Fargro Ltd v David Hide

Under section 123(6) of the Employment Rights Act 1996, a tribunal must reduce compensation if it finds that the dismissal was caused or contributed to by the claimant’s culpable conduct. It must consider contribution where the facts may support such a finding, but need not search for evidence to construct an unarticulated case. Findings of culpability should not be made on allegations the claimant had no proper opportunity to answer.

Reasons must address material fairness arguments, including whether the employee had a proper opportunity to explain themselves to the decision-maker. A Polkey assessment must account for all material grounds of unfairness; it may need to be revisited if the tribunal has not considered them.

Fargro Ltd, the employer, appealed against an Employment Tribunal decision that the dismissal of its employee, David Hide, was unfair. The tribunal made a 66.66% Polkey reduction but made no reduction for contributory fault. On reconsideration, it accepted that direct evidence was not essential, but remained unable to identify evidence supporting findings of culpability.

Hide cross-appealed, arguing that the tribunal had failed to address further grounds of unfairness and that its reasons and Polkey assessment were inadequate or perverse. The appeal concerned the tribunal’s fact-finding duties on contribution; the cross-appeal concerned the completeness of its fairness analysis and the effect of any omissions on the compensation assessment.

1. Appeal dismissed. Section 123(6) of the Employment Rights Act 1996 requires a just and equitable reduction when the tribunal finds that the claimant’s action caused or contributed to the dismissal. Where the facts may support a finding of culpable conduct, the tribunal must consider contribution and raise it with the parties. But it need not search the evidence for a case that has not been articulated, or interrogate a represented party about what evidence it relies on. The EAT applied Swallow Security Services Ltd v Millicent UKEAT/0297/08 and Carmelli Bakeries Ltd v Benali UKEAT/0616/12/RN.
2. The Employment Judge had little evidence about the alleged conduct. Hide had not been cross-examined about most of the allegations, and the employer did not identify evidence from which the Judge should have made findings. Making culpability findings on allegations Hide had not had an opportunity to answer would have been contrary to the rule discussed in Secretary of State for Justice and anor v Dunn EAT 0234/16. The Judge therefore did not err by making no contribution finding. The EAT also confirmed that tribunals must make findings on relevant facts in issue from the evidence available, but are not required to look for material supporting an unadvanced case: Hovis Ltd v Louton EA-2020-000973-LA.
3. Cross-appeal allowed in part on reasons. A tribunal need not address every submission, but must deal with material arguments: Bah v Berendsen UK Limited EAT 0256/19. The Employment Judge should have considered whether Hide had been shown documents put to him during the investigation and whether the employer had considered mitigation. The Judge also needed to consider whether Hide had a proper opportunity to explain himself, including on mitigation, to the decision-maker. A face-to-face meeting is not invariably required, as Charalambous v National Bank of Greece [2023] EAT 75 makes clear, but the opportunity to explain remains a material question.
4. The EAT rejected the perversity ground. The Judge’s acceptance that the managing director was the decision-maker was supported by some evidence; limited evidence is not no evidence. Nor was outsourcing the disciplinary process to consultants, of itself, shown to make the decision perverse.
5. The 66.66% Polkey assessment was set aside. The counterfactual must account for all material respects in which a dismissal may have been unfair. The assessment will stand only if no further findings of unfairness are made. The matter will be remitted; the parties were invited to address whether it should return to the original Judge or a new tribunal, and on what terms.

• Employment Appeal Tribunal — In [2026] EAT 162 , the appeal was dismissed and the cross-appeal allowed in part. The Polkey assessment was set aside, with the remittal forum and terms left for submissions.
• Employment Tribunal — Employment Judge Cadney found the dismissal unfair and applied a 66.66% Polkey reduction, with no reduction for contributory fault. The judgment was sent to the parties on 9 December 2022. On reconsideration, the Judge maintained that the evidence did not permit findings of contributory fault.