Pybus v Geoquip Ltd

An Employment Tribunal assessing compensation after an unfair dismissal must base any Polkey reduction on evidence and adequate reasoning. A percentage reduction cannot be justified by speculation alone. The Tribunal must also consider the employee’s contractual notice and any fixed-term entitlement when assessing the period of loss. The burden of proving failure to mitigate rests on the employer, but a Tribunal may find failure to mitigate where the employee has taken no reasonable steps to obtain alternative work. An Employment Tribunal may use its industrial knowledge of the local labour market where the evidence is limited.

Mr Pybus was dismissed by Geoquip Ltd for alleged misconduct. An Employment Tribunal found the dismissal unfair because the investigation was inadequate. At a remedies hearing, it applied a 35% Polkey reduction, limited compensation to a further nine months, found 50% contributory fault and reduced compensation for failure to mitigate.

Mr Pybus appealed the compensation decision. He challenged the exclusion of further evidence, the Polkey reduction, the nine-month period, the contributory-fault finding and the mitigation ruling. The central issues were whether the Tribunal had properly reasoned its compensation assessment and considered the fixed-term contract.

1. Evidence. The Employment Tribunal was entitled to exclude further evidence which sought to reopen factual matters already determined at the liability hearing, or which was irrelevant or unfair to admit. Its case-management discretion was exercised judicially and disclosed no Wednesbury error.
2. Polkey reduction. The 35% reduction was unlawful. The Tribunal had relied on the speculative possibility that a customer might have confirmed an earlier statement, although no evidence established what that customer would have said after a proper investigation. The one-third assessment was therefore not evidence-based and inadequately reasoned.
3. Period of loss. The Tribunal erred in failing to consider the operative fixed-term contract. The contractual three-month notice provision could only be used after expiry of three years from the contract date, and there was no evidence justifying dismissal for misconduct. The Tribunal also gave no adequate reasons for selecting nine months.
4. Contributory fault. The findings that the creation of business materials for another company and persistent refusal to provide relevant telephone records were culpable conduct contributing to the dismissal disclosed no error of law.
5. Mitigation. The burden remained on Geoquip. The Tribunal was entitled to conclude, on the Appellant’s own evidence, that he had not taken reasonable steps to mitigate his loss. It was also entitled to use its knowledge of the local labour market.
6. The appeal was allowed on grounds 2 and 3. The compensation assessment was remitted to the same Employment Tribunal.

• Employment Tribunal: found the dismissal unfair and later assessed compensation, including a 35% Polkey reduction, a nine-month loss period and 50% contributory fault.
• Employment Appeal Tribunal: allowed the appeal on the Polkey percentage reduction and the assessment of the loss period, and remitted compensation to the same Employment Tribunal. The remaining grounds were dismissed.