Wealmoor Limited v R Poniatowski

An Employment Tribunal must not gross up the whole of an injury-to-feelings award for tax where the award may cover both pre-dismissal discrimination and dismissal. It must consider apportionment and gross up only any taxable dismissal-related element.

A tribunal deciding mitigation must give sufficient reasons. A bare conclusion that a claimant took reasonable steps, without identifying the evidence, the steps taken, or the factors relied upon, does not enable the losing party to understand why the mitigation case failed.

The claimant succeeded before the Employment Tribunal in disability-discrimination claims, including failure to make reasonable adjustments and discrimination arising from disability in his dismissal. He also succeeded in claims for unfair dismissal and wrongful dismissal.

The employer appealed the remedy judgment on two grounds. It challenged the grossing up for tax of the entire injury-to-feelings award and contended that the Tribunal gave inadequate reasons for rejecting its case that the claimant had failed to mitigate loss of earnings.

The central issues were whether the injury-to-feelings award required apportionment between pre-dismissal conduct and dismissal, and whether the Tribunal had adequately explained its mitigation finding.

1. Appeal allowed. The remedy decision was remitted to the same Employment Tribunal on the two challenged issues.

2. The Tribunal had grossed up the entirety of the injury-to-feelings award without considering whether it included distinct elements for pre-dismissal failures to make reasonable adjustments and for dismissal. Under the taxation provisions in the Income Tax (Earnings and Pensions) Act 2003, injury includes injured feelings. The judgment accepted that injury-to-feelings awards short of dismissal are not taxable, whereas awards relating to dismissal are taxable. The Tribunal therefore had to consider apportionment and gross up only the dismissal-related element if appropriate.

3. The Tribunal’s mitigation reasoning was inadequate. It made a positive finding that the claimant had taken reasonable steps and that the employer had not proved a failure to mitigate, but did not identify the steps found, the evidence accepted, or the factors on which it relied. Its reference to “these factors” could not be understood from the judgment as a whole. That failure also affected the award of six months’ future loss.

4. Applying the relevant factors in Sinclair Roche & Temperley v Heard [2004] IRLR 763, remission to the same Tribunal was proportionate. It had heard the mitigation evidence, could potentially decide the matter on further submissions, and there was no reason to doubt that it would approach the remitted issues professionally.

• Employment Appeal Tribunal: Allowed the employer’s appeal on the grossing-up and mitigation-reasons issues, and remitted those issues to the same Employment Tribunal.
• Employment Tribunal: Remedy judgment following the claimant’s success in disability-discrimination, unfair-dismissal and wrongful-dismissal claims; judgment sent to the parties on 9 October 2023.