“Today, we are not financially sustainable. We are at ‘amber’ – break-even. We have the 135 plan, and you are confident that we will deliver the plan, but I would … advise you not to count your chickens before they have hatched. From my perspective, you have expressed equal confidence in previous plans that have ended up not delivering.”
“Overall, I’m very happy with where the business is and where [it] is going, and the job that you are doing to get it there… Technology is in the best shape that it [has] been in for as long as I can remember, which is great!... Achieving break even is very welcome. A very welcome relief.”
“I’ve lost confidence in your ability to lead the business back to sustainable profitability. I have lost count of the number of times you’ve represented profitability goals to me (and the board) that you have then not delivered. I’m not prepared to give you any more chances. Sorry.”
“… you have taken very little if any personal responsibility for the company’s dismal financial performance during your tenure as CEO”
“This offer is made as an attempt to resolve amicably an irreparable failure in your performance. It is made without prejudice to any disciplinary action that the company may take should you choose not to accept his offer.”
“These pros and cons included a perceived saving in Mr Stobart’s early dismissal and the opportunity for Mr Tang to assume the role of CEO as soon as possible against the surprise to others within the company and losing the ‘good things that [Mr Stobart] would bring to [the] business over the remainder of the [financial year]’.”
“I hereby issue 12 months’ notice to terminate your Appointment in accordance with clause 2(i) of your Director’s Service Agreement dated10 September 2018 . The last day of your appointment will therefore be17 March 2024 .”
“54. Mr Tang did accept that he was aware of the Zen disciplinary and grievance procedures and that they applied to capability issues, requiring that an investigation be undertaken if capability became an issue, holding a hearing where the employee could put their case and in the [event] that they were unhappy with the outcome of the process, they could seek an appeal. The Zen procedure was not included within the hearing bundle but there was no suggestion that it would not reflect the broad principles of the relevant ACAS Code of Practice. 55. While Mr Tang disputed that Zen had not followed its procedures when deciding to dismiss Mr Stobart, I do not accept this was the case. There had been discussions taking place by email between them in February and March 2023, but they did not take the form of a formal process and they did not involve a separate and more independent investigating manager. Mr Stobart was [not] The parties were agreed before me that there is a typographical error in this paragraph of the Tribunal’s judgment. The word “not” was omitted. informed that he was the subject of a process investigating his capability. The decision of the Board did not involve Mr Stobart being able to make representations either in writing or verbally and he was not provided with a right of appeal. 56. I do have some sympathy with Mr Tang and the Board at Zen in that they were dealing with a CEO, who was in a senior leadership role, who normally attended Board meetings and where they would look at issues through the ‘lens’ of company leaders remaining effective and furthering the interests of Zen as a company. But while this might be the case, Mr Stobart remained an employee and whose contract of employment confirmed that he was subject to the company’s policies and procedures including the application of the disciplinary and grievance procedures. This placed not only Mr Stobart under an obligation to Zen, but also placed Zen under an obligation to Mr Stobart as his employer.”
“70. It is fair to say that Mr Tang did reach a ‘final straw’ in February 2023 where he believed Mr Stobart’s performance as CEO was no longer acceptable. But the evidence of the performance reviews, the emails and minutes in February and March 2023 reveal an overall contentment with his work, with questions relating solely to his capability for the role of CEO. This was the real operative reason behind the decision to terminate. This was an available potentially fair reason, it was appropriate and indeed it had been relied upon by Zen as respondent in their defence to this claim. As this is available, I do not accept that some other substantial reason was the real reason for the dismissal and the reason which was in the mind of Mr Tang as the person recommending dismissal to the Board.”
