EAT clarifies approach to assessing future loss in unfair dismissal claims
The Employment Appeal Tribunal has confirmed that tribunals must properly evaluate future loss based on evidence, rather than adopting arbitrary limits such as a default retirement age.
Background
In Davidson v National Express Ltd, the claimant, a coach driver, was dismissed after failing alcohol tests at work. The employment tribunal found the dismissal procedurally unfair because the appeal process had been mishandled, but upheld the employer’s right to dismiss overall.
When calculating compensation, the tribunal limited Ms Davidson’s future loss of earnings to age 65, even though her state pension age was 66 and she had given evidence that she intended to work until 70. It also applied significant reductions to reflect her conduct and the likelihood that dismissal would still have occurred after a fair process.
The appeal
The EAT upheld the tribunal’s findings on liability and reductions but found an error in its assessment of future loss. The tribunal had simply chosen age 65 as a cut-off without explaining why that date represented the end of Ms Davidson’s likely working life.
The EAT stressed that tribunals must make a genuine assessment of the loss caused by the dismissal, drawing on the available evidence and applying common sense. That includes considering the claimant’s age, intention to work on, and other practical factors such as health and employability. While some uncertainty is inevitable, tribunals must still engage with the task rather than adopting a convenient or conventional end point.
The case was sent back to the same tribunal to reconsider the compensatory award, with directions to assess the future loss afresh based on updated evidence about the claimant’s employment and earnings.
Learning points for employers
This decision highlights the importance of tribunals providing a clear, evidence-based rationale when assessing future loss in unfair dismissal claims. Compensation cannot be capped at a conventional retirement age without explanation. The appropriate approach is to consider the claimant’s likely working life, their stated intentions, and any relevant contingencies.
For employers, the case offers insight into how tribunals are expected to approach future loss calculations and the level of reasoning required to support their conclusions.