Tagged: schedule of loss

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Not all compensation is part of the compensatory award

In many schedules of loss, there are a number of different items being claimed under the heading ‘Unfair Dismissal: Compensatory Award’ or just ‘Compensatory Award’.

Often this is right — you’re claiming loss of wages up to the hearing, future loss, loss of statutory rights, etc. These are all part of the compensatory award.

But the compensatory award is also used as handy place to put any amounts of money being sought — whether or not they have anything to do with the unfair dismissal claim. This is not right.

If, in addition to your unfair dismissal claim, you are bringing an unlawful deduction of wages claim (about unpaid wages in the weeks running up to dismissal) that is a separate claim. It’s not part of your unfair dismissal claim. So it should have its own heading on your schedule.

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Don’t double dip

Often, when drafting a schedule of loss, you will need to include more than one claim. For example, if your case is for unfair dismissal and unlawful deduction of wages, your schedule should set how how much compensation you want for both claims.

But you must avoid seeking double recovery. This is when you try to claim the same compensation twice under two claims.

The most common cause of this is unfair dismissal and wrongful dismissal claims. Under the unfair dismissal, you will claim compensation for your lost salary from the dismissal. Under the wrongful dismissal claim, you will claim the notice pay you didn’t get.

Say you were dismissed on 1st February, were unemployed for two months before finding a new job earning the same money and were entitled to four week’s notice. Your compensatory award will be the salary you would have got in February and March. Your wrongful dismissal claim is for four weeks salary from the 1st February.

You will see that the notice pay is for the same period as part of the compensatory award. So there is double recovery. If the tribunal were to award both amounts, you would actually be better off, financially, than if you hadn’t been dismissed. Instead of just having your February and March salaries, you’d have those plus four weeks pay.

How do you deal with this in your schedule? Don’t just take the notice pay claim out. It is still part of your claim, and the tribunal will want to know what you’re claiming under it. But you should indicate that you are aware of the double recovery rule and not trying to claim the amount twice. Simply writing something like ‘Claimed in the alternative, since this sum also forms part of the compensatory award’ is normally the best route.

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Preserving Online Mitigation Evidence

Nowadays a lot of people search for jobs online. If you are doing this, you will need to make sure you can produce copies of the adverts and your application for the tribunal to show that you have made reasonable efforts to get another job (and thereby mitigate your loss).

Online adverts and applications can complicate this process, because it can seem as if you have a record when you don’t. For example, an email with a link to the advert on a website may seem to be a good record. But, six months later, when you’re preparing a mitigation bundle you may well find that the website has changed and there is no trace of the job or its details.

To be safe, make sure you have a full record of the advert yourself. The easiest and simplest way of doing this is to print it out there and then. Or to save it as a pdf.

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Past lost goes up to the hearing, even though the hearing is in the future

Most schedules of loss are divided into past loss (loss that has already been suffered) and future loss (loss that will occur in the future). With past loss the tribunal is trying to decide what has already happened, while with future loss they are predicting what will happen.

This distinction makes more sense in a example. If you are dismissed, you lose the salary you were being paid. Assuming that you have a tribunal hearing six months after your dismissal, and you are still unemployed, you have a past loss of six months earnings. That is money you would have been paid had you not been dismissed. Unless you have lined up a job starting the day after the tribunal hearing, you also have future loss — money that you wouldn’t have been paid yet, but would be expecting had you not been dismissed. So the tribunal needs to decide what that loss will be, by predicting when you will get a new job.

Normally, you will prepare your schedule of loss well before the hearing. But you should normally claim past loss up to the hearing (unless you know the loss will stop before that point, for example, if you’ve secured an equally well paying job). This is because the schedule will be used by the tribunal at the hearing. So it needs to reflect the position they will be in.

Otherwise, you get into a situation in which the tribunal is looking at a schedule thinking ‘I need to think about the past loss that is on this schedule as past loss. Then I need to think about the part of the future loss on this schedule that is actually now past loss. And then I need to think about the actual future loss.’ This is just too confusing.

This means that circumstances may change before the hearing, making the schedule inaccurate. For example, you may find a new job. If this happens, just update the schedule to reflect the new situation.

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Do you have to pay back compensation for lost earnings if you get a job?

Someone recently found us by searching this question.

The answer is no – you don’t have to volunteer to repay it, anyway. A tribunal award is basically a guess about what the future will hold. You must tell the truth at the hearing about your prospects. But if you win compensation on the assumption that you’ll be out of work for another 6 months, and then the week after the hearing you land a new job that’s better paid than the old, that’s just your good luck.

But don’t crow about it to your old employer. It’s just conceivable that they might apply to the tribunal to review the remedy decision on the basis that there’s new evidence available that should change the award. They’d probably fail, but best not to risk it.

