The Court of Appeal has held that an employment tribunal could lawfully reduce the amount of compensation awarded to an employee for loss of future earnings by taking into account the fact that the employee might have been made redundant six months later had she not been dismissed.

The claimant had been disciplined by her employer for incidents of bullying and harassment. Efforts had been made to relocate the claimant but the proposals had been refused. The claimant was subsequently dismissed. At the tribunal it was accepted that the claimant‘s compensation for future loss of earnings should be limited to six months as the claimant would have been made redundant six months later anyway. The EAT, however, found that the tribunal could not sensibly recreate the world as it might have been and should not have reduced the compensation.

The Court of Appeal found that the tribunal had not made a mistake by engaging in a speculative exercise, since any assessment of future loss will involve an element of speculation. There was evidence in the case that showed a risk that the Claimant’s employment might not continue indefinitely. Nevertheless the tribunal’s decision could not stand, as it had not provided sufficiently clear reasons showing that a necessary analysis of all factors had been undertaken.

From an employer’s perspective this is a useful tool with which to reduce claims for ongoing losses, subject to the employer being able to produce cogent evidence of the likelihood of future redundancy dismissal.

Scope v Thornett