Kidron House v Howie

When assessing compensation for unfair dismissal under section 123(1) of the Employment Rights Act 1996, a tribunal must consider whether there was a chance that the employee would in any event have been fairly dismissed. It must not require certainty, inevitability or a guarantee of dismissal.

If a real chance is found, the tribunal must assess it as a percentage and reduce compensation accordingly. If an assessment would be too speculative, or if there was no chance of fair dismissal, the tribunal must explain that conclusion.

The claimant, a hotel chambermaid, was dismissed shortly after informing her employer that she was pregnant. The Employment Tribunal found that pregnancy was the effective cause of dismissal and therefore that the dismissal was automatically unfair. It awarded compensation for the whole claimed period.

The employer appealed only against compensation. It contended that the Tribunal had failed to make a deduction for the possibility that the claimant would later have been fairly dismissed because of her attendance record.

1. Appeal allowed. The Employment Tribunal erred in law in its approach to the compensatory award under section 123(1) of the Employment Rights Act 1996.

2. The Tribunal had recognised that compensation could be limited if employment would in any event have ended. However, its reasoning asked whether future dismissal was guaranteed or inevitable. That was too high a test. The required inquiry was whether, on the evidence, there was a chance that the claimant would have been fairly dismissed notwithstanding the unlawful dismissal.

3. Where such a chance exists, it must be expressed as a percentage and reflected by a corresponding deduction. The Tribunal's findings on the reason for the actual dismissal did not show that it had separately addressed that counterfactual question.

4. If the evidence permits no reliable assessment because the exercise is too speculative, the Tribunal must say so and explain why. Equally, if it concludes that there was no chance of a fair dismissal during the compensable period, it must give reasons for that conclusion.

5. The compensation issue was remitted to the same Tribunal. It was to hear no further evidence, receive submissions on the findings already made and the applicable law, and determine compensation afresh with reasons.

• Employment Appeal Tribunal: Allowed the employer's appeal on the calculation of compensation and remitted that issue to the same Employment Tribunal.
• Employment Tribunal: By a decision sent to the parties on 25 March 2013, held that the claimant had been automatically unfairly dismissed for a reason connected with pregnancy and made monetary awards, including compensation.