“71. I considered whether Zen acted reasonably in all the circumstances in treating capability as a sufficient reason to dismiss Mr Stobart from his CEO role and given that it related to performance (as opposed to a health related absence), I was concerned about whether the respondent adequately warned Mr Stobart and gave him a chance to improve and that dismissal was within the range of reasonable responses. 72. As has already been discussed within the findings of fact and submitted by Mr Brittenden, there was a dissonance in the performance review documents. This was that while concerns were being raised regarding profitability following Mr Stobart’s appointment as CEO, by Mr Tang, the documents produced at these meetings also provided many positive comments about performance and did not suggest he was going to face any intervention from the Board or Mr Tang. 73. It was only in February 2023 that Mr Tang’s dissatisfaction and overall lack of trust were clearly expressed and where the job swap and potential disciplinary action was raised. 74. The role of a CEO as an employee is a curious one and especially the case where they work for a large organisation with a Board of directors or trustees and there are dominant shareholders who had been involved in the creation of the business. The CEO is at the pinnacle of the organisation and the analogy of a football manager made during discussions between Mr tang and non executive directors on17 March 2023 is a reasonable one to make. The CEO leads the organisation, is aware that there is a heavy weight of expectation and that their remaining in the role can be precarious based upon the performance of [the] organisation they lead. 75. It is for these reasons and taking into account Mr Stobart’s considerable experience, he should have been aware that an ongoing failure to achieve profitability over a period of more than 4 years, could well affect his position as CEO. The nature of the relationship between Mr Tang as majority shareholder, creator of the company and former CEO and Mr Stobart as his mentor, experienced business leader and former Chairman, was a complicated one. It is perhaps understandable that Mr Tang tried to balance his ongoing frustrations with profitability against the other positive achievements and also his struggles with ‘letting go’ from the CEO role which he had occupied for many years. Such are the tensions that exist where an individual has created and nurtured a business from scratch and who may have an emotional attachment far beyond someone who is simply paid to be a CEO or director. 76. This explained why he operated in the way that he did engaging in discussions and emails with Mr Stobart and then eventually involving the Board. He saw his concerns as being a leader, shareholder and director matter as opposed to a traditional employer and employee matter. Mr Stobart had of course begun his relationship with Zen as a mentor, non executive director and Chairman of the Board. 77. But Mr Stobart as CEO was an employee and there was no dispute that he enjoyed access to the same Zen policies and procedures as other more junior employees within the company. Once Mr Tang became aware of his loss of trust in Mr Stobart’s performance, he should have raised the matter with the Board and HR and arranged for a meeting with Mr Stobart to explain the concerns, rather than simply making vague reference to disciplinary procedures as he did in one of his emails during February/March 2023. 78. I agreed with Mr Brittenden’s submission that the ACAS Code of Practice on Disciplinary and Grievance Procedures applies to all employees regardless of seniority and the Tribunal should consider its application when determining whether a dismissal was fair. Paragraph 1 of the Code makes clear that disciplinary situations can include poor performance although an employer may rely on a separate capability procedure if one exists. Whilst I am aware of a disciplinary and grievance procedure being used within Zen as respondent, there was no evidence that a capability procedure document had been produced separately. Mr Tang’s emails with Mr Stobart included reference to disciplinary procedures and it is these documents which should have been considered when he felt it was necessary to take such action. 79. The ongoing performance documentation, financial information produced for Board meetings and other correspondence involving Mr Tang and Mr Stobart provided much to demonstrate a failure to achieve profitability during the latter’s tenure as CEO. But nonetheless, Zen should have taken steps to formally establish the facts, inform the employee of the problem, arrange meetings where he could be accompanied and put his case, decide upon outcome and to allow him an appeal. None of these steps were taken and while there may have been good reasons to end Mr Stobart’s employment as CEO, the failure to apply a fair investigation which considered whether capability existed, whether steps should have been taken short of dismissal and allowed Mr Stobart to improve were not deployed. Accordingly, I must conclude that the decision to dismiss him was procedurally unfair.”
“The parties however, will not be surprised to read following the above discussion that while the dismissal was procedurally/Polkey unfair, there was nonetheless a likelihood that Mr Stobart would have been fairly dismissed had a fair procedure been followed. In this case, I believe that it would have been almost certain that the utilisation of a fair procedure would have resulted in a fair dismissal taking into account the available evidence and time elapsed where profitability had not been achieved. Under these circumstances, had Mr Stobart been the subject of a formal investigation under Zen’s procedures, a fair dismissal would have taken place a little over two months following the17 March 2023 Board meeting and certainly by no later than 31 May 202[3] At §80, the year is typed as 2024, however this was a typographical error: see §83. The parties were again agreed that this must be the case. . Dismissal on grounds of capability would have been within the range of reasonable responses available to the decision making manager in this case taking into account the period where profitability had been an issue and the role of CEO occupied by Mr Stobart.”
