A recent case has raised the question of when it is practicable for an employer to reinstate an employee who has taken them to an Employment Tribunal with a claim of unfair dismissal.

In the case of Kelly v. PGA European Tour, Mr Kelly was dismissed due to his employer’s concern about his ability to do the job. However, the Employment Tribunal found that the dismissal was unfair due to the process followed. It held that it would not be practicable to reinstate him to his old job, but ordered that he be re-engaged.

The employer appealed, and the Employment Appeal Tribunal and the Court of Appeal held that the order for re-engagement was not practicable and should not have been made, because the employer had genuinely lost confidence in Kelly’s capability.

However, reinstatement must always be considered as a first option. If an employee takes their employer to an Employment Tribunal for unfair dismissal and wins their case, there are three remedies available that the Tribunal must consider under Section 116 of the Employment Rights Act 1996. They are reinstatement, re-engagement and compensation and must be assessed in this order.

Commercial law firm rradar breaks down each of these options.

Reinstatement
This means that the employer has to treat the employee as if dismissal had never taken place. The original contract is reinstated and they take up the job they held before the dismissal, complete with the same terms (and alongside the same colleagues). They will not lose any pay, pensions rights or continuity of employment and will receive any pay rises or other benefits that they would have had if they had not been dismissed.

If it can be shown by the employer that it is not practicable for a reinstatement order to be carried out, the next option available to the Tribunal is a re-engagement order.

Re-engagement
This is more flexible. The employer has to take back the employee but on new terms, although with no loss of continuity of employment. The job that they are to be given must be comparable with the job they held before the dismissal or, if that is not possible, other suitable employment must be arranged.

Before it issues a re-engagement order, the Tribunal needs to take into account both the wishes of the employee and any submissions that the employer may want to make regarding the practicability of enacting such an order.

A Tribunal would be justified in ordering a re-engagement order if an employee had lost the trust and confidence of their line manager but a similar role had arisen, reporting to a different line manager in another part of the organisation.

Compensation
Should neither reinstatement nor re-engagement be thought appropriate or practicable (possibly because of submissions from the employer or the wishes of the employee), the Tribunal will resort to its third option. A compensation award will be made up of a basic amount as compensation for loss of job security and an additional amount intended to reflect any financial loss that the employee has suffered as a result of their dismissal.

The Tribunal has no power to force an employer to comply with either a reinstatement or re-engagement order but if the employer does not comply, the Tribunal can award additional compensation that can range from 26 to 52 weeks. This can lead to employees playing the system, making applications for reinstatement or re-engagement when they know full well that the employer will not agree, thereby obtaining additional compensation.

How can an employer resist a reinstatement order?

• They must show, before the remedy hearing, that – on the balance of probabilities – compliance with the order will be impractical.
• If steps have been taken to replace the dismissed employee, this will be ignored by the Tribunal unless the employer can demonstrate that there was no other option in order for the business to continue operating. The employer can also show that there was no word from the employee (after a reasonable period has passed) about their wishes concerning reinstatement, thereby meaning that there was no reasonable alternative to taking on a permanent replacement.
• If the employer can show that relations between the claimant and their colleagues have broken down irretrievably, it is unlikely that the Tribunal will insist on a reinstatement order. A re-engagement order may still be practicable, depending on the size of the employer’s business.
• Some instances of dismissal may be due to issues like stress or disability. The former employee’s capability to do the job or their level of health may mean that it is impractical for them to return to work.
• If the employee has been dismissed for an act of dishonesty and has not disputed this, reinstatement is not likely to be ordered. However, re-engagement at a lower grade could be an answer.
• A breakdown of trust and confidence between employer and employee, which may have been caused by the circumstances behind the dismissal, means that there is little chance of a reinstatement or re-engagement order being made.