Employer’s Ability to Pay Award for Unfair Dismissal is Irrelevant

In Tao Herbs and Accupuncture Ltd v Jin the EAT upheld the Employment Tribunal’s award of £11,000 to an unfairly dismissed employee, despite the Employer seeking to argue that this would place it into liquidation. The EAT decided that the likelihood that the employee’s employment would probably have ended due to the recession had been reflected in the award which compensated the employee for lost earnings to the date of the hearing. However, no further account should be taken of the employer’s financial ability to pay as this was not a relevant factor when making tribunal awards for unfair dismissal.

In these challenging economic times this decision offers no comfort to employers who may likewise face harsh financial consequences as a result of tribunal proceedings. It is therefore even more important that employers ensure that they deal with employees fairly.