“In our judgment, [the employee’s] submission does not accurately state the law. An employer’s duty is to be fair both to the employee and the business in all circumstances. … This duty of fairness both to the employee and to the business is the only general rule. All else is but a particular application of that general rule. Thus in the field of conduct there are at least two types of case in which it may be reasonable exceptionally to dismiss without giving the employee an opportunity of offering an explanation. The first is that in which the employee, as part of the conduct complained of, states in terms why he is adopting that attitude. If it is clear that this is the employee’s considered view and not merely the result of a passing emotion, there can be no point in giving him an opportunity of restating a view the expression of which led to the decision to dismiss him. But even so, an employer should be slow to conclude that an opportunity to reflect and a subsequent opportunity to explain could in no circumstances produce a changed situation in which dismissal would be unnecessary. The second is that in which an employee’s conduct is of such a nature that, whatever the explanation, his continued employment is not in the interests of the business. In such a case it is not unfair to dismiss without giving the employee an opportunity for explanation, although even in such a case many employers would rightly afford such an opportunity in order that the employee may have no possible excuse for feeling aggrieved. In the field of capability similar problems frequently arise. If an employee is not measuring up to the job, it may be because he is not exercising himself sufficiently or it may be because he really lacks the capacity to do so. An employer should be very slow to dismiss on the ground that the employee is incapable of performing the work which he is employed to do, without first telling the employee of the respects in which he is failing to do his job adequately, warning him of the possibility or likelihood of dismissal on this ground, and giving him an opportunity of improving his performance. But those employed in senior management may by the nature of their jobs be fully aware of what is required of them and fully capable of judging for themselves whether they are achieving that requirement. In such circumstances, the need for warning and an opportunity for improvement is much less apparent. Again, cases can arise in which the inadequacy of performance is so extreme that there must be an irredeemable incapability. In such circumstances, exceptional though they no doubt are, a warning and opportunity for improvement are of no benefit to the employee and may constitute an unfair burden on the business.”
“Where there is no issue raised by sections 58 to 62 the subject matter for the tribunal's consideration is the employer's action in treating the reason as a sufficient reason for dismissing the employee. It is that action and that action only that the tribunal is required to characterise as reasonable or unreasonable. That leaves no scope for the tribunal considering whether, if the employer had acted differently, he might have dismissed the employee. It is what the employer did that is to be judged, not what he might have done. On the other hand, in judging whether what the employer did was reasonable it is right to consider what a reasonable employer would have had in mind at the time he decided to dismiss as the consequence of not consulting or not warning. If the employer could reasonably have concluded in the light of the circumstances known to him at the time of dismissal that consultation or warning would be utterly useless he might well act reasonably even if he did not observe the provisions of the code.Failure to observe the requirement of the code relating to consultation or warning will not necessarily render a dismissal unfair. Whether in any particular case it did so is a matter for the industrial tribunal to consider in the light of the circumstances known to the employer at the time he dismissed the employee.”
