English v Martlett Estate Agents Ltd

A tribunal deciding whether to reduce compensation for contributory conduct must explain why the reduction chosen is justified. A complete extinction of a compensatory award is not an inevitable consequence of serious misconduct, even where the misconduct involves dishonesty and exposes the employer to risk. The tribunal must distinguish between the existence of grounds for reduction and the extent of the reduction. Where the reasons disclose no rational basis for reducing the award to nil, the issue is properly arguable on appeal and permission should be granted.

The applicant challenged the dismissal of his appeal by the Employment Appeal Tribunal on a preliminary hearing. An Employment Tribunal had found that his dismissal was wholly unfair, assessed basic and compensatory awards, reduced both by 25 per cent for contributory conduct, and then reduced the compensatory award to nil in the interests of justice and equity.

The misconduct concerned a false bereavement asserted in correspondence seeking an adjournment of court proceedings. The central issue was whether the Employment Tribunal had adequately justified the complete elimination of the compensatory award.

1. Application allowed. Permission to appeal was granted. The court considered that there was substance in the submission that the Employment Tribunal’s findings did not make a reduction of the compensatory award to nil inevitable or self-evident.
2. The Employment Tribunal had found the dismissal to be wholly unfair and had identified substantial apparent loss. Its conclusion that justice and equity required the compensatory award to be reduced to nil contained little reasoning beyond the assertion that there was no alternative. That was arguably insufficient to explain a dramatic reduction of the award.
3. The Employment Appeal Tribunal had treated the misconduct as sufficiently serious to justify a reduction beginning at 75 per cent and extending to nil. It had accepted that other reductions were possible, but concluded that the decision fell within the range of reasonable responses. The Court of Appeal considered that the applicant had an arguable case that this approach treated the outcome as inexorable without adequate analysis of the extent of the actual loss or the appropriate reduction.
4. At a full inter partes hearing, the court might either re-allocate the award or remit the matter for re-allocation. The judgment also noted that a shorter period of loss, such as the likely notice period, might have been relevant but had not been considered by the Employment Tribunal.
5. As part of granting leave, the court directed that the parties attempt alternative dispute resolution through the court before any full hearing was listed.

• Court of Appeal (Civil Division): Permission to appeal from the Employment Appeal Tribunal was granted. The court directed an attempt at alternative dispute resolution before any full hearing.
• Employment Appeal Tribunal: On a preliminary hearing, dismissed the applicant’s appeal against the Employment Tribunal’s decision.
• Employment Tribunal: Found the dismissal wholly unfair, assessed basic and compensatory awards, reduced them by 25 per cent for contributory conduct, and reduced the compensatory award to nil in the interests of justice and equity.