Having a right, for example the right not to be unfairly dismissed, or to have reasonable adjustments made to your disability, is one thing. But on its own, it is not worth much.

The best way of explaining why is a worked example:

s94 of the Employment Rights Act 1996 creates the right not to be unfairly dismissed. It does this simply enough, by saying in effect ‘An employee must not be unfairly dismissed by his employer.’ This right is then explained and detailed in the rest of the ERA.

But on its own, this really doesn’t do anything. You may have a right, but what happens if it is breached? What, in other words, is your remedy?

This is set out in some of the later sections of the ERA, s112-126. These set out the basic and compensatory awards – as well as the various re-employment orders that might be made

So this far, you have both a right and a remedy. But even this isn’t enough. You need a way of getting your remedy. Otherwise your employer could say “Yes, you should not have been unfairly dismissed, and I should pay you compensation – but what are you going to do about it?”

The answer, of course, is that you are going to go to an employment tribunal. But if you are to do so, the tribunal must have jurisdiction. That is to say, it must have the legal power to deal with your claim. That’s set out in s111 ERA, which tells us ‘A complaint may be presented to an employment tribunal against an employer by any person that he was unfairly dismissed by the employer.’ Without s111, the tribunal wouldn’t be able to hear any unfair dismissal claims. And because it says that unfair dismissal claims will be heard by the employment tribunal, they cannot be dealt with by another court. If you tried to bring an unfair dismissal claim in a County Court, it would be rejected, because the County Court does not have jurisdiction.

All this is important, because there are traps for the unwary. You must not assume that, just because you have a right, you are entitled to compensation in a particular way or that you will be able to bring a claim to the tribunal.

For example, the Working Time Regulations 1998 contain a right that you will not have to work more than 48 hours a week (unless you agree in writing to opt-out) and that night workers do not have to work more than eight hours at a time. But there is no entitlement to compensation if these rights are breached and you cannot bring a claim to the employment tribunal about them. They are enforced by the Health and Safety Executive, and various other Government agencies.

For each claim you bring to the tribunal you must have some idea of what compensation can be awarded, and where the tribunal’s jurisdiction comes from. Otherwise you may be caught out: at best, you’ll have have wasted your time, and at worst you may have missed the chance to bring your claim in the correct forum, or risk an order that you pay the other side’s costs.

Claimants in person

The number of individuals representing themselves in the employment tribunals has remained fairly constant over the last 3 years: 30,195 in 05/06; 31,694 in 06/07 and 31,780 in 07/08

Maximum and median awards

The median award for unfair dismissal was £4,000; the medians for race, sex and disability discrimination were £8,120; £5,200 and £8,363 respectively. The highest award for unfair dismissal (including basic award) was £76,536; and the highest for race, sex and disability discrimination were £68,991, £131,466 and £227,208.

Costs

The costs figures are badly explained in the published statistics, but costs seem to have been awarded against claimants in 327 cases (out of a total of 189,303: that is, in 0.17% of cases) and against employers in 134 cases. The median award was £1,000, and the maximum was £17,775.

These figures would seem to exclude those – very rare – cases in which costs in excess of the limit of £10,000 are sought, and the costs question sent to the county court for assessment.

Appeals

There were 671 appeals to the Employment Appeal Tribunal, of which 303 were dismissed at either a full or a preliminary hearing 235 were allowed (in full or in part) and 133 were withdrawn.

These numbers do not include those that were dismissed on the papers under rule 3(7) and either not taken to an oral hearing, or dismissed at an oral hearing under rule 3(10).

As of today (that is to say, for the purposes of employment ending today or later), the maximum award of compensation for unfair dismissal is £66,200, up from £63,000; and the maximum amount of a ‘week’s pay’ for the calculation of statutory redundancy pay and various other awards is £350, up from £330.

If you’re claiming compensation for injury to feelings in a discrimination case, you’ll need to read the judgment of the Court of Appeal in Vento for guidance on what kind of sum you can sensibly claim. But bear in mind that Vento was decided in 2002, so don’t forget to adjust for the effect of inflation. The Bank of England provides a helpful inflation calculator.

Most awards of compensation made by the employment tribunals are of fairly modest amounts that are unlikely attract any tax: the sum of money that the tribunal orders the employer to pay is the sum of money the claimant ends up with.

