Contributory fault

If the tribunal thinks the employee’s conduct contributed to the unfair dismissal, it can reduce thecompensatory award to reflect this (section 123(6) ERA 96). However, to justify a cut in compensation, the conduct must be “foolish, perverse or unreasonable” (Nelson v BBC (No.2) [1980] ICR 110).

Note that where a dismissal is automatically unfair because it relates to trade union duties or activities, section 155 TULRCA 92 requires a tribunal assessing contributory fault to disregard any conduct or action by the employee relating to the employer’s demand that the employee cease to be a member of a union, participate in union activities or access union services.

The tribunal can reduce the amount of the basic award because of any conduct of the employee before dismissal (section 22(2) ERA 96). The tribunal also has a general power to reduce the compensatory award if it thinks this is “just and equitable”, for example, if the employee is guilty of misconduct which was only discovered after the dismissal (so that it cannot be said to have contributed to the dismissal decision). This can result in a percentage reduction of as much as 100% (Devis v Atkins [1977] ICR 662).

Any money already paid to the employee by the employer as a result of the dismissal (for example, any settlement payment) will be deducted from the compensation. Income-based benefits like Job Seekers Allowance can also be taken into account (Morgans v Alpha Plus Security EAT/0438/04), but in Sheffield Forgemasters International Ltd v Fox (UKEAT/0143/08/MAA) it was decided that incapacity benefit was not to be deducted.

Compensation can also be reduced where the tribunal finds a chance that, even if a fair procedure had been followed, the employee would have been dismissed. This is known as a Polkey reduction. Compensation can also be increased or decreased because of the employer’s (or employee’s) failure to follow the Acas Code of Practice. The amount awarded can be increased or decreased by up to 25%: Section 207A, ERA 96.

Redundancy payments are offset against the basic award (which is equivalent to a statutory redundancy payment in terms of its amount) (Digital Equipment v Clements [1998] IRLR 134), but only if the tribunal finds that there was a genuine redundancy (Boorman v Allmakes ([1995] IRLR 553).

An additional award applies in trade union membership (or non-membership) cases and in cases of unlawful discrimination and dismissal for health and safety reasons where the employee asked for reinstatement or re-engagement but the employer refused to comply with the tribunal order. It gives between 26 weeks’ and 52 weeks’ pay. Section 160 of TULRCA 92 gives the tribunal power to order that the compensation award be paid by the union instead of the employer in cases where the tribunal decides that the union induced the employer to dismiss.