Hamer v Kaltz Ltd

Under section 123(1) of the Employment Rights Act 1996, a Polkey assessment is a predictive assessment of the loss caused by an unfair dismissal. It is not all or nothing. The tribunal must assess the chances of what the actual employer, acting fairly, would have done, including the prospect of dismissal at a later date.

A conclusion that employment would inevitably have ended on the dismissal date is a strong finding. It requires reasons which address and reconcile the tribunal's material findings. Where the evidence supports disciplinary action but not inevitable dismissal, compensation should be reduced by a percentage reflecting the assessed chance.

A reduction of the basic award under section 122(2) remains a distinct just-and-equitable assessment of blameworthy conduct.

The claimant was dismissed after allegations concerning her treatment of staff and directors and disclosures of payroll information. The Employment Tribunal held that the principal reason for dismissal was her protected disclosure concerning a colleague's pay. It therefore upheld her whistleblowing unfair-dismissal complaint.

After the employer's earlier appeal, the case was remitted for findings on Polkey and contributory conduct. On remission, the Employment Tribunal held that dismissal on the same date would inevitably have occurred even without the protected disclosure. It extinguished the compensatory award and reduced the basic award by 10%.

The claimant appealed against the Polkey finding. The employer cross-appealed, contending that the conduct reduction should have been greater.

1. Appeal allowed; cross-appeal dismissed. The Employment Tribunal's conclusion that fair dismissal on the same date was inevitable could not stand. Its reasons did not reconcile that conclusion with its findings that the earlier confidential-information disclosures had not been treated as serious and that the remaining misconduct allegations were lesser matters.

2. The compensatory award under section 123(1) of the Employment Rights Act 1996 requires a predictive assessment of the loss caused by dismissal. The exercise is not confined to procedural unfairness and is not all or nothing. It requires an assessment of the prospects of what the actual employer would have done if it had acted fairly, allowing for uncertainty. A finding that dismissal would have occurred on the same day means that there was no chance that employment would have continued.

3. The tribunal had not explained how summary dismissal on the same day was inevitable once the protected-disclosure allegation was excluded. Nor had it addressed the real possibilities of no disciplinary proceedings, a warning, dismissal with notice, or later dismissal. Its reliance on the proposition that conduct, rather than gross misconduct, appears in section 98(2)(b) was beside the point because the assessment concerned whether this claimant would in fact have been summarily dismissed.

4. Exercising the power to determine the matter rather than remit it again, the Appeal Tribunal held that disciplinary proceedings were virtually inevitable. Fair dismissal was nevertheless less than probable. A final written warning was the most likely outcome, with a significant further prospect of later dismissal. The appropriate Polkey reduction was 40%.

5. The Employment Tribunal had correctly applied section 122(2) in reducing the basic award by 10% for a single instance of disrespect to a director. Its findings that the earlier disclosures and the claimant's sharpness towards staff did not justify a greater reduction were permissible. The same 10% reduction for contributory conduct applied under section 123(6) after the 40% Polkey deduction.

• Employment Appeal Tribunal: Allowed the claimant's appeal against the second remedy judgment, dismissed the employer's cross-appeal, and remade the Polkey assessment at 40%.
• Employment Tribunal, Manchester: By judgment dated 8 February 2013, on remission after an earlier appeal, made no compensatory award on the basis that dismissal was inevitable and reduced the basic award by 10%.
• Employment Appeal Tribunal: On 24 February 2012, allowed the employer's appeal against the first remedy judgment and remitted the case for consideration of Polkey and contributory conduct.
• Employment Tribunal, Manchester: By its liability judgment dated 9 November 2010, upheld the protected-disclosure unfair-dismissal claim; by its first remedy judgment dated 13 December 2010, awarded a basic and compensatory award.