However, awards can attract tax at up to 40% and, in some cases, can also be subject to national insurance. In such cases, it is necessary to take the effect of tax into account in calculating the schedule of loss; this is the calculation known as ‘grossing up.‘

If you are the claimant and you have done this calculation, you will probably remember when you get the tribunal’s judgment that the sum awarded is larger than it would otherwise be because you are going to have to pay a substantial amount of tax. But if you are an adviser acting for a client, don’t assume that they have understood the grossing up calculation or remembered what you told them about tax on any award the tribunal might make. At least on first sight, they are likely to read the judgment saying that their former employer has to pay them £X, and think that that means they are going to end up with £X. It will then come as a let-down when they realise that what they’re actually going to get is £Y, substantially less than £X, because quite a lot of it is going to have to be paid to HMRC.

So when you contact your client to tell them the result of the case, tell them the news in the right order. That is to say, don’t tell them:

‘The tribunal has awarded you £X in compensation.

Instead, make sure you have done the tax calculation before getting in touch, so that you are in a position to say something like:

‘The tribunal has awarded you a sum of money that will leave you about £Y after tax.’

That way, by the time they see the judgment telling their employer to pay then £X, they will know what it means in terms of the money they will actually get.

If you are bringing a claim against your employer for dismissing you, you will almost certainly be claiming compensation for lost earnings. Sometimes this will be very small – for example if you managed to find a better-paid job only a few weeks after you were dismissed. But sometimes there will be good reason to think that you have lost more than that. You may even think that the dismissal has done permanent damage to your career. You should tell the tribunal about the whole of your future loss: for more detail on this, see Push your luck.

Mothers of young children will often suffer the greatest losses. If you have lost a responsible and demanding job soon after having your first child, you may have real difficulty getting or keeping another job at the same level. This is because it is one thing winning the respect of an employer in a pressured environment as a single twenty-something who is able to work all hours, go drinking with colleagues in the evening, and be back at your desk at 7.30 am the next day. It is quite another pulling off the same trick through morning sickness, ante-natal appointments, maternity leave, unreliable child-minders, school hours, homework, childhood illnesses, and general parental knackeredness. If you have lost your job at this critical time of your life, you may find that you have been pushed onto a ‘mummy track’ that can affect the rest of your career.

The same may be true, of course (barring morning sickness), if you are the father of a young child – if you really do act, when push comes to shove, as if your child is as much your responsibility as its mother’s.

It is frustrating to win your case, but get limited compensation because you can’t convince the tribunal that you have done a reasonable amount to find work – what’s called ‘mitigating your loss.’

It is important to make sure you collect evidence of all your mitigation efforts. If you are claiming benefits for which you have to be available for work, you will have to show the JobCentre some evidence that you have been looking for work. But bear in mind that evidence that is sufficient to convince a bored and underpaid JobCentre worker may not stand up to the kind of scrutiny you can expect from an employment tribunal.

Your aim, in collecting evidence of your mitigation efforts, should be to collect together a pile of papers so enormous that the respondent’s lawyers feel tired just looking at it, and can’t face trying to cross-examine you on it at all.

With this aim, do the following. Keep a diary of your job search. Aim to take at least one step every weekday day to find work, and record it in your diary. Make a note every time you look for jobs in a newspaper, or visit the JobCentre, or visit or telephone a particular employer. If for some reason you are not able to take any steps at all on a particular day, make a note in your diary of the reason why. Keep a file of relevant papers in chronological order. Put in it clippings of all newspaper adverts you follow up, a copy of every application you make, a copy of every rejection letter or invitation to interview that you receive.

Keep copies of the cost of your job search in the same file: keep your train or bus tickets if you have to travel to an interview, and receipts for printing costs if you have to print copies of your CV.

Bear in mind that the longer you are out of work, the more you will have to prove: if you find another job in 3 months or less, it is unlikely that the respondent will even try to argue that you have not done enough to mitigate. But if you are out of work for 9 months or a year – especially if you are still out of work at the time of the hearing – you will almost certainly face close questioning about what you have done and why you have not succeeded yet.

Maths teachers, much to the frustration of their students, always say to ’show your working’. They mean that it is not enough to get the right answer, you should also show how you reached it.

