The level of compensatory award for unfair dismissal may only be 'grossed up' before, not after the application of the cap

Hardie Grant London Ltd v Aspden (Unfair Dismissal : Constructive dismissal) [2011] UKEAT 0242_11_0311

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23/11/2011

The EAT (HHJ Peter Clark) has decided in Hardie Grant London Ltd v Aspden that a tribunal when deciding the level of compensatory award for unfair dismissal may only gross up the award before, not after the application of the cap (when allowing for taxation).

Tax was due on the Claimant's compensatory award after winning the case for constructive unfair dismissal (as it exceeded £30,000). The ET therefore 'grossed-up' the award to allow for tax. This however brought the gross award over the statutory cap. The employer appealed against the amount of the award and the EAT decided that although the award is intended to cover the loss of net earnings, and that 'grossing-up' will ensure that net lost earnings will be paid, the gross amount must not exceed the statutory cap.

Employment Tribunal entitled to conclude, on the facts, that Respondent was in breach of implied term of trust and confidence. Claimant resigned in response. She was constructively dismissed. S.124(1) Employment Rights Act 1996. The Employment Tribunal was wrong to make a compensatory award to Claimant in excess of statutory cap. Grossing up takes place before, not after, application of cap so as to allow for taxation.

Transcript of the judgement:-   Hardie Grant London Ltd v Aspden
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