Kapoor v Balfour Beatty Group Employment Ltd

A Polkey reduction requires an assessment of the loss caused by procedural unfairness. The tribunal must assess the likelihood that the actual employer would nevertheless have fairly dismissed the employee, and when that dismissal would probably have occurred. Evidence concerning the employee’s conduct, performance and response to management may be relevant to that assessment, even where the employer does not rely on contributory fault under section 123(6) of the Employment Rights Act 1996.

A non-contractual capability procedure is not necessarily a rigid timetable. A tribunal may find that the employer would have ended it and fairly dismissed for another substantial reason. A discretionary bonus need not be included in compensation where the employer could reasonably withhold it under the scheme’s notice condition.

The claimant was dismissed in October 2013. The employer conceded that the dismissal was procedurally unfair because it had not followed its capability procedure, but contended that he would in any event have been fairly dismissed for capability or some other substantial reason.

An Employment Tribunal awarded compensation after making an 85% Polkey reduction. It found that a fair dismissal would probably have occurred three months later, while allowing a 15% chance that it would not. On reconsideration, the Tribunal modestly increased the award but rejected most of the claimant’s challenges, including his claim for a March 2014 bonus.

The claimant appealed both the original compensation decision and the reconsideration decision. The central issues were whether the Tribunal had wrongly treated conduct as relevant to the Polkey assessment, had incorrectly assessed the capability procedure, and had wrongly excluded the bonus.

1. Both appeals were dismissed. The Employment Tribunal made no error of law in applying an 85% Polkey reduction to the compensatory award.
2. The employer’s amended response had retained a clear case that the claimant would have been dismissed for capability or some other substantial reason. The removal of its allegation of contributory fault under section 123(6) of the Employment Rights Act 1996 did not prevent it from relying on the pleaded matters when assessing the likelihood of a fair dismissal. There was no procedural unfairness or estoppel.
3. A Polkey assessment properly required consideration of whether the claimant would improve through a formal capability procedure. His behaviour, refusal to accept guidance and lack of insight were relevant evidence on that question. They were not treated as a finding of contributory fault.
4. The Tribunal had assessed what this employer would probably have done. Its capability procedure was a non-contractual framework, not a rule requiring the employer to retain the claimant for six months. On the findings of commercial risk and unlikely improvement, it was entitled to find that the employer would probably have ended the process and fairly dismissed after three months. The 15% allowance for a different outcome reflected the necessarily speculative nature of the exercise.
5. The Tribunal’s reasons adequately disclosed application of the correct principles and resolution of the central issues. It was unnecessary for it to reproduce the statutory provisions or leading authorities where both parties had addressed the narrow compensation issue through specialist counsel.
6. The bonus claim also failed. Even if the claimant were treated as employed at the bonus date, the discretionary scheme permitted no bonus for an employee working out notice. It was not unreasonable or capricious for the employer to withhold payment in analogous circumstances where notice had been given by it. No compensatory award, including a 15% award, was therefore due for the bonus.

• Employment Appeal Tribunal: dismissed the claimant’s appeals against the original compensation decision and the reconsideration decision.
• Employment Tribunal (Employment Judge Wade): by an order dated 24 June 2014, awarded compensation after an 85% Polkey reduction. Following reconsideration, by a reserved judgment dated 11 December 2014, it increased the award modestly but otherwise maintained its conclusions.