“10 A fair dismissal requires that the employer shall have a honest belief that the employee is incompetent or unsuitable for the job and that he should have reasonable grounds for that belief; Alidair Ltd -v- Taylor[1978] ICR 445 . Further, an employer who dismisses an employee on the grounds of capability will normally risk a finding of unfair dismissal unless he can show that he has given the employee adequate warnings. Such warnings must be effective to identify the shortcomings of the employee, explain, where necessary, what steps are to be taken to remedy them, provide all necessary support, guidance, etc which may reasonably be required in order to achieve them, provide a reasonable time for improvement and give clear warning as to the possible consequences of failure to achieve the required standard. It is implicit in this process that the employee is given an opportunity to explain his shortcomings, the proper consideration be given to any such explanation and he be provided with all necessary support in the form of additional facilities, staff training, etc which the employee may reasonably need. It is important, however, that an employee should be aware of the dissatisfaction; Laycock -v- Jones Buckie Shipyard Ltd EAT 395/81. This principle is subject to the qualification that senior employees may not need such clear warnings that they are failing to achieve their performance as might be required of more junior staff; Jones -v- Waltham Holy Cross UDC [1973] 398. Although a contrary view was apparently expressed by the EAT in McPhail -v- Gibson[1977] ICR 42 , the important issue was whether the employee was aware that his job was in jeopardy. In Laycock -v- Jones Buckie Shipyard Ltd it was indicated that “as a matter of common sense, the higher someone is in the managerial scale the more likely it is that he will be conscious of the satisfaction or lack of satisfaction that his performance is giving”
“We decline the invitation to pick our way through the tortuous path of conflicting decisions or, more accurately, conflicting dicta in very different cases. Much of that which is dignified by the words as being a proposition of law, is, on its true analysis, no more than a comment of industrial good sense in the context of a particular case. The one matter that to us is paramount is the sentence of Sir John Donaldson's judgment which reads “This duty of fairness both to the employee and to the business is the only general rule all else is but a particular application of that general rule.”
“21. In order to provide an incentive to follow recommended practice, section 3 contains provisions giving employment tribunals the discretion to vary awards for unreasonable failure to comply with any relevant Code of Practice relating to workplace dispute resolution, by introducing a new section 207A and Schedule A2 to TULRCA 1992. The relevant Code of practice is one which relates exclusively or primarily to procedure for the resolution of disputes. Of the existing six codes issued under TULRCA, such a definition only applies to the Acas Code of Practice on disciplinary and grievance procedures, which Acas is substantially revising for reissue at the time the Act comes into force.”
“Where the employer has fulfilled the requirements of subsection (1) [viz shown a potentially fair reason for dismissal], the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) – (a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and (b) shall be determined in accordance with equity and the substantial merits of the case.”
“Whether someone acted reasonably is always a pure question of fact, so long as the tribunal deciding the issue correctly directs itself on the matters which should and should not be taken into account. But where Parliament has direct a tribunal to have regard to equity – and that, of course, means common fairness and not a particular branch of the law – and to the substantial merits of the case, the tribunal’s duty is really very plain. It has to look at the question in the round and without regard to a lawyer’s technicalities. It has to look at it in an employment and industrial relations context and not in the context of the Temple and Chancery Lane. It should, therefore, be very rare for any decision of an industrial tribunal under this section to give rise to any question of law. And this is quite plainly what Parliament intended. Of course, a tribunal can approach this simple question in a way which is other than that which Parliament intended. However, where Parliament has given to the tribunal so wide a discretion, in my judgment, appellate courts should be very slow indeed to find that the tribunal has erred in law. …”
“… save at least where there is a proper basis for saying that the tribunal simply failed to follow their own self direction, the appeal tribunal should not interfere with that decision unless there is no proper evidential basis for it, or unless the conclusion is perverse. That is a very high hurdle.”
“It is the ET to whom Parliament has entrusted the responsibility of making what are, no doubt sometimes, difficult and borderline decisions in relation to the fairness of dismissal. An appeal to the EAT only lies on a point of law and it goes without saying that the EAT must not, under the guise of a charge of perversity, substitute its own judgment for that of the ET.”
