Aitken v The Tontine Hotel (Unfair Dismissal : Compensation)

In assessing unfair dismissal, a tribunal must distinguish whether misconduct occurred from the separate question of the appropriate sanction. An employee’s state of mind may be relevant to sanction, but is not necessary to establish breach of a clear rule requiring payment before consuming goods.

Procedural defects at the disciplinary stage may be cured by a fair and effective appeal. The tribunal must assess the disciplinary process as a whole, including the appeal. Where the evidence shows that dismissal would inevitably have occurred after a proper appeal, a Polkey reduction of 100% may be justified.

A reduction of the basic award under section 122(2) requires a factual basis and may take account of any relevant conduct before dismissal, including conduct not causative of the dismissal.

Two hotel employees, a head chef and a kitchen porter, were dismissed for consuming drinks without payment, contrary to a contractual rule. The Employment Tribunal found the dismissals procedurally unfair because the investigator chaired the disciplinary hearings and the dismissing director had not attended them. It nevertheless found the dismissals substantively fair, applied a 100% Polkey reduction to compensation and reduced the basic awards by 75%.

The employees appealed, challenging the substantive fairness findings, the Polkey reduction and the reductions to the basic awards. The employer cross-appealed, arguing that the appeal procedure cured any earlier defects and that the basic awards should have been reduced by 100%.

1. The employees’ appeal was refused and the employer’s cross-appeal was upheld. The Tribunal’s judgment was replaced by a finding that the employees had been fairly dismissed and their claims were dismissed.
2. The Tribunal was entitled to find that the employer had conducted an adequate investigation and that the dismissing director had a reasonable belief in the employees’ guilt. The fact that the director relied on a full report from the investigating manager did not prevent that belief from being reasonable. Credibility findings made by the Tribunal did not require the employer to accept the employees’ accounts.
3. The question whether the employees had breached the rule requiring payment before consumption was distinct from the question of sanction. The employees’ belief that another person might later pay for the drinks was relevant, if at all, to mitigation or sanction, not to whether the rule had been breached.
4. An appeal can cure defects occurring earlier in the disciplinary process. Under [2006] ICR 16020, and section 98(4) of the Employment Rights Act 1996, overall fairness requires consideration of the process as a whole. The appeal hearings allowed the employees to advance their cases, involved further consideration of the evidence, and produced reasoned written decisions. The Tribunal had failed to consider that process and was bound to conclude that it cured the earlier defects.
5. The 100% Polkey reduction was open to the Tribunal. The appeal process provided a proper opportunity for the employees to be heard, and it was plainly open to conclude that dismissal would have occurred in any event.
6. Under section 122(2), a reduction of the basic award must have a factual basis and may take account of any conduct before dismissal. The Tribunal had wrongly speculated about the possible truth of the employees’ explanations. It should also have considered their changing accounts and Mr Siddons’s refusal to answer questions. A 100% reduction was substituted.

• Employment Tribunal — Found both dismissals procedurally unfair but substantively fair; awarded basic awards, reduced by 75%, and made no compensatory award after a 100% Polkey reduction.
• Employment Appeal Tribunal — Refused the employees’ appeal, upheld the employer’s cross-appeal, found the dismissals fair and dismissed the claims.