Tao Herbs & Acupuncture Ltd v Jin

When assessing compensation for unfair dismissal under Employment Rights Act 1996, section 123, the principal consideration is the claimant’s loss attributable to the employer’s action. The employer’s ability to pay the award, or the risk that payment may cause insolvency, is irrelevant to that assessment.

A tribunal should consider the Polkey question in every unfair-dismissal case, namely what would have happened if the dismissal had not occurred. An express finding is not essential where the tribunal’s reasoning shows that it considered the possible duration of employment and assessed loss accordingly.

The respondent employer appealed from an Employment Tribunal decision upholding claims by the claimant for automatic unfair dismissal and unlawful deductions from wages. The tribunal found that she had been dismissed after asserting rights concerning her pay, including payment at no less than the national minimum wage, and awarded approximately £11,000, including £9,951.34 for unfair dismissal.

The appeal challenged the tribunal’s findings concerning the statutory-rights complaint, its failure expressly to address a possible Polkey reduction, and the size of the compensatory award. The central issues were whether the tribunal had made an error of law in its treatment of loss and whether the employer’s financial circumstances were relevant.

1. The application was dismissed and the appeal was taken no further. None of the grounds disclosed a reasonable prospect of success.
2. The tribunal was entitled to find that the claimant’s complaints about being paid less than she was due, including below the national minimum wage, could amount to an allegation under the National Minimum Wage Act 1998. The complaint could also properly be treated as one concerning unlawful deductions from wages. The tribunal had correctly found compliance with the grievance regime under the Employment Act 2002.
3. The tribunal should address the Polkey issue in every unfair-dismissal case. It must consider what would have happened if the claimant had not been unfairly dismissed, although the assessment necessarily involves some speculation. Here, the tribunal had considered the poor trading position and the deteriorating employment relationship. Its decision to limit the award to loss up to the hearing date showed that it had applied the loss principle in section 123(1), together with the Polkey principle, despite not setting out an express separate finding.
4. Under section 123, the primary consideration is loss suffered by the claimant so far as attributable to the employer’s action. The employer’s ability to pay is not relevant to the assessment of compensation for unfair dismissal. Although ability to pay may be relevant under other employment-law regimes, it is not a consideration in assessing this statutory compensatory award.

• Employment Appeal Tribunal: dismissed the respondent’s Rule 3(10) application and directed that the appeal proceed no further.
• Employment Tribunal: upheld the claimant’s claims for automatic unfair dismissal and unlawful deductions and awarded approximately £11,000.