The claimant had been dismissed without a proper investigation into her medical condition. The ET found this to be unfair, and in the EAT's eyes this was not a matter of procedure but of substance. The claimant had found alternative employment, therefore the issue of compensation did not arise, and so the award was restricted to the basic and loss of statutory rights. The ET reduced these amounts by 50% broadly because they concluded that the claimant was as likely as not to have lost her job if there had been a more thorough investigation.

Lady Smith allowed the appeal against the reduction, agreeing with the submissions for the claimant that the ET had been wrong to make a Polkey reduction as such deductions  a) can only be made in cases where a dismissal is unfair on account of a flaw in the procedure and b) can only relate to the basic award where there is contributory conduct by the complainant, which was not the case here.

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Appeal No. UKEATS/0011/11/BI

EMPLOYMENT APPEAL TRIBUNAL**

52 MELVILLE STREET, EDINBURGH EH3 7HF

At the Tribunal

On 14 October 2011

**

THE HONOURABLE LADY SMITH, MISS J GASKELL, MRS A HIBBERD**

MISS LINDA STEWART (APPELLANT)

**

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NEXT RETAIL LTD (RESPONDENT)

Transcript of Proceedings

JUDGMENT

APPEARANCES

For the Appellant
MR F LEFEVRE (Solicitor)

Quantum Claims Compensation Specialists Ltd
70 Carden Place
Queen's Cross
Aberdeen
AB10 1UL

For the Respondent
No appearance by or on behalf of the Respondent

**

UNFAIR DISMISSAL**

Compensation**

Polkey deduction****

THE HONOURABLE LADY SMITH

Introduction

1. This is the case of Linda Stewart against Next Retail Ltd, which comes before us this morning as a full hearing. It is an employee's appeal from the Judgment of the Employment Tribunal sitting at Aberdeen, Employment Judge Mr J M Hendry. The Judgment was registered on 13 January 2011. Mr Lefevre, solicitor, appeared before us for the Appellant, who is the Claimant. There was no appearance for the Respondents, their solicitors having confirmed that they did not seek to oppose the appeal, although they did not concede it.

1. The Tribunal in this case found that the Claimant was unfairly dismissed in respect that the Respondents had not carried out a fair investigation,; that is, applying the test under s.98(4) of the Employment Rights Act 1996**, the dismissal was not fair. Having read the Judgment we can see that it was not simply a matter of there being any flaw in procedure; indeed, there is no procedural flaw as such, pointed to by the Tribunal. Their concern was one of substance. They found that the Respondents had not carried out a full and fair investigation into the Claimant's medical condition, prior to deciding to dismiss her.

1. Having found that the Claimant was unfairly dismissed, the Tribunal turned to remedy. The Claimant had found alternative employment and so the question of a compensatory award did not arise. The Tribunal, accordingly, restricted their award to (a) a basic award; and (b) an award for loss of statutory rights. The basic award was correctly calculated as being £4,220.46, but the Tribunal then applied a 50% deduction. The Tribunal explained the thinking behind their deduction at paragraph 87, which was in the following terms.

"87. Finally, we consider whether the claimant would have been dismissed in any event. Would further investigations have made any difference to the outcome? This is not an easy matter for us to resolve. We cannot say that there could have been no possible difference in the outcome. There certainly would have been a delay in the dismissal taking place. We do not know if the claimant would have continued to have persistent absences or if the medical evidence indicated that the absences were part of an underlying condition if a relaxation in the system operated by the employers would have allowed the claimant to keep her job. The chances of the claimant ultimately losing her job were in our opinion as likely as her keeping it and accordingly we will reduce the award by 50% to reflect this."ally, we consider whether the claimant would have been dismissed in any event. Would further investigations have made any difference to the outcome? This is not an easy matter for us to resolve. We cannot say that there could have been no possible difference in the outcome. There certainly would have been a delay in the dismissal taking place. We do not know if the claimant would have continued to have persistent absences or if the medical evidence indicated that the absences were part of an underlying condition if a relaxation in the system operated by the employers would have allowed the claimant to keep her job. The chances of the claimant ultimately losing her job were in our opinion as likely as her keeping it and accordingly we will reduce the award by 50% to reflect this."

**

1. That is, they would appear to have applied what is often referred to as a deduction: see Polkey v A E Dayton Services Ltd [1987] IRLR 503. We accept Mr Lefevre's submissions that the Tribunal were wrong to do so. First, deductions can only be made in cases where a dismissal is unfair on account of a flaw in the procedure. Examples would be a failure to provide an employee with notice of the charge that he has to answer at a disciplinary hearing or not affording an employee an opportunity to appeal, or not allowing an employee to appear at a disciplinary hearing.

1. It is plain that, in this case, the Tribunal's concern was not a procedural one. There was no flaw of that sort that they pointed to. They pointed to a substantial defect in the employer's approach to the matter that they had to address, and a wholesale failure to investigate that went to the heart, as we see it, of the s.98(4) tests that they had to apply.

1. Secondly, deductions on grounds can only, in any event, be made from an award of compensation under s.123 of the Employment Rights Act 1996. It seems plain to us from the speech of Lord Bridge in the case of that that was envisaged by their Lordships and, indeed, it makes sense. Further, the terms of s.122(2), which relate to basic awards, differ from those of s.123(1). The general power to assess compensation on just and equitable grounds that appears in s.123(1) and enables **deductions to be made, does not appear in s.122(2). There, the power to reduce the basic award on just and equitable grounds is restricted to where there is contributory conduct by the complainant.

1. There was no misconduct or contribution by the Claimant in this case that contributed to her dismissal, and so there was no basis on which it was competent for the Tribunal to reduce the basic award. Whilst it might be said, of course, that the £250 for loss of statutory rights is a compensatory award, and so it would have been competent to reduce it, as we have explained, we accept that this dismissal was substantively unfair, not procedurally unfair, and so it would not be appropriate to apply any abatement to it.

1. We will, accordingly, allow the appeal, set aside the Tribunal's award and substitute for it the sum of £4,470.46, that is a basic award of £4,220.46 plus an award for loss of statutory rights of £250.