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To be assessed by the tribunal

Quite often schedules of loss will leave off figures for some types of damage and replace them with words like ‘in the tribunal’s discretion’ or ‘to be assessed’. The expectation is that the tribunal will fill in the blanks.

This is not a good idea.

Your submissions, including your schedule of loss, should ask the tribunal to do something. There should not be gaps, where the tribunal does not know what you are asking for.

This is partly a practical issue. Things will be easier for everyone involved if it is clear what the claimant is trying to achieve.

The other issue is one of advocacy. The schedule is an opportunity to persuade the tribunal and to set up other submissions.

Imagine a case in which a women unfairly dismissed a few months before starting maternity leave. She will want to claim for the loss of earnings flowing from the dismissal. The hearing takes place about a month after she gives birth. One approach would be to claim for loss up to the hearing, then leave future loss ‘at the discretion of the tribunal’.

A better approach, however, would be to set out exactly what the loss is likely to be. The Claimant may not yet be in a position to seek work. So set out when she will be able to start looking. She will probably have some difficulty in finding a job. The job market is unfriendly to new mothers and she will need to balance her search with her new childcare responsibilities. So she should claim for a considerable period of time to reflect this – probably at least six months. When she finds a new job it may well be on a lower salary. It will take time to work back to her old earnings. So she should claim for that period as well.

All of this will be contested by the respondent. He will say that the Claimant should start looking for work immediately and that she will probably find a new job, at her old salary, very quickly. The tribunal may agree, at least to some extent.

But setting out a position is more persuasive than leaving things entirely to the tribunal. It also gives you the opportunity to make more submissions. Once you say ‘at the discretion of the tribunal’ it is difficult to say much else. After all, you have said you are leaving it to them. If you say precisely what you want the tribunal to do, you can call evidence and make submissions to support your position.

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Use Excel for Schedules of Loss

In any trade ‘Use the right tool for the job’ is good advice. If you are writing a schedule of loss, the right tool is a spreadsheet program – probably Excel.

A spreadsheet presents you with a page of cells, in which you can enter numbers. It is designed for dealing with and presenting numerical information, in the same way that a word processor – eg Word – is designed for dealing with text. But Excel is much better designed than Word.

The main advantage of a spreadsheet is that you can get the software to do the calculation for you. Suppose you have calculated a weekly loss of £78.65, and the period of time between dismissal and the hearing is 57 weeks. You write 78.65 in one cell (say D7) and 57 in another (say D8). To get the total past loss, you need to multiply £78.65 by 57. At this point, you could reach for your calculator, do the calculation, and then write £4,483.05 into cell E9. But the clever thing is to tell cell E9 that it should do the sum: (number in cell D7)x(number in cell D8). You do this using Excel’s ‘formula builder’ function.

How to use ‘formula builder’

Open a new Excel document. Write some numbers in cells D7 and D8, and imagine that you wish to add them and put the answer in cell E9.

Write “=” in E9. Then click on D7 and D8 in succession, and you will see that cell E9 now reads “D7+D8.” Press ‘return’ and you will see the answer in E9.

You don’t always want to add, of course. Excel defaults to addition because it is the most common operation people want to do in spreadsheets. But you can subtract, multiply or divide, too. Write “=” in another cell, and this time click on D7, then write “-“, then click on D8. That will subtract the number in D8 from the number in D7. To multiply you use “*” and to divide you use “/”.

The reason this is so clever is that it allows you to change your mind about any of the numbers that go into your calculation without re-doing all the consequential calculations the hard way. Change the number in cell D7 or D8, and the number in E9 will change automatically. If you use ‘formula builder’ every time you do any calculation, by the time you have finished you will have a lot of automatic calculations built in to your schedule. Your ‘weekly loss’ will have played a part in past loss, and future loss; you will have added up various heads of loss; you may have calculated interest, or done a ‘grossing up’ calculation. Lots of these figures will depend on each other.

Download this sample schedule and play around with it to see how it works. Try changing the ‘Week’s Pay, Net’ figure. Most of the figures will change, because they depend on the weekly pay.

The more complicated a schedule of loss is, the more this helps. In a difficult case your schedule may go on for a dozen pages and include a hundred separate calculations. You won’t get it right first time – or even second or third – so there will be many changes. If you’re doing the sums manually, you’ll end up doing hundreds of separate recalculations, which will then have to be double and triple checked. You will spend a lot of quality time with your calculator; and even then, you’ll probably get tired and end up with some errors. You can make mistakes with a spreadsheet, too of course – if you tell ‘formula builder’ to subtract instead of adding, or add instead of multiplying, or if you fail to add all the figures you ought to, or add some figures twice. But the point is that they are easier to spot; and once spotted, easier to correct.

