Legal Updates

Employment – Loss of Statutory Rights – Compensation

The recent case of Corbett v Superdrug Stores Plc [2006], addressed how to calculate the award for an employment dispute. The employee had been working for the employer for more than 10 years when she was unfairly dismissed. She brought her case before the Employment Tribunal and was awarded the sum of £1,420 for loss of her statutory rights. However, the Tribunal neglected to give an explanation as to why that figure was reached.

The main problem was that it was not made clear how that figure was reached. There were three potential reasons why the Tribunal awarded her that amount:

• It was compensation for the loss of protection against unfair dismissal which it would have taken the employee until 17 May 2006 to acquire; or
• It was compensation for the loss of the right to long notice which she had built up with the employer and did not receive; or
• Both.

The employer appealed against the amount awarded to the Employment Appeals Tribunal (“EAT”). It argued that the Tribunal had erred in awarding the sum of £1,420 for ‘loss of statutory rights’. The employer said that in making this award the Tribunal had used the conventional label for compensation for loss of protection from unfair dismissal and such an award normally attracted an award of around £250. By awarding the employee £1,420 the Tribunal had wildly exceeded its discretion, perhaps due to undue sympathy for the employee.

The employee submitted that the Tribunal had acted within its powers and that the sum of £1,420 was awarded to reflect the fact that she had lost her statutory rights. Considering she had been employed for over 10 years, she believed that she was entitled to 10 weeks notice which would take a further 10 years to build up again, and therefore the award was justified.

The appeal was allowed. The EAT ruled that the Tribunal had failed to explain why it had reached the conclusions which it had and had awarded almost six times the usual amount of compensation without an appropriate justification. Although the employee had been employed for more than 10 years and would have accordingly been entitled to compensation for the loss of the right to long notice, it was not appropriate to calculate the amount by applying the simple arithmetic multiplier which was relied upon by the Tribunal. In addition, there were no submissions made by the employee before the Tribunal regarding loss of right to long notice, and therefore an award should not have been made in this regard.

The EAT ruled that the award would be recalculated by the same Tribunal after hearing the appropriate submissions.

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© RT COOPERS, 2006. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.