Steen v ASP Packaging Ltd

When reducing compensation for contributory fault in an unfair dismissal case, a tribunal must identify the employee’s conduct, decide whether it was blameworthy, determine whether it caused or contributed to the dismissal for the purposes of Employment Rights Act 1996, section 123(6), and then decide what reduction is just and equitable. Section 122(2) involves a separate just-and-equitable assessment for the basic award.

The tribunal must determine what the employee actually did, rather than adopt the employer’s view of the facts or wrongfulness. A 100% reduction is legally permissible but rare and requires clear, fact-based reasons, particularly where both awards are extinguished.

An Employment Tribunal found that the claimant’s dismissal was unfair because of procedural defects, but concluded that his conduct had made him entirely responsible for the dismissal. It extinguished the basic and compensatory awards and also made a substantial finding concerning the likely outcome had a fair procedure been followed.

The claimant appealed on the basis that the tribunal had not identified his actual conduct, assessed whether it was blameworthy, addressed causation under section 123(6), or explained the separate just-and-equitable questions under section 122(2) and section 123(6). The central issue was whether the tribunal had given legally adequate reasons for the reductions.

1. Appeal allowed. The decision on compensation was set aside and remitted to a differently constituted Employment Tribunal for a fresh determination.
2. Sections 122(2) and 123(6) of the Employment Rights Act 1996 impose subtly different requirements. Section 123(6) requires a finding that the claimant’s action caused or contributed to the dismissal to some extent, followed by a just-and-equitable assessment of the proportion by which the compensatory award should be reduced. Section 122(2) does not require causation; it asks whether reduction of the basic award is just and equitable.
3. The tribunal must identify the conduct said to constitute contributory fault and decide whether it was blameworthy. It must determine the facts of what the claimant actually did or failed to do. The employer’s assessment of the conduct, and the employer’s belief about what occurred, do not determine contributory fault.
4. For section 123(6), the tribunal must decide whether the identified blameworthy conduct caused or contributed to the dismissal. If it did not, no deduction may be made under that provision. The tribunal must then determine the appropriate extent of the reduction. The assessment under section 122(2) is separate, although the same or similar considerations may sometimes produce a similar result.
5. A 100% reduction is permissible but rare and unusual. It must be justified by findings of fact and reasons explaining why it is just and equitable to extinguish compensation. A tribunal must not assume that total responsibility for the dismissal automatically justifies a nil award, nor assume that the basic and compensatory awards require identical reductions. The reasons may be brief, but they must identify the factors supporting the percentage or complete reduction.
6. The tribunal’s reasoning did not make the necessary factual findings about the relevant conversations or explain the blameworthiness and separate statutory assessments. Its finding on contributory fault therefore could not stand. The Polkey assessment was also to be reconsidered because predictive reasoning about what the employer would have done fairly differs from the historical factual inquiry into the claimant’s contributory conduct.

• Employment Tribunal, Liverpool: found the dismissal unfair for procedural reasons, but extinguished the basic and compensatory awards on grounds of contributory fault.
• Employment Appeal Tribunal: allowed the appeal and remitted compensation issues, including the Polkey issue, to a differently constituted tribunal.