How an employer can turn a loss into a win at a tribunal

Employers often ask if they’re going to win a claim. Even if a tribunal finds that an employee has been unfairly dismissed, if the amount they award the employee is less than you were willing to pay, that might be a win. The employment team at Freeths explains the ways you can reduce an unfair dismissal award.  

Polkey reductions

These can reduce the amount of compensation by up to 100%. 40 years ago, the House of Lords established the 'Polkey' principle that a tribunal can adjust a compensatory award for unfair dismissal to reflect what would have happened had a fair procedure been followed. For example, if three quarters of a pool would still have been made redundant even with a fair consultation process, you can argue that the compensatory award should be reduced by 75%.

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Similarly, if you can show that the employee would have been fairly dismissed a short time after their unfair dismissal, then compensation can be reduced to the period between the unfair dismissal and when the fair dismissal would have happened. Polkey reductions only relate to the compensatory award so the employee would still be entitled to a basic award if unfairly dismissed.

Contributory fault

Where a claimant’s conduct contributed to their dismissal, the tribunal can reduce the amount of compensation by up to 100% of both the basic award and compensatory award.

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Failure to mitigate losses

The dismissed employee has a duty to try and find another job. If you want to argue for a reduction in the compensatory award, the burden of proof is on you: you could argue that they didn't make sufficient efforts to find a new role, perhaps their search was too narrow in terms of type of role or location, or they unreasonably declined a job offer either from another organisation or yours.

Deal with this at a really early stage of a tribunal claim. Carry out online job searches so you can show the jobs and salaries on offer. If you feel that your ex-employee hasn't done enough to try and find another role, set that out in a witness statement.

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Acas code of practice

If an employee unreasonably fails to follow the Acas code of practice on disciplinary and grievance procedures, their compensation can be reduced by up to 25%. The most common failure is an employee not appealing against dismissal.

Just and equitable reduction

Employers can argue that there is good reason why the employee shouldn't be unjustly enriched by an award, for example, they’ve been barred from the profession or convicted of a relevant crime after their dismissal.

Reinstatement and reengagement

Although these remedies are rare, whenever there's a finding of unfair dismissal the judge has to ask the claimant if they’re interested, so be prepared. Reinstatement is where the employee is slotted back into the same job. Re-engagement is where the employee is re-employed in a different job with the same employer, for example in large employers like the NHS where the same jobs are carried out on multiple sites.

By Rena Magdani, partner and head of employment, and Matt McBride, partner, at national law firm Freeths