal compensatory awards (the lower of 52 weeks' pay and, currently, '93,878) applies to the overall assessment of compensation after 'taking into account' any payment made by the employer to the employee in respect of the subject matter of the claim. The Scottish EAT has ruled that, where a compensatory award ordered by the tribunal was paid by the employer but the employee then appealed the remedy, and at the second remedies hearing the tribunal calculated compensation at a higher amount well above the cap, the original sum paid should be deducted before applying the statutory cap. The employer argued that the cap should be applied first and the amount already paid then set off; the EAT had sympathy for the employer's position but felt constrained by the statutory...