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If you are unfairly dismissed, how much compensation could you be awarded?

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If you are an employee who has recently been dismissed, or an employer who is currently defending a claim for unfair dismissal there is one very important question to ask. How much compensation could the Tribunal award?

Following a successful claim for unfair dismissal, when considering how much compensation to award, a Tribunal will consider two types of loss that an employee has suffered. Firstly, the past loss of the employee will be considered from the date of dismissal up to the date of a final hearing, and then secondly the future loss of the employee. This will be the loss suffered up to a date by which a Tribunal could reasonably expect the employee to have found new employment.

Usually, past loss can easily be calculated by considering how many weeks the employee has been out of work. However, employees can be left disappointed when the Tribunal comes to calculating compensation particularly for an employee’s loss.

In some cases the Tribunal may decide that the dismissal was unfair because the employer failed to follow a fair procedure. However, they may feel that had the employer followed a fair procedure, the employee would have been dismissed in any event. Where this is the case the Tribunal can apply what is known as the Polkey principle or a Polkey reduction.

The Tribunal can apply the Polkey principle in any dismissal case, no matter what the grounds for dismissal were. In a case where the Tribunal believes it is appropriate to apply the Polkey principle then it will consider the likelihood that employment would have ended had a fair procedure been followed. The Tribunal will then apply a percentage to reflect the chances that the employee would have been dismissed if a fair procedure had been followed. The compensation awarded will then be reduced.

The outcome of the Polkey reduction can be a significant reduction in what compensation is awarded by the Tribunal. In some cases a 100% reduction has been made to an employee’s compensation even though their claim was successful.

Taking legal advice will help you determine whether your case is at risk of this type of reduction, and help you prepare your case properly ahead of a Tribunal hearing.

By Karen Devine