Monday 25th September 2023
PUBLISHED ARTICLES
Article 9
Why Compensation Rules Mean that Winning an Unfair Dismissal Claim May be
Valueless
Often a Claimant’s employment tribunal victory can be rendered meaningless
when compensation rules mean that the award is reduced to nil. The Employment
Rights Act 1996 states that the employer must show that the dismissal was
for one of five potentially fair reasons such as misconduct, capability or
redundancy and that it acted reasonably when treating that reason as a sufficient
reason to dismiss the employee. As part of the tribunal’s thinking process
it is necessary for the tribunal to review the fairness of the procedure followed
by the employer when dismissing the Claimant.
The procedures adopted when dismissing an employee are not straight forward
and professional advice should always be sought. The employment judge and
the panel will be looking amongst other omissions on the part of the employer,
for the absence of an opportunity for an employee to present their side of
the story, or if the employee is dismissed, an invitation to appeal the decision.
Employment law, however hands an olive branch to the recalcitrant employer
in the shape of a principle established in the case of, ICR/Polkey v A.E.
Dayton Services Ltd*: If the dismissal is held to be procedurally unfair,
the Tribunal will ask itself the question whether this failure would ultimately
have made any difference to the outcome. If not, then compensation will be
limited to the period it would have taken for a proper procedure to take place
before a fair dismissal could have occurred. This is commonly known as a "Polkey"
reduction,.
The Employment Tribunal’s Task is to Predict What Would have Happened
had there been no Unfair Dismissal In the case of Software 2000 Ltd some of
‘Softwares’ employees were told that they faced redundancy. 18
managers carried out the assessments of individuals but were not told how
to approach the exercise nor were they given a full explanation of what the
criteria involved. There was no proper consultation and dismissal letters
were backdated wrongly. This case also looks at the new section 98A(2) of
ERA 1996 which states: "Subject to subsection (1), failure by an employer
to follow a procedure in relation to the dismissal of an employee shall not
be regarded for the purposes of section 98(4)(a) as by itself making the employer’s
action unreasonable if he shows that he would have decided to dismiss the
employee if he had followed the procedure
The tribunal found that all the claimants had been unfairly dismissed by reason
of redundancy, because the selection process was fundamentally flawed. It
concluded that the subjective nature of the selection criteria did not render
the decision unfair on its own, but, when coupled with the assessment by a
large number of different managers, without proper guidance, they did render
the dismissals unfair. The tribunal, however refused to reduce compensation
under the ‘Polkey’ guidance on the basis that it would be too
difficult o predict whether or not the Claimant would have been dismissed
but for the flawed dismissal procedure.
The Employment Appeals Tribunal gave guidance on the case:
That if fair procedures had been complied with, the employer has satisfied
it – the onus being firmly on the employer – that on the balance
of probabilities the dismissal would have occurred when it did in any event.
The dismissal is then fair under s98A(2).
That there was chance of dismissal but less than 50%, in which case compensation
should be reduced accordingly.
Mitigating Loss
Another way in which an award may be reduced is if the tribunal determines
that the individual has not attempted to mitigate his/her loss for the period
for which they are trying to claim compensation. This can mean looking for
alternative employment or setting up their own business.
The compensatory award should be calculated as "such amount as the tribunal
considers just and equitable in all the circumstances having regard to the
loss sustained by the complainant in consequence of the dismissal in so far
as that loss is attributable to action taken by the employer" (section
123 ERA 1996 ).
*(HL 1988)
By Charles Price, barrister No5 Chambers
www.charlesprice.net
This article Copyright HRZone - Written by Charles Price
