Labour & European Law Review Weekly Issue 372 04 June 2014
After finding that someone has been constructively dismissed, can tribunals reduce their compensation due to their own conduct? The Employment Appeal Tribunal (EAT) agreed in Frith Accountants Ltd v Law that it would be unusual (although not unheard of) for a tribunal to find that a constructive dismissal had been caused or contributed to by the employee’s conduct.
Although Mrs Law did well in her 2011 performance review, she was not given a pay rise in 2012 as her immediate managers had started to have concerns about her performance by then. She admitted to one mistake, but did not accept that she was at fault in respect of other errors which her managers pointed out to her.
Mr Frith, the principal of the practice became a little concerned about her after a conversation in which she seemed incoherent and rambling. However, rather than raise the issue with Mrs Law herself, he discussed her conduct, her performance review and her behaviour with her son.
When Mrs Law found out that her employer had discussed confidential matters about her behind her back, she resigned and claimed constructive dismissal.
The tribunal agreed that Mr Frith had breached his duty of trust and confidence to his employee. Mrs Law was therefore justified in the circumstances to have resigned and that there had been a dismissal.
With regard to compensation, the tribunal considered how long she would have remained in employment had she not been dismissed, the length of any future loss, whether she failed to mitigate her loss and whether there should be any reduction to the basic or compensatory awards to reflect contribution. It concluded that there was a 40 per cent chance that Mrs Law would have lost her employment by dismissal or resignation after a period of eight months after the date on which she was dismissed, but did not make any reduction on the basis of contributory fault.
The company appealed, arguing that Mrs Law had contributed to her dismissal by refusing to accept any criticism of her work. It also disputed the 40 per cent assessment that she would have lost her job anyway in due course as too low.
Noting that it would be unusual (although not unheard of) for a constructive dismissal to be caused or contributed to by the employee’s conduct, the tribunal had found in this case that Mrs Law had not contributed to her dismissal. Instead it found that Mr Frith had talked to Mrs Law’s son because he was motivated by genuine concern for her state of health, not because she was averse to criticism of her work.
As the company had never put that point directly to Mrs Law, the tribunal’s decision could not be said to be perverse and there was therefore no reason for the tribunal to find contributory fault under section123(6) of the Employment Rights Act (ERA) 1996.
However, the tribunal was wrong when it failed to consider whether it would be just and equitable to make a deduction from the basic award to reflect its view of her conduct for the purposes of section 122(2) ERA. The EAT thereby substituted a revised figure that the parties themselves agreed.
Finally, the deduction of 40 per cent was within the very wide range open to tribunals. Although it seemed on the high side to the EAT (Mrs Law was not in a medical or senile decline), there was a significant chance that she might be dismissed within a period of eight months or so of her dismissal. The EAT could not say that it should have been placed at any other level or that it was manifestly outside the range open to the tribunal.