This is good advice in legal practice as well. Unless they are obvious, conclusions are not convincing. It is the route you take to the conclusion that will persuade others.

Even more than that, it is often hard to remember in detail how you reached a particular conclusion some time later. This is particularly true if, like most tribunal hearings, there are lots of different issues to deal with.

It is particularly important when dealing with schedules of loss. Unless you write things down at the time, it is almost impossible to remember why a particular number is what it is. And raw numbers are not intuitive. Nobody will be able to look at a final figure, say £16,540, and understand immediately where it comes from. For every figure of compensation claimed, you should set out how it was reached.

If you are claiming compensation for lost earnings, basic award, pension or other contractual payments, your claim is for your net losses: you are entitled to be awarded what you have actually lost by reason of your employer’s default. However, if your award for losses of this kind totals more than £30,000, you will be taxed on the excess over £30,000 at the rate of 40%. That means that if you simply claim your net losses, you will end up significantly out of pocket.

In these circumstances you need to do a calculation commonly referred to as ‘grossing up’ to arrive at the figure you need to claim so that, after tax, you will be left with a sum that properly compensates you for your net losses.

This calculation is a little daunting at first sight, but if you keep calm it is not really difficult.

You can approach it in one of two ways: you can either understand the calculation properly, or you can follow a formula and not worry too much about understanding why the formula gets you the result you are after. Obviously it is better to understand all your calculations, but if you are short of time and algebra makes you feel sick and panicky, you can get away with the short cut..

The full explanation

Round figures make sums easier, so suppose your net claim for lost earnings etc. is exactly £130,000. If you don’t gross up, you will lose 40% of the excess of this over £30,000 – that is, 40% of £100,000 which is of course £40,000. So you will end up with only £90,000 to compensate you for a net loss of £130,00.

To head this off, you need to claim a sum which, after tax at 40% on the excess over £30,000 will leave you with £130,000. We don’t know what this sum is at the moment, so we will call it X. We want to find out the value of X.

A good start is to write down what we do know about X:

X minus 40% of the amount by which X exceeds £30,000 is £130,000

or to put it another way:

X – 40/100 x (X-£30,000) = £130,000

If you remember a bit about how to manipulate equations from school, you can see at a glance that you are going to be able to find out from this what X is. The key is to remember that the left hand side equals the right hand side: that is what an equation is. So anything you do to one side, you must do to the other side as well. (Think of twins balanced on a see-saw if it helps. Give one twin a 5kg bag of apples to hold, and you have to give the other twin 5Kg of something to hold too. Move one twin 1m closer to the centre, and you’ll have to move the other one 1m towards the centre.)

Start by multiplying out the bracket:

X – 40X/100 + (40/100 x £30,000) = £130,000

so X – 40X/100 + 12,000 = £130,000

then subtract 12,000 from each side:

X-40X/100 = 118,000

then cancel the fraction:

X – 2X/5 = 118,000

then notice that X – 2X/5 is the same thing as X – 2/5ths of X, which is 3/5ths of X

so

3X/5 = 118,000

multiply each side by 5:

3X = 118,000 x 5

divide each side by 3:

X = 118,000 x 5/3

so:

X = 196,66.67

So you need to claim £196,66.67 to compensate you properly for a loss of £130,000.

It is easy to make a slip in this kind of calculation, so always try the calculation in reverse to make sure you have done it right.

If you are awarded £196,66.67 by the tribunal, you will be taxed at 40% on the excess over £30,000, that is on £166,66.67 of it. So to check we have done the calculation right, we need to take 40% off £166,66.67 and then add back the first £30,000.

40% of £166,66.67 is £66,666.67

So taking off 40% we have £166,66.67-£6,666.67 = £100,000

and adding back the £30,000 we get £130,000, which we are pleased to note is the number we first thought of.

The short cut

If your net loss is £A, you need to claim:

5 x (A – 12,000)/3

in order to be awarded a sum that will leave you with £A after tax.

Or if you prefer words: subtract £12,000 from your net loss, multiply the result by 5 and divide it by 3 and the result will be the sum you need to claim.

Remember that you should only apply this formula to net losses (of earnings, the value of contractual benefits etc – not including personal injury, injury to feelings or aggravated damages) where the total exceeds £30,000.