Stonehouse Coaches Ltd v Smith

In determining whether a dismissal was fair under section 98 of the Employment Rights Act 1996, the tribunal must assess the employer’s reasons and conduct when the dismissal occurred. Evidence first obtained months later, which played no part in that decision, cannot render the dismissal fair.

A Polkey assessment forms part of the assessment of future loss. It requires a prediction of whether, and when, a fair dismissal would have occurred. Where fair dismissal was certain after a defined period, compensation ends at that predicted date. Later allegations which would not have been available during that period do not alter the assessment.

A school-bus driver was summarily dismissed after an allegation that he used seriously offensive language towards a passenger. The Employment Tribunal found that the employer genuinely believed the allegation and had reasonable grounds for that belief, but that the dismissal process was unfair because there had been no adequate disciplinary hearing.

The Tribunal awarded compensation for four weeks’ loss only. It found that, had a fair procedure been followed, the driver would certainly have been fairly dismissed after that period. The employer appealed against the exclusion of two witnesses’ evidence concerning an earlier incident, and against the Polkey assessment. The central issue was whether evidence obtained after dismissal could affect either fairness or the date of a predicted fair dismissal.

1. Appeal dismissed. The Employment Tribunal was entitled to exclude the witnesses’ statements. Under section 98 of the Employment Rights Act 1996, fairness concerns the dismissal that actually occurred and the employer’s reasoning and conduct at that time. The statements emerged months after dismissal and had played no part in the employer’s decision. They were therefore irrelevant to fairness.

2. A Polkey adjustment is an aspect of assessing future loss under section 123. The tribunal must compare the position following the actual unfair dismissal with the position that would probably have obtained had there been no unfair dismissal. The possibility of a fair dismissal is one factor which may limit compensation. If a fair dismissal would certainly have occurred, compensation cannot run beyond the date predicted for it.

3. The Tribunal had found a 100% chance of fair dismissal after four weeks. The later statements would not have been available during that four-week period. In any event, it would have been perverse to treat later allegations about a different earlier incident as justifying immediate dismissal without a fair procedure. They could not affect the sole remaining question, namely the date of the predicted fair dismissal.

4. By way of observation, procedure is part of a reasonable investigation. It is not a matter of form alone: hearing the employee’s account may determine what further enquiries are needed and whether the facts are properly established.

• Employment Appeal Tribunal: dismissed the employer’s appeal and upheld the four-week compensatory award.
• Employment Tribunal: following a hearing on 30 November 2012, found the claimant unfairly dismissed. Reasons were delivered on 8 April 2013 and the decision was confirmed on review on 14 June 2013.