Dr James Mullen v Melian Dialogue Research Limited

In assessing compensation for unfair dismissal, a tribunal may make a Polkey reduction only on an evidentially grounded prediction that the actual employer might have fairly dismissed the employee. It must identify the potential fair reason, the process that might have been followed, and the real prospect of dismissal rather than a lesser sanction.

The employer bears the burden of proving unreasonable failure to mitigate. A tribunal must not require the employee to prove that a chosen business venture was reasonable, or reduce compensation on matters on which the employee had no fair opportunity to respond.

An award for injury to feelings cannot be made for dismissal, although it may be made for protected-disclosure detriments. Claims for aggravated damages require findings on whether the employer’s alleged conduct was high-handed, malicious, insulting or oppressive.

The claimant succeeded before the Employment Tribunal in claims of automatic unfair dismissal and protected-disclosure detriment. At the remedy hearing, the Tribunal reduced compensation by 10% under the Polkey principle, made substantial deductions for alleged failure to mitigate loss after the claimant established a new consultancy, omitted to determine claimed start-up expenses, and rejected aggravated damages.

It also awarded injury to feelings in respect of dismissal. The respondent cross-appealed on that issue, and the claimant conceded that the Tribunal had no jurisdiction to make such an award for dismissal.

The claimant appealed the remedy findings. The central issues were whether the Tribunal had an evidential basis for its Polkey and mitigation findings, had determined all heads of loss, and had adequately addressed the aggravated-damages claim.

1. Appeal and cross-appeal allowed. The remedy judgment contained substantive errors and the whole remedy assessment was remitted to a differently constituted Employment Tribunal.

2. The 10% Polkey reduction could not stand. Under section 123(1) of the Employment Rights Act 1996, the exercise is predictive but must rest on evidence. The Tribunal identified performance, the French consultant issue and complaints about the claimant, but did not analyse what potentially fair reason each might establish, what a fair process by this respondent would have revealed, or the likelihood that this employer would fairly dismiss rather than impose a lesser sanction. Its description of a small prospect of dismissal did not supply an evidential basis for the percentage selected.

3. The mitigation deductions were also erroneous. The respondent had to prove that the claimant acted unreasonably. The Tribunal instead effectively required the claimant to prove the reasonableness of devoting time to his new business, and made major adverse findings from documents and matters largely raised by the Tribunal itself without giving him an opportunity to address them. That was substantively unfair.

4. The Tribunal failed to determine the claimed costs of establishing the new business. That head of compensation must be determined on remission.

5. The cross-appeal succeeded because injury to feelings is not recoverable for unfair dismissal. It may be awarded for detriments short of dismissal. The remitted Tribunal must identify the relevant detrimental treatment, make findings on the injury caused, and assess the appropriate Vento band and award.

6. The aggravated-damages claim required reconsideration. Although the applicable threshold is conduct that is high-handed, malicious, insulting or oppressive, the Tribunal did not make necessary findings on the alleged failure to answer a subject access request, the threatened and issued civil claim, allegations against the claimant, the police report, and alleged insults. A robust defence is permissible, but false allegations or a disingenuous police complaint intended to intimidate a claimant could, alone or cumulatively, support aggravated damages.

• Employment Appeal Tribunal: allowed the claimant’s remedy appeal and the respondent’s cross-appeal, and remitted remedy to a differently constituted Employment Tribunal: [2025] EAT 179.
• Employment Tribunal: following the claimant’s successful automatic unfair-dismissal and protected-disclosure-detriment claims, gave a remedy judgment sent to the parties on 28 February 2024. Its remedy findings were set aside.