The Claimant was awarded just over £46,000 in compensation after a first remedies hearing, at which the ET refused to order re-engagement. The Respondent duly paid this amount to the Claimant. The Claimant then appealed against the re-engagement decision and the case was remitted back to the ET for a further remedies hearing. As a result of the appeal on the question of re-engagement, the ET came to the view that the first compensatory award was deficient but again refused to order re-engagement. The new figure for the compensation was just over £128,000. The question of how the statutory cap should be applied to this new compensation figure hinged on the interpretation of s124(5) ERA which says:

124 (5) The limit imposed by this section applies to the amount which the employment tribunal would, apart from this section, award in respect of the subject matter of the complaint after taking into account—

(a) any payment made by the respondent to the complainant in respect of that matter, and

(b) any reduction in the amount of the award required by any enactment or rule of law.

This hearing was to determine whether the £46,000 already paid by the Respondent should be taken into account and deducted from the £128,000 and the then cap of £72,400 applied thus giving the Claimant another £72,400; or whether the £46,000 should not be regarded as such a payment meaning the cap should apply to the £128,000, thus giving the Claimant a TOTAL of £72,400. It was argued that the words “taking into account” necessitated the deduction of the sum already paid to the Claimant. If this sum was ignored no “account” would have been taken of it. Since the maximum sum the Claimant was entitled to receive was £74,200 the Respondent had in effect been penalised for complying with the ET’s order at the first remedies hearing. The EAT also had to decide if the ET was wrong not to order re-engagement.

The EAT dismissed both aspects of the appeal. They concluded that although the words “taking into account” were somewhat nebulous, they referred to a reduction in the sum due. s124(5)(b) refers to a “reduction”. It would appear that both sub-paragraphs were designed to perform the same purpose namely to identify sums that must be deducted from compensation. The EAT concluded that payments to account should be deducted from the overall award before applying the statutory cap even if that meant that the employer did not get any benefit from payments to account. On the re-engagement issue, the decision to refuse to order re-engagement and the decision to reconsider are discretionary in nature. Where a discretion is engaged the Claimant must be able to demonstrate that the decision was manifestly wrong. The EAT was not satisfied that she had done so.