Employment Appeal Tribunal Quashes 100% Compensation Reduction in Unfair Dismissal Case
The EAT has quashed a tribunal decision that reduced a claimant's compensation to nil, citing legal errors regarding the assessment of contributory conduct.
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Tribunal Erred in Assessing Contributory Fault
The Employment Appeal Tribunal (EAT) has overturned a previous decision that imposed a 100% reduction on both basic and compensatory awards in an unfair dismissal claim. The case, Khanafer v Single Homeless Project, centred on whether the claimant's failure to disclose secondary employment justified a complete loss of compensation.
The claimant was dismissed by the respondent, a homelessness charity, following a failed probationary period. Although the respondent conceded the dismissal was procedurally unfair, they argued that the claimant's conduct, specifically his failure to disclose full-time employment with another charity while on special paid leave, warranted a 100% deduction of his award.
Legal Distinction Between Awards
His Honour Judge Barklem identified a key error in the original tribunal's reasoning. The tribunal failed to distinguish between the legal tests for basic and compensatory awards under sections 122(2) and 123(6) of the Employment Rights Act 1996.
Critically, the EAT noted that the compensatory award reduction requires the conduct to have caused or contributed to the dismissal. Because the respondent did not discover the claimant's other employment until after his dismissal, that conduct could not have been a factor in the decision to terminate his contract. Therefore, the tribunal's decision to reduce the compensatory award on this basis was an error in law.
Need for Clearer Legal Application
The EAT emphasised that tribunals must follow the four-stage test set out in the landmark case of Steen v ASP Packaging Ltd. By failing to apply these steps, the original tribunal conflated the issues, leading to a flawed outcome. Consequently, the EAT has quashed the judgment and ordered the matter to be remitted to a differently constituted tribunal for a full rehearing.
Read the entire judgment here: Khanafer v Single Homeless Project
