Understanding the statutory cap on compensation for unfair dismissal
A recent tribunal decision serves as a warning to employers as to what might happen when an award is reconsidered, says Guy Guinan
An employer facing a claim for unfair dismissal may have to pay substantial compensation. The amount will depend on the losses that flow from the dismissal taking into account what is just and equitable. However, a statutory cap will generally apply to limit the total amount that the employer might have to pay. The current cap is the lower of £93,878 and 52 weeks’ wages, the fixed amount being reviewed each year.
The application of the statutory cap failed to be considered in the recent case of Dafiaghor-Olomu v Community Integrated Care, where the employment tribunal had to consider what was the appropriate remedy for the claimant in relation to their dismissal for the second time. The key issue was at which point in the calculation was the statutory cap to be applied.
Mrs Dafiaghor-Olomu had been successful in her claim for unfair dismissal. However, the tribunal refused to order re-engagement as she had requested, but instead awarded compensation of £46,153.55. The employer paid the full sum of money as ordered.
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