Compensation

Case 8: The facts

Mr Stark was dismissed when his job was merged into a new post, for which he was not given the opportunity to apply. He was asked to work his notice to cover the handover period; in return he was paid an ex gratia payment of two months' salary on top of his normal pay. Stark subsequently brought an unfair dismissal claim and was awarded compensation.

The issue on appeal was whether the ex gratia payment should be taken into account.

The ruling

The Employment Appeal Tribunal held that the purpose of a compensatory award is to compensate the claimant for the losses they have incurred as a result of their dismissal. Unless it would have been made in any event, an ex gratia payment should be deducted from such an award.

Stark only received the payment because he had been dismissed, so it had to be taken into account in assessing his level of compensation.

DCM Optical Clinic v Stark EAT/0124/04