Your spreadsheet can help during the hearing, or during negotiations, too. If you are using a laptop, you can have your spreadsheet open, and adjust it on the fly. Say, for example, the tribunal finds that the Claimant’s weekly wage is £15.50 less than you were arguing for. You adjust one cell, then see exactly what the result of the change is. Or your opponent suggests that the tribunal is likely to take this approach and says you should therefore accept £6,000. You’ll be able to see immediately that this is bad argument, since such a reduction will only take the total claimed down to £7,211.05.

Learning to use a new tool always slows you down a bit while you do it, but if you are going to prepare a lot of schedules, this is an essential investment of your time. You’ll soon get the hang of it, and from that point on it will make your life much easier.

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Hard and soft numbers

An important part of case preparation is drawing up a schedule of loss. This is a list of the money that you are claiming from your employer.

A schedule should be complete and optimistic, without being silly. It should include everything that, if things go very well indeed, the tribunal might award.

This means that most schedules ask for an amount much higher than you are actually likely to get.

It is important to keep this in mind. Firstly, because otherwise you are likely to be disappointed by what is actually a stunning victory. Secondly, because when negotiating you need to take account of the likely outcome much more than the schedule of loss.

A convenient mental short hand is hard and soft numbers. Hard numbers are those that are unlikely to change very much. Soft numbers are those that are likely to change a great deal. A hard schedule of loss is one where, if you win, you are likely to recover something close to the amount claimed. A soft schedule is one where, if you win you are likely to recover much less.

A hard schedule is not necessarily better than a soft one. A claim with a near certainty of getting £300 is not nearly so good as a soft claim for £50k. After all, even if you only recover 5% of the latter you will end up with £2,500.

But it will be very difficult to properly negotiate the claim for £50k, unless you recognise that the most likely outcome is about £10k.

Most schedules have some hard elements and some soft ones. It is normally worth going through point by point to assess how much the claim is likely to be worth.

Of course, the other important assessment is how likely you are to win in the first place. A hard schedule of £1,000 in a very weak case is very different to one in a very strong case.

If you are advising a claimant it is important to make sure that your client understands what the schedule of loss means in real terms. Otherwise, you are setting them up for disappointment and hindering their ability to make sensible decisions in settlement.

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Beyond the past and future (loss)

Schedules of loss normally divide the compensatory award for unfair dismissal into past loss (loss up to the hearing) and future loss (loss that will happen after the hearing). A very similar approach is also taken to equivalent loss in other types of cases

This is a sensible system, because the tribunal will have to think about these things differently. Past loss is about what has actually happened. The tribunal will focus on making findings of fact about the claimant’s earnings post-dismissal and his efforts to mitigate. Future loss, however, is about predicting what will happen next.

There is no rule, however, that these are the only two categories that you can use. Often more subcategories are extremely useful.

Events

Sometimes a claimant’s loss remains constant. For example, a woman who losses a job that paid £200 per week and remains unemployed up to the hearing has a past loss of £200 multiplied by the number of weeks between dismissal and the hearing.

On the other hand, she might have had done some temporary work for a few weeks shortly after dismissal where she earned £100 per week. Then got some part-time work earning £150 per week. Then a period of unemployment, followed by securing a permanent job on £185 per week.

In the second example trying to group all the past loss under one heading is likely to be difficult. A better approach is to divide it as follows:

  • Unemployment: 2 weeks @ £200 = £400
  • Temporary work: 3 weeks @ £100 = £300
  • Part-time work: 6 weeks @ £50 = £300
  • Unemployment: 6 weeks @ £200 = £1,200
  • Permanent work: 16 weeks @ £15 = £240

This will make it much easier for everyone to understand what loss you are claiming and why.

A schedule of loss should, up to a point, tell a story. It should be possible to understand what has happened to a claimant, and what he says will happen in the future, by reading it.

Types of loss

Most claims for compensation are primarily based on lost wages. But there are often other types of loss: bonuses, gym membership, lunch vouchers, car allowances, unsociable hours payments, subsidised travel, etc.

Often there will be dispute about whether all the types of loss are recoverable or how much they are worth. In such cases it is normally useful to divide them up, rather than deal with a single lump figure.

This has two advantages, firstly, as with dividing by events, it makes your schedule easier to understand.

Secondly, it makes it easier to for the tribunal to make changes to the figures. This will normally happen to a greater or lessor extent. Either the tribunal will decide that certain loss is not recoverable or that it should be calculated differently. It is much easier to make such changes if the figures are split up sensibly.

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Announcing the result

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.