In the case of Cumbria v Bates, the EAT considered the case of a teacher who had been unfairly dismissed and awarded the maximum compensatory award (to reflect future loss of earnings and, in particular, pension loss).
After his dismissal (and indeed after the original Employment Tribunal hearing), he was convicted of common assault on a 16-year old former pupil. He was given a jail sentence and subsequently was banned from teaching for life. This incident was not the reason for his dismissal, but the employer argued that the level of any compensatory award should take this post-dismissal conduct into account, as it would clearly affect the level of his future earnings.
The claimant argued that anything that occurred after the Tribunal hearing date could not be taken into account when assessing compensation.
The EAT disagreed.
The law requires a Tribunal, when assessing compensation, to award such amount as it considers just and equitable. When considering loss of future earnings, this ‘inevitably involves a speculative element’.
A Tribunal is also entitled to make a so-called Polkey deduction if it thinks that compensation should be reduced to reflect the fact that the claimant would have been dismissed at a later date (in this case when he was banned from teaching). The evidence demonstrating this may be wholly unrelated to the circumstances of the dismissal. This was such a case, and compensation for future loss of earnings and pension loss should be reduced.
Points to note –
- In deciding whether a dismissal is fair, remember that an employer can only fairly dismiss for misconduct if the misconduct was known to the employer at the time