Annodata Limited v. Jones

An employment tribunal assessing compensation for unfair dismissal must evaluate any realistic chance that the employee would have been dismissed following a fair procedure. Uncertainty or speculation is inherent in that exercise and does not justify refusing to assess the evidence. The tribunal must distinguish this assessment from contributory fault. A reduction under section 123(6) of the Employment Rights Act 1996 requires proof of culpable or blameworthy conduct which contributed to the dismissal. Reasons must enable the parties and an appellate tribunal to understand the essential reasoning. Where reasons do not explain the treatment of contributory fault or a potential Polkey reduction, remission is appropriate.

The respondent was summarily dismissed after an investigation and disciplinary process concerning alleged involvement in a competing business, solicitation of customers and inducement of a colleague. The Employment Tribunal found the dismissal automatically and substantively unfair because of serious procedural and investigative defects. It nevertheless found that a fair procedure might have produced a different result.

For remedy, the Tribunal refused reductions for contributory fault and for the possibility that dismissal would have occurred after a fair procedure, stating that the exercise was too speculative. The employer appealed on the adequacy of the reasons, the approach to contributory fault and the Polkey assessment.

1. The appeal was allowed to the extent that the Tribunal’s reasons on contributory fault and a possible Polkey reduction were inadequate. The Tribunal’s finding that the employer had not established contributory fault could not be understood from the single sentence addressing the issue. It appeared to have focused on procedural unfairness without explaining whether the employee’s conduct, proved or alleged, was culpable and contributed to the dismissal.

2. Section 123(6) of the Employment Rights Act 1996 is engaged only where the Tribunal is satisfied that the claimant was guilty of culpable or blameworthy conduct which contributed to the dismissal. Section 122(2) permits reduction of the basic award where the claimant’s conduct makes reduction just and equitable, whether or not that conduct contributed to the dismissal.

3. The Tribunal’s observation that a fair procedure might have produced a different result required an assessment of the chance that dismissal would nevertheless have occurred. Following Gover, Thornett and Software 2000, a Tribunal must use the material and reliable evidence, common sense, experience and its sense of justice. It must make an assessment even where the result cannot be predicted with confidence. The mere presence of speculation is insufficient reason to decline the exercise.

4. The Tribunal’s conclusion that the employee was not shown to have committed the charged offences did not resolve either contributory fault or the Polkey question. Its factual conclusion was not perverse, since the high threshold for appellate interference was not met, but the remedy issues required reconsideration.

5. The case was remitted to the same Tribunal. No further evidence was required, and there was no suggestion of bias or incapacity to approach the issues with an open mind.

• Employment Appeal Tribunal: allowed the appeal in part and remitted the questions of contributory fault and any Polkey reduction to the same Employment Tribunal.
• Employment Tribunal: found the dismissal unfair and adjourned the remedies hearing, but gave inadequate reasons for refusing reductions to compensation.