Ladrick Lemonious v Church Commissioners

A tribunal may reduce a compensatory award for contributory conduct to nil only where the employee’s conduct was the sole cause of the dismissal. Procedural unfairness does not itself make the employer’s fault causative of dismissal.

A basic award may also be reduced to nil under section 122(2) of the Employment Rights Act 1996. The words “to any extent” permit that result. A nil award is nevertheless rare. The tribunal must give cogent reasons why it is just and equitable, separately considering the basic and compensatory awards.

A finding against a claimant on a disputed fact does not automatically establish unreasonable conduct or require a costs order. Costs remain discretionary.

The Employment Tribunal held that the claimant had been unfairly dismissed on procedural grounds after almost 37 years’ employment. At a remedies hearing it found that he had sent anonymous emails, denied doing so and implicated colleagues. It held that this conduct justified dismissal and made no basic or compensatory award. It also refused the employer’s application for costs.

The claimant appealed the nil awards. He contended that a 100% contributory reduction was unavailable or perverse, and that the basic award could not be extinguished. The employer cross-appealed the refusal of costs. The central issues were the proper operation of sections 122(2) and 123(6) of the Employment Rights Act 1996, the adequacy of reasons for a nil award, and whether the factual finding required a costs order.

1. Appeal allowed in part; cross-appeal dismissed. The Tribunal was entitled in principle to conclude that the claimant’s misconduct was the sole cause of his dismissal and to reduce both awards to nil. Its reasons did not, however, adequately explain why that result was just and equitable. The issue of the extent of reduction was remitted to the same Tribunal.

2. Under section 123(6) of the Employment Rights Act 1996, a compensatory award may be reduced by 100% only where the claimant’s conduct solely caused the dismissal. If the employer’s procedural failings were causally relevant to the dismissal, a 100% reduction would not be just and equitable. Here, the procedural defects made the dismissal unfair but did not cause it. The Tribunal could find that the claimant’s sending of the emails, denial and accusations against others were the sole cause.

3. A Polkey assessment asks whether a fair dismissal might have occurred later. It does not determine the past factual cause of the dismissal which occurred. It therefore did not assist the claimant’s causation argument.

4. Section 122(2) permits the basic award to be reduced to nil. The phrase “reduce … to any extent” includes a reduction to nothing. There was no basis for giving “reduce” a different meaning in section 122(2) from section 123(6). The civil-law observations in Anderson concerned liability for an industrial accident and did not displace the established unfair-dismissal approach.

5. Nil compensation following an unfair dismissal is legally possible but unusual. A tribunal must not assume that sole causation automatically makes a 100% reduction just and equitable. It must explain why the seriousness of the conduct, notwithstanding the employer’s unfairness and the claimant’s long service, justifies no award. It must address the basic award separately, because section 122(2) has no causation requirement.

6. Rule 40 of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004 requires both a qualifying circumstance and a discretionary assessment that costs are appropriate. A finding that a claimant did not establish a central allegation, or lied about it, does not automatically prove unreasonable conduct or compel costs. The Tribunal’s refusal was within its discretionary ambit.

• Employment Appeal Tribunal: allowed the claimant’s appeal only on inadequate reasons for reducing both awards to nil, dismissed the employer’s costs cross-appeal, and remitted the remedies issue to the same Tribunal.
• Employment Tribunal, London Central: held the dismissal unfair on procedural grounds, awarded no basic or compensatory award, and refused the respondent’s costs application. Reasons were delivered on 18 August 2011.