Donald Gormley v Phoenix Business Solutions (UK) Limited

Where an employment tribunal finds that a redundancy dismissal involved no consultation and that absence was unfair, the tribunal must uphold the unfair-dismissal claim. It may nevertheless limit compensation by assessing what would probably have occurred had a fair process been followed.

A Polkey assessment is fact-sensitive. A tribunal may conclude that a fair consultation would have lasted only a defined period and that dismissal would then have occurred, provided its findings adequately support that conclusion.

Conduct discovered after dismissal defeats a contractual notice-pay claim only if it amounts to a repudiatory breach which would have justified summary dismissal. Whether that threshold is met is principally a factual issue for the tribunal.

The appellant, a legal director, was dismissed following a restructuring of the respondent’s legal services department. The Employment Tribunal dismissed claims for unfair dismissal and wrongful dismissal. It found that there was a genuine redundancy situation and that alternative lower-paid roles would not have been accepted. Although it found that there had been no consultation and that this was unfair, it awarded a redundancy payment and two weeks’ pay but purported to dismiss the unfair-dismissal claim.

The tribunal also rejected the notice-pay claim. It found that the appellant had continued to operate a consultancy business without the advance written consent required by his employment contract.

On appeal, the parties agreed that the dismissal of the unfair-dismissal claim was incompatible with the tribunal’s findings and financial orders. The principal issues were whether the remedy decision should be remitted and whether the tribunal had applied the correct test to wrongful dismissal.

1. Appeal allowed in part. The tribunal’s dismissal of the unfair-dismissal claim was an error of law. It had found both that redundancy was the reason for dismissal and that there had been no consultation, which could not be regarded as fair on these facts. Applying sections 98(2)(c) and 98(4) of the Employment Rights Act 1996, the only available conclusion was that the unfair-dismissal claim succeeded. The EAT substituted that finding.

2. The respondent’s concessions did not remove the tribunal’s duty to decide fairness under section 98(4). It was entitled to consider all the circumstances. However, its own findings, read with Polkey, compelled the conclusion that this dismissal was unfair.

3. The tribunal’s compensation decision stood. It had correctly directed itself under section 123 of the Act and made adequate findings that a fair process would have involved two weeks’ consultation; the appellant would not have accepted the substantially lower-paid alternative roles; and he would then have been made redundant. The EAT was required to read the decision fairly and as a whole, without a hypercritical focus on isolated deficiencies. The limited award of two weeks’ pay was neither legally erroneous nor perverse, and no remission was required.

4. The wrongful-dismissal appeal failed. Material discovered after dismissal can be relied upon only where it establishes a fundamental, repudiatory breach that would have justified summary dismissal. The tribunal had stated that test and, read as a whole, had found that the appellant’s unauthorised operation of his consultancy business was sufficiently serious on its own. That fact-sensitive conclusion was open to it.

5. As only one conclusion was available on unfair-dismissal liability, substitution rather than remission was appropriate. The remaining grounds were refused and no further order was made.

• Employment Appeal Tribunal: Allowed the appeal in part and substituted a finding that the unfair-dismissal claim succeeded: [2025] EAT 198.
• Employment Tribunal: On 23 October 2024, dismissed the unfair- and wrongful-dismissal claims, while awarding a statutory redundancy payment and two weeks’ pay for the absence of consultation. No neutral citation was stated.