Tribunals are entitled by law to reduce a complainant’s compensation by an amount that is “just and equitable”, depending on the circumstances of their dismissal. In Parkview Care Ltd v Fenn, the Employment Appeal Tribunal (EAT) held that a five per cent reduction was perversely low, given that the employee had disappeared for two hours in a company car and then lied about where he had been and what he had been doing. 

Basic facts

Mr Fenn was accused by his employer of using a company vehicle for “clandestine purposes” over a two-hour period while he was supposed to be at work. He then gave two different accounts of where he had been, saying firstly that he had been stuck in traffic and then that he had been at a friend’s house trying to get the car fixed. 

His employer was not convinced by his explanation and asked him to attend a disciplinary hearing. Mr Fenn then lodged a grievance but the company ignored it and went ahead with the hearing. Although Mr Fenn attended the meeting, he walked out claiming that it was unfair. His employer then issued him with a final warning. However, Mr Fenn brought a claim of unfair constructive dismissal. 

Tribunal decision

The tribunal agreed with Mr Fenn that the conduct of the meeting had been unfair, not least because it lacked the “elementary requirements of natural justice”. As such, Mr Fenn had been unfairly constructively dismissed.

It then held that it would be “just and equitable” to reduce his compensation by five per cent under section 123(6) of the Employment Rights Act, given his behaviour. However, it refused to apply what is known as a Polkey reduction which relates to situations where, even if the employer had followed a fair procedure, the employee would have been dismissed in any event.

It also held that Mr Fenn was entitled to his hourly rate when “sleeping-in” at his former place of employment.

The company appealed on the number of grounds, including the low assessment of Mr Fenn’s contributory behaviour and that Mr Fenn was entitled to his normal hourly rate when “sleeping-in”. 

EAT decision

The EAT held firstly that the tribunal was entitled to find that the conduct of the meeting was unfair and it was this that led Mr Fenn to walk out, as opposed to his underlying behaviour.

The tribunal was also entitled to find that the company should have stopped the hearing as a matter of fairness in order to deal with Mr Fenn’s grievance. Alternatively, it could have continued with it before returning to the grievance. What it was not entitled to do was to ignore it.

As for failing to apply a Polkey reduction, the EAT held that there was no evidence to support the company’s contention that Mr Fenn would have left his employment irrespective of the conduct of the hearing.

In terms of the reduction in the compensatory award, the EAT agreed with the employer that a five per cent reduction was a perversely low assessment of Mr Fenn’s contribution to his unfair dismissal, given the gravity of his underlying behaviour which involved using a company vehicle for clandestine purposes for at least two hours, after which he lied to his employers. It concluded that his contribution should be set at 25 per cent.

Finally, it held that the tribunal was wrong to conclude that Mr Fenn was entitled to his normal hourly rate when “sleeping-in”. Instead, it was persuaded that, based on a construction of his contract, the company had agreed to pay him an “allowance” for any time he spent “sleeping-in”.