“53. … The ET is the tribunal to which fell the responsibility of finding the facts in the case and of applying the applicable law to the facts so found. Amongst the findings it had to make was whether or not the dismissal of Ms Tayeh for her misconduct under each of heads 4 and 5 fell within the ‘band of reasonable responses’. That was either a finding of fact pure and simple, or else was a finding in the nature of a value judgment akin to such a finding. Whichever it was, once the ET had made its finding, that would normally mark the end of the matter. That is because there is no appeal to the EAT against an ET's findings of fact. Appeals to the EAT against an ET's judgment lie only on questions of law:section 21(1) of the Employment Tribunals Act 1996 . This principle is applied by the EAT strictly. It will, for example, not be enough for a would-be appellant to the EAT to assert that the ET's finding on a particular factual issue was against the weight of the evidence. If there was evidence justifying the ET's finding, that will usually be fatal to the bringing of an appellate challenge and the EAT will refuse to permit an appeal to proceed. Generally speaking, the only bases on which appellate challenges to an ET's findings of fact will be permitted by the EAT will be if they are said to have been supported by no evidence at all, or if they were findings that no reasonable tribunal could have reached. In either case, if such challenges are made good, they would demonstrate an error of law. At least the latter way of putting the case is dependent on an assertion of perversity, although that requires nothing less than ‘an overwhelming case’: see Yeboah v. Crofton[2002] IRLR 634 , at paragraph 93, per Mummery LJ. 54. So the decision of the ET in a case such as the present is, and will be, normally the end of the road for both parties – just as it should be — unless, however, it can be shown to be arguably vitiated by an error of law. …”
“It is well established, and has been said many times, that one ought not to take too technical a view of the way an employment tribunal expresses itself, that a generous interpretation ought to be given to its reasoning and that it ought not to be subjected to an unduly critical analysis.”
“James v Waltham Holy Cross UDC[1973] ICR 393 – where the employer is considering capability, it should be slow to dismiss without first raising the question of performance with the employee and giving them an opportunity to improve.”
“The employment tribunal then followed, as it was bound by authority to do, the approach in Iceland Frozen Foods Ltd. v. Jones [1983] I.C.R. 17 and held that, although it was of the view that the decision to dismiss was “harsh,” it was not entitled to substitute itself for the employer and impose its “decision upon that of a reasoned on the spot management decision” (paragraph 23). Instead it asked, as required by authority, whether the dismissal was “within the range of reasonable responses for this employer to have dismissed this employee.”
“That is not, however, the basis on which Mr. Reade, on behalf of Mr. Foley, attacked the decision of the tribunal. His submission, based on Haddon v. Van den Bergh Foods Ltd. [1999] I.C.R. 1150 , was that the tribunal ought to have started from the position of considering what it would do in the circumstances and then consider on the objective test in section 98(4) whether the decision to dismiss was reasonable or unreasonable. It should not simply have applied what was described in Haddon as the “mantra” (i.e., the band of reasonable responses and the warning against substituting its own judgment for that of the employer) which drove employment tribunals to subvert the provisions of section 98 and in effect apply a more extreme perversity test. If the tribunal had taken the approach in Haddon it would have given effect to its express view that the decision to dismiss was “harsh” and it would have concluded that the dismissal of Mr. Foley, who had a clean record, for an offence which was not gross misconduct, was manifestly unreasonable. I would reject these submissions on the perversity point and on the substitution point as contrary to authority binding on this court.”
“It was also made clear in Iceland Frozen Foods Ltd ., at pp. 24 g -25 b, that the members of the tribunal must not simply consider whether they personally think that the dismissal is fair and they must not substitute their decision as to what was the right course to adopt for that of the employer. Their proper function is to determine whether the decision to dismiss the employee fell within the band of reasonable responses “which a reasonable employer might have adopted.”
“30. … The range of reasonable responses test (or, to put it another way, the need to apply the objective standards of the reasonable employer) applies as much to the question whether the investigation into the suspected misconduct was reasonable in all the circumstances as it does to the reasonableness of the decision to dismiss for the conduct reason. … 34… the range of reasonable responses approach applies to the conduct of investigations, in order to determine whether they are reasonable in all the circumstances, as much as it applies to other procedural and substantive aspects of the decision to dismiss a person from his employment for a conduct reason.”
“applying the test of fairness in section 98(4), did the respondent act reasonably in all the circumstances in treating that reason as sufficient reason to dismiss the claimant?”
