How Employment Tribunals approach future loss compensation for older claimants

When a dismissal is found to be unfair, an Employment Tribunal must determine compensation that is “just and equitable” having regard to the loss sustained by the claimant as a result of the employer’s actions.

While the framework is simple in principle, assessing future losses—particularly for older claimants approaching or past traditional retirement age—poses complex questions.

The recent Employment Appeal Tribunal (EAT) decision in Ms J Davidson v National Express Ltd provides insight into how tribunals should approach such assessments and where they can go wrong.

Case Study: Davidson v National Express

Ms Davidson, aged 61 at the time of dismissal, had been a long-serving coach driver for National Express. She was dismissed following a failed alcohol test, with readings just above the employer’s internal threshold.

The Employment Tribunal found the dismissal procedurally unfair—the appeal process had been flawed—but otherwise upheld the employer’s substantive position.

Tribunal Adjustments to Compensation

• a 75 % Polkey reduction (reflecting the chance a fair dismissal would have occurred had the appeal process not been flawed),
• a 75 % reduction for Ms Davidson’s contribution to her dismissal,
• a 10 % ACAS Code uplift on compensation for the employer’s procedural failings.

Controversy: Limiting Future Loss to Age 65

The key controversy, however, lay in how the Tribunal assessed future loss of earnings. Ms Davidson, then 63, was in lower-paid work and said she intended—of necessity—to continue working until age 70. The Tribunal, deciding that compensation should stop at 65, deemed that period “just and equitable”.

EAT Rules on How Tribunals Should Assess Future Loss Beyond Age 65

On appeal, the EAT found that the Tribunal had failed to take a principled approach to assessing Ms Davidson’s future loss of earnings.

The EAT reaffirmed that tribunals must grapple with the evidence when estimating future loss, even where that requires an element of speculation. Citing the case of Software 2000 Ltd v Andrews, the EAT emphasised that uncertainty does not excuse a tribunal from making a reasoned assessment.

The Judge stressed three key points:

1. Evidence-Based Assessment: The tribunal must determine the loss “sustained in consequence of the dismissal”—it cannot simply rely on what feels “just and equitable” without evidential grounding.
2. Claimant Intentions Matter: Ms Davidson’s statement that she intended to work to 70 should have been evaluated, not dismissed as too speculative. The tribunal needed to weigh her personal circumstances, financial necessity, health prospects, and the realities of continued employment.
3. No Arbitrary Retirement Age Limit: Limiting loss to age 65 without a coherent rationale was wrong. The Tribunal’s reasoning—such as noting that pay increases beyond 65 were uncertain or that the award period already seemed “considerable”—was not a principled justification. As the EAT put it, the Tribunal had “mixed apples and pears” by confusing the evidential limits of wage data with the assessment of how long loss might persist.

The matter was remitted to an Employment Tribunal for re-assessment of the compensatory award.

Lessons From the Case on Future Loss Compensation

This case highlights the importance of evidence and procedural fairness.

1. “Just and equitable” requires evidence, not guesswork

Tribunals must base their assessments on realistic evidence—financial, medical, and vocational—of how long a claimant might remain in work. Employers should therefore be prepared to produce evidence on employability, such as industry norms, retirement patterns, and alternative job opportunities.

2. No presumption of retirement at 65

Since the abolition of the default retirement age, tribunals cannot assume that claimants over 60 will retire imminently. Older workers often remain economically active well beyond 65. Unless the employer can point to clear evidence (for instance, a contractual retirement age or medical constraints), loss may be assessed to 67, 68, 70 or beyond.

3. Future loss involves “industrial common sense”

While precision is impossible, tribunals must apply practical judgment informed by the evidence. Employers should help ensure that the tribunal’s “industrial common sense” is properly informed—by explaining business realities, typical earnings trajectories, and the availability of comparable roles.

4. Procedural fairness still matters

Even where misconduct seems clear-cut, procedural lapses (as in Ms Davidson’s unfair appeal process) can still lead to liability. Employers should treat appeals as substantive opportunities to correct earlier errors, not formalities.

Key Takeaways from the Case

Employers should be aware of financial exposure when dismissing older employees.

Davidson v National Express Ltd reminds employers that calculating compensation in tribunal claims is not an exercise in intuition but in reasoned evaluation.

When older employees are dismissed unfairly, tribunals will look beyond traditional retirement ages and demand an evidence-based approach to predicting future loss.

For employers, the lesson is clear: ensure fairness in process, clarity in policy, and realism in assessing the potential consequences of dismissal.

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