Lancaster & Duke Ltd v Wileman

For the statutory extension of the effective date of termination, section 97(2) of the Employment Rights Act 1996 incorporates the whole of section 86, including section 86(6). The statutory minimum notice period therefore does not extend the effective date where the employer was entitled to terminate without notice because of the employee’s repudiatory conduct.

A Polkey reduction under section 123(1) is not confined to a dismissal characterised as procedurally unfair. The tribunal must consider whether it is just and equitable to reduce compensation for the possibility that employment would have ended fairly, even where the actual dismissal was substantively unfair.

The Claimant was summarily dismissed two days before completing two years’ service. The Employment Tribunal held that her effective date of termination was extended by one week’s statutory notice, so that she could bring an unfair-dismissal claim. It upheld that claim, made a 25% conduct reduction, and declined a Polkey reduction because it considered the dismissal substantively unfair.

The employer appealed. It contended that section 86(6) of the Employment Rights Act 1996 prevented any statutory-notice extension where summary termination was justified by conduct. It also contended that the Tribunal had wrongly treated substantive unfairness as excluding a section 123(1) reduction.

1. Appeal allowed and remitted. Section 97(2) of the Employment Rights Act 1996 refers to the notice required by section 86 as a whole. It therefore incorporates section 86(6), as well as the minimum-notice entitlement in section 86(1).

2. Accordingly, the statutory deeming provision extends the effective date of termination only where the statutory minimum notice period is required. It is subject to the employer’s right to terminate without notice because of the employee’s conduct. Section 86(6) is not an ouster of the Tribunal’s jurisdiction. It forms part of the statutory definition imported by section 97(2).

3. The Employment Tribunal had not made an express finding on the distinct contractual question whether the Claimant’s conduct amounted to a repudiatory breach entitling the employer to dismiss without notice. Its unfair-dismissal findings could not safely be treated as resolving that issue. The qualifying-service issue had to be remitted for determination.

4. A Polkey reduction is an application of section 123(1). It is not confined to procedural unfairness: compensation may be reduced or limited if the evidence shows a chance that employment would have ended fairly in any event. The Tribunal’s statement that no such question arose because the dismissal was substantively unfair was a legal misdirection. Reading the decision as a whole did not provide sufficient confidence that it had undertaken the required just-and-equitable assessment.

5. Both issues were remitted to the Employment Tribunal. The parties were invited to make written submissions on the precise remittal order.

• Employment Appeal Tribunal: allowed the employer’s appeal and remitted the qualifying-service and compensation issues.
• Leicester Employment Tribunal: upheld the unfair-dismissal claim, treating the effective date of termination as extended to 27 September 2016; it made awards subject to a 25% conduct reduction and made no Polkey reduction.