“e) Iceland Frozen Foods Limited v Jones[1982] IRLR 439 – where the test to apply when considering whether the decision to dismiss was reasonable is whether the decision fell within the range of reasonable responses available to a reasonable employer in those circumstances which led to the dismissal. f) Foley v Post Office; Midland Bank plc v Madden[2000] IRLR 82 – which reminds the Tribunal that it must not substitute its own view for that of the employer when applying the test of reasonableness.”
“(1) Subject to the provisions of this section and sections 124, 124A and 126, the amount of the compensatory award shall be 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.”
“There is no need for an ‘all or nothing’ decision. If the industrial tribunal thinks there is a doubt whether or not the employee would have been dismissed, this element can be reflected by reducing the normal amount of compensation by a percentage representing the chance that the employee would still have lost his employment.”
“… It seems to us that the matter will be one of impression and judgment, so that a tribunal will have to decide whether the unfair departure from what should have happened was of a kind which makes it possible to say, with more or less confidence, that the failure made no difference, or whether the failure was such that one simply cannot sensibly reconstruct the world as it might have been. …”
“The highlighted passage from King v Eaton Ltd (No 2)[1998] IRLR 686 , 691, para 19 seems to us both practical and to coincide with the approach of this court in O'Dea's case. It provides tribunals with a straightforward and sensible yardstick with which to approach such cases, and avoids unnecessary and unproductive debate about whether a particular piece of conduct fits into the "substantive" as opposed to the "procedural" category.”
“…to draw upon its own industrial experience of circumstances such as this and to construct, from evidence not from speculation, a framework which is a working hypothesis about what would have occurred had the [employer] behaved differently and fairly.”
“The tribunal's statutory duty may involve making such predictions and tribunals cannot be expected, or even allowed, to opt out of that duty because their task is a difficult one and may involve speculation.”
“When Lord Prosser, in King v Eaton Ltd (No 2)[1988] IRLR 686 , para 19, spoke of making decisions “with more or less confidence” he was not saying that a prediction could only be made when confidence was complete; on the contrary, he contemplated prediction when there was “less” confidence. As already stated, however, there may come a point, at which evidence of countervailing factors is so slight that an indefinite continuation of the employment may be held to be an appropriate prediction.”
“It is important, however, that, when a conclusion is reached as to what is likely to have happened had the employment been allowed to continue, the reasons for that conclusion and the factors relied on are sufficiently stated.”
“52. The case emphasises that the task is for the tribunal to identify and consider any evidence which it can with some confidence deploy to predict what would have happened had there been no unfair dismissal. To fail to do this could lead to over compensating the employee, which would not be a just outcome. In this context we would caution against taking the phrase “constructing the world as it might have been” too literally. 53. The question is not whether the tribunal can predict with confidence all that would have occurred; rather it is whether it can make any assessment with sufficient confidence about what is likely to have happened, using its common sense, experience and sense of justice. It may not be able to complete the jigsaw but may have sufficient pieces for some conclusions to be drawn as to how the picture would have developed. For example, there may be insufficient evidence, or it may be too unreliable, to enable a tribunal to say with any precision whether an employee would, on the balance of probabilities, have been dismissed, and yet sufficient evidence for the tribunal to conclude that on any view there must have been some realistic chance that he would have been. Some assessment must be made of that risk when calculating the compensation even though it will be a difficult and to some extent speculative exercise.”
