Kaltz Ltd v Hamer

Where compensation for an automatically unfair dismissal is assessed on a just and equitable basis, an Employment Tribunal must give adequate reasons for declining to reduce compensation for the employee’s contributory conduct or for the chance that employment would in any event have ended. Findings made on an ordinary unfair dismissal claim do not themselves determine contributory fault. However, where those findings identify other alleged misconduct, including misconduct capable of justifying summary dismissal, the Tribunal must explain why it is immaterial to compensation.

A Polkey-type reduction may be considered in this context. A Tribunal may decline such a reduction, but must address the employer’s case and give reasons.

The respondent, an administration manager, was dismissed for gross misconduct after disciplinary proceedings concerning her conduct towards staff and directors and three disclosures of payroll information. One disclosure, concerning another employee’s pay during paternity leave, was a protected disclosure.

The Manchester Employment Tribunal dismissed the claims for sex discrimination and wrongful dismissal. By a majority, it also rejected the ordinary unfair dismissal claim. It nevertheless held that the principal reason for dismissal was the protected disclosure and that the dismissal was automatically unfair under Employment Rights Act 1996, section 103A.

At the remedies hearing the Tribunal awarded £33,941.20 without a contributory-fault or Polkey-type deduction. The employer appealed against that assessment of compensation.

1. Appeal allowed in part. The Employment Tribunal’s remedies decision could not stand. The appeal succeeded on the grounds concerning contributory conduct and the possibility of dismissal in any event. It failed on the alleged misdirection.

2. The Tribunal had not directed itself that compensation could never be reduced where dismissal was automatically unfair for making a protected disclosure. Its reference to what was just and equitable in all the circumstances, its consideration of both parties’ submissions, and its case-specific language showed that it had exercised a broad discretion.

3. However, the Tribunal had to explain why the other alleged conduct was irrelevant to compensation. The protected disclosure was not the sole subject of the disciplinary process. There were two non-protected disclosures and allegations of misconduct towards directors and staff. The earlier findings also included an admitted non-protected disclosure and dismissal of the wrongful dismissal claim on the basis of gross misconduct justifying summary dismissal. Those matters made the bare conclusion that there was no culpable or blameworthy conduct insufficiently reasoned.

4. Section 43J of the Employment Rights Act 1996 might explain why the protected disclosure was not a contractual breach. It could not, without further reasoning, explain the treatment of the two non-protected disclosures.

5. The Tribunal also failed to address the employer’s case for a Polkey-type reduction. It might properly decide that no reduction was warranted, but it was obliged to give reasons, particularly given the rejected wrongful dismissal claim and the majority rejection of the ordinary unfair dismissal claim.

6. The assessment of compensation was remitted to the same Tribunal, which was to reconsider it with sufficient reasons and any further submissions it directed.

• Employment Appeal Tribunal: allowed the employer’s appeal on the contributory-conduct and Polkey grounds, dismissed the misdirection ground, and remitted compensation to the same Tribunal: [2012] UKEAT 0198_11_2402.
• Employment Tribunal, Manchester: dismissed the claims for sex discrimination and wrongful dismissal and, by a majority, the ordinary unfair dismissal claim; held the dismissal automatically unfair because the principal reason was a protected disclosure; awarded compensation without deductions.