Johnson v. Rollerworld

An Employment Tribunal may limit compensation for unfair dismissal by reference to the period for which the employee would probably have remained employed. The assessment may reflect a real prospect of a future fair dismissal or the employee’s voluntary departure. The Tribunal must not cap compensation by assuming a future dismissal which would itself be unfair. Where the assessment is unusual or uncertain, the Tribunal must give sufficient reasons identifying the anticipated termination, its legal basis and the conduct said to justify it. Legitimate assertions of statutory rights or qualifying disclosures cannot, without more, support an assumption of future fair dismissal.

The Employment Tribunal upheld Mr Johnson’s claim of automatic unfair dismissal under section 98A of the Employment Rights Act 1996, and concluded that the dismissal would also have been unfair under section 98(4). It assessed contributory conduct at 20 per cent, a finding not challenged on appeal.

For compensation, the Tribunal concluded that the employment relationship was unlikely to continue and limited compensation to nine months. Its reasons referred to complaints about unpaid hours, alleged underpayment of staff, alleged breaches of duty of care, alleged breaches of the Paternity and Adoption Leave Regulations 2002, and a police report concerning the workplace incident. The appeal concerned whether those matters could lawfully support the compensation cap and whether the Tribunal had given adequate reasons.

1. Appeal allowed. The Employment Tribunal was entitled in principle to assess that employment would have ended after a limited period. Under section 123 of the Employment Rights Act 1996, compensation is the amount considered just and equitable for loss attributable to the dismissal. A Tribunal may express the assessment as a period of likely continuing employment rather than as a percentage chance of future dismissal.
2. Where the anticipated ending of employment is a dismissal, the Tribunal must contemplate a fair dismissal for good and lawful reasons. It cannot limit compensation by assuming a dismissal based on the employee’s assertion of statutory rights, legitimate complaints or other conduct which would make the later dismissal unfair. A fair dismissal for some other substantial reason may, however, be contemplated where the employee’s behaviour has genuinely caused a breakdown of trust and confidence and the statutory fairness requirements would be met.
3. The Tribunal’s reasoning was inadequate. It did not explain whether Mr Johnson was expected to resign voluntarily, leave for better employment, or be fairly dismissed by the employer. Nor did it characterise the complaints and disclosures as legitimate, unfounded, mischievous, or otherwise unacceptable. The reference to conduct intended to irritate the employer was insufficiently clear because it appeared to depend on the underlying matters, many of which might have been lawful.
4. Following the approach in O’Donoghue v Redcar & Cleveland Borough Council [2001] IRLR 615, an unusual limitation of compensation requires sufficient reasons. The case was remitted to the same Employment Tribunal to reconsider what was likely to bring about the parting of the ways and why. The Tribunal was permitted to adopt another lawful method of assessing compensation under section 123.

• Employment Appeal Tribunal: allowed the appeal against the Employment Tribunal’s compensation assessment and remitted the matter to the same Tribunal for reconsideration.
• Employment Tribunal: upheld the unfair-dismissal claim, found automatic unfair dismissal under section 98A of the Employment Rights Act 1996, and limited compensation to nine months.