“The following principles emerge from these cases. (1) In assessing compensation the task of the tribunal is to assess the loss flowing from the dismissal, using its common sense, experience and sense of justice. In the normal case that requires it to assess for how long the employee would have been employed but for the dismissal. (2) If the employer seeks to contend that the employee would or might have ceased to be employed in any event had fair procedures been followed, or alternatively would not have continued in employment indefinitely, it is for him to adduce any relevant evidence on which he wishes to rely. However, the tribunal must have regard to all the evidence when making that assessment, including any evidence from the employee himself. (He might, for example, have given evidence that he had intended to retire in the near future.) (3) However, there will be circumstances where the nature of the evidence which the employer wishes to adduce, or on which he seeks to rely, is so unreliable that the tribunal may take the view that the whole exercise of seeking to reconstruct what might have been is so riddled with uncertainty that no sensible prediction based on that evidence can properly be made. (4) Whether that is the position is a matter of impression and judgment for the tribunal. But in reaching that decision the tribunal must direct itself properly. It must recognise that it should have regard to any material and reliable evidence which might assist it in fixing just compensation, even if there are limits to the extent to which it can confidently predict what might have been; and it must appreciate that a degree of uncertainty is an inevitable feature of the exercise. The mere fact that an element of speculation is involved is not a reason for refusing to have regard to the evidence. (5) An appellate court must be wary about interfering with the tribunal's assessment that the exercise is too speculative. However, it must interfere if the tribunal has not directed itself properly and has taken too narrow a view of its role. (6) …even if a tribunal considers that some of the evidence or potential evidence to be too speculative to form any sensible view as to whether dismissal would have occurred on the balance of probabilities, it must nevertheless take into account any evidence on which it considers it can properly rely and from which it could in principle conclude that the employment may have come to an end when it did, or alternatively would not have continued indefinitely. (7) Having considered the evidence, the tribunal may determine: (a) that …the dismissal would [certainly, or almost certainly] have occurred when it did in any event: [whilst the dismissal remains unfair, the employee has not suffered any loss of earnings in respect of which compensation falls due]; (b) that there was a chance of dismissal…, in which case compensation should be reduced accordingly [by the appropriate percentage]; (c) that employment would have continued but only for a limited fixed period. The evidence demonstrating that may be wholly unrelated to the circumstances relating to the dismissal itself, as in O'Donoghue v Redcar and Cleveland Borough Council[2001] IRLR 615 ; (d) that employment would have continued indefinitely. However, this last finding should be reached only where the evidence that it might have been terminated earlier is so scant that it can effectively be ignored.”
“13. “Polkey” awards have perhaps developed a mystique of their own, which they do not entirely justify. It should be remembered that the principle is part of the general principle of assessment of future loss. Where a person has suffered a loss, in consequence of dismissal, a Tribunal has to determine the extent of that loss. That involves comparing what would have occurred had there been no dismissal when the dismissal took place with what did in fact occur. The first question, what would have occurred, depends on a very great number of factors. They may include factors such as the Tribunal being aware of the illness of the Claimant which would have put him off work. They include the possibility that he would have chosen to leave that employment for any one of a variety of reasons. They include the possibility that the job might no longer have existed, again for a number of reasons. They also, and obviously, include the possibility, where the employer has taken steps to, and has, dismissed the employee for reasons which in substance are good but procedurally are bad, whether if the procedure had been fair there would have been a dismissal. This involves looking at the chance that would have occurred. Thus the chance of a fair dismissal, which is the subject matter of Polkey, is one of a number of factors which are likely to limit the extent of any compensatory award. Here, the Tribunal took the view that the chance was to be placed at 100% on the sliding scale, as it has been called, which runs from 0–100% (see the words of Judge Peter Clark in Countrywide Freight Group v Hobbs UKEAT 0582/11, a decision of9 May 2012 , paragraphs 10 and 11). Where a Tribunal is satisfied that there would have been a dismissal if a fair procedure had been adopted, the compensatory award cannot extend further than the date upon which the Tribunal predicts that would have happened. Here, Judge McManus decided that a “reasonable timescale” would have been four weeks. Although the issue was not one of reasonableness but of prediction, that is what I think she meant to say and is entirely appropriate. There is always likely to be a time gap between an actual decision to dismiss, reached unfairly by unfair procedure, and a decision which would or might have been reached following a fair procedure. That gap is a period of time during which the employee would remain in employment and for which the employee is entitled to be compensated.”
