This case is solely for the benefit of employers who think that their ability to pay is relevant to assessing compensation should they lose a tribunal. Unfortunately it's not. I've quoted directly from the case below. "The third ground advanced in this application relates to section 123. It is contended that the award to the Claimant was not just and equitable because it was substantial. I reject this as a proposition of law. In the calculation of loss for unfair dismissal the prime consideration is the loss suffered by the Claimant attributable to the action of the employer. The vehicle for the submission today is that if this award has to be paid, the business will go into liquidation. That is not the correct approach to the assessment of an award for unfair dismissal, which does not pay attention to the ability of the employer to pay. There are places in the employment protection canon where ability to pay is a feature (see for example the costs regime). But in the assessment of damages for a statutory tort, the possibility that the employer will be in difficulty paying an award is not a relevant consideration. So of the three live issues argued before me today I form the opinion that none has a reasonable prospect of success. I dismiss the application. The appeal will be taken no further." Daniel Barnett, employment barrister in his email updates states, "Personally, I think this will change at some point. Section 123 of the Employment Rights Act 1996 requires the tribunal to award such sum as is "just and equitable in all the circumstances having regard to the loss sustained by the complainant." It doesn't say 'having regard only to the loss sustained by the complainant'. There is a powerful case for saying that one relevant circumstance is the impact a substantial award would have on the jobs of other members of the workforce." It will take someone to run that argument on appeal, battle against the dearth of caselaw in support and then win before employers can take comfort from Daniel's worthy argument. The full case can be read here: http://www.bailii.org/uk/cases/UKEAT/2010/1477_09_1407.html
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