Zebrowski v 31/Birmingham Ltd

An Employment Tribunal may make a Polkey reduction to compensation for constructive unfair dismissal. It may assess a percentage chance that employment would have ended fairly, including after an initial period of full loss.

It may limit compensation to a defined period only where it is certain that fair dismissal would have occurred by that date. A finding of a 60 per cent chance of dismissal does not permit a tribunal both to limit losses to two months and reduce those losses by 60 per cent. The tribunal must instead assess proved loss, subject to mitigation, and apply the percentage reduction in a lawful way under Employment Rights Act 1996, section 123(1).

The Claimant succeeded before the Birmingham Employment Tribunal in his constructive unfair dismissal claim. The Tribunal found that the Respondent had failed to take reasonable steps to investigate and address his health concerns, including probable occupational asthma. It held that there was a 60 per cent chance that, after a fair process, the employment would have ended within two months.

The formal decision recorded a 60 per cent reduction in compensation under section 123(1) of the Employment Rights Act 1996. The reasons were ambiguous as to whether compensation was also confined to two months. The Claimant appealed the approach to the Polkey reduction and the proposed period of loss.

1. Appeal allowed. Paragraph 169 of the Employment Tribunal's reasons was materially ambiguous. It could be read as applying a 60 per cent percentage reduction, as limiting loss to two months, or as allowing full loss for two months followed by a 60 per cent reduction.
2. An Employment Tribunal may make a Polkey deduction where an employee has been constructively and unfairly dismissed. The statutory language requires a practical and just assessment; it does not justify elaborate subsidiary rules.
3. Two approaches were lawful on the Tribunal's findings: it could reduce the Claimant's compensation by 60 per cent throughout, or award full compensation for the initial two-month period, subject to mitigation, and then apply a 60 per cent reduction. The 60 per cent assessment was not perverse. Assessments of future loss necessarily involve prediction, and the Tribunal had identified the relevant uncertainties.
4. It was not lawful to confine compensation to two months unless the Tribunal was 100 per cent confident that fair dismissal would have occurred by then. The reasoning in O'Donoghue supported a fixed cut-off only where dismissal by the selected date was certain. Here, the Tribunal found only a 60 per cent chance that the parties would fail to resolve matters. Loss therefore could extend beyond two months, subject to mitigation, before the 60 per cent reduction was made.
5. The case was remitted to the Employment Tribunal at the remedy hearing to identify which lawful approach it had intended and to assess compensation accordingly.

• Employment Appeal Tribunal: appeal allowed and remitted for a lawful assessment of compensation.
• Employment Tribunal, Birmingham: decision sent to the parties on 6 May 2016. The Claimant was found constructively and unfairly dismissed. The Tribunal recorded a 60 per cent reduction under section 123(1) of the Employment Rights Act 1996.