“19. As to … the chances of a job not continuing, whether by the employee's choice or the employer's choice or decision, it has become conventional to express this in terms of a percentage. This is not the only way of doing it. It too may be represented, taking it together with the chances of obtaining fresh employment, by assessing a period of weeks as being the appropriate amount of compensation. As the words “just and equitable” insection 123 of the Employment Rights Act 1996 suggest, the award may necessarily have an element of broad-brush about it. O'Donoghue v Redcar and Cleveland Borough Council[2001] IRLR 615 demonstrates that a period of time may be as appropriate in some cases as it is to express a result in terms of a percentage deduction from what would otherwise be the full period of loss assessed by the tribunal. A percentage does, however, have the advantage of transparency in identifying a particular factor in respect of which arguments may then be addressed. In assessing this percentage, it must be remembered that a tribunal is not looking to decide the probability of a past event having happened. It is seeking to determine the likelihood in percentage terms of a future event occurring. 20. Whether the word “chance” is used or “risk” is used is, in my view, largely immaterial. They express the same concept, though from different perspectives. The aim of the assessment is to produce a figure that as accurately as possible represents the point of balance between the chance of employment continuing and the risks it will not, expressed in terms of weeks, months or years or as an overall percentage. If a percentage, it will inevitably take account not only of the risk that, at some time during a period of weeks, months or years which would otherwise pass before a fresh job was obtained, the claimant would have lost her employment by fair dismissal, but also take account of when that would have occurred. For instance, a 50% risk that an employee would lose her job at some stage during a 12-month period following dismissal does not justify a 50% reduction from the whole year's salary if it is thought that it is a risk expressed in respect of an event which might happen, if at all, only after six months. There would first be six months' full salary. In the case of this example, the risk mathematically would be expressed as 25%. 21. I draw attention to these factors to place the assessment of a Polkey contribution in context, but also to demonstrate that it is inevitably an exercise about which there can be no absolute and scientific certainty. It is a predictive exercise. Evidence is needed to inform the prediction. It is important that a tribunal should spell out, as best it can, what factors it takes into account in determining why it adopts a particular percentage. However, there can be no legitimate ground for criticising a particular percentage unless it is manifestly less than or more than the percentage which might have seemed proper or unless it is simply unreasoned. This is because, of its very nature, justifying 20% rather than 25% (as the case may be, or some slightly higher or some slightly lower percentage) is not susceptible of detailed reasoning. It is, and has to be, a process of assessment. Part of my reasoning in setting out all the various factors which can intersect is to show how much a matter of art, as Mr Robinson-Young put it, this is rather than a matter of science.”
“In any event, the Polkey analysis is, of necessity, forward-looking. The test is not whether R could have got its house in order and dismissed C fairly by31 March 2023 – that question is in the words of Lord Bridge “simply irrelevant”
“47. The relevant principles can be summarised as follows: (1) The duty to give reasons is a duty to give sufficient reasons so that the parties can understand why they had won or lost and so that the Appellate Tribunal/Court can understand why the Judge had reached the decision which s/he had reached; (2) The scope of the obligation to give reasons depends on the nature of the case; (3) There is no duty on a Judge, in giving his or her reasons, to deal with every argument presented by counsel in support of his case: (4) The Judge must identify and record those matters which were critical to his decision. It is not possible to provide a template for this process. It need not involve a lengthy judgment; (5) The judgment must have a coherent structure. The judgment must explain how the Judge got from his or her findings of fact to his or her conclusions; (6) When giving reasons a Judge will often need to refer to a piece of evidence or to a submission which s/he has accepted or rejected. Provided that the reference is clear, it may be unnecessary to detail, or even summarise, the evidence or submission in question; and (7) It is not acceptable to use a fine-tooth comb to comb through a set of reasons for hints of error or fragments of mistake, and try to assemble them into a case for oversetting the decision. Nor is it appropriate to use a similar process to try to save a patently deficient decision.”
“Industrial tribunals’ reasons are not intended to include a comprehensive and detailed analysis of the case, either in terms of fact or in law. … their purpose remains what it has always been, which is to tell the parties in broad terms why the lose or, as the case may be, win. I think it would be a thousand pities if these reasons began to be subjected to a detailed analysis and appeals were to be brought based upon any such analysis. This, to my mind, is to misuse the purpose for which reasons are given.”
“…to make an assessment, of what will often have to be a fairly broad-brush nature, about what might have happened in a hypothetical situation which never in fact transpired.”