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9 November 2012
Employment Appeal Tribunal (EAT)
Lady Smith, Mr M R Sibbald and Mr M Smith OBE JP
Where an unfair dismissal complaint is made against a number of different respondents, then money paid under a settlement by one respondent must be taken into account when assessing compensation to be paid by another respondent - even if it turns out that the respondent who settled was never liable in the first place.
Optimum lost a contract with a client. That contract was split amongst a number of other organizations. Optimum considered that TUPE applied so one of those other organizations should take over the employment of their manager, M. Those other organizations did not accept that TUPE applied and refused to employ M.
M complained of unfair dismissal against Optimum and the other companies. One of the companies settled the claim for £20,000. The employment tribunal concluded that TUPE did not apply so Optimum was liable for the unfair dismissal compensation. The tribunal concluded that his losses were about £24,000 and it awarded that by way of compensation, without deducting the £20,000 settlement. It justified this by saying that to deduct the £20,000 would have meant an unjustified windfall for Optimum.
The EAT said that was wrong. The compensatory award for unfair dismissal is to compensate. A successful unfair dismissal claimant should not be compensated for more than the losses actually incurred. The settlement amount should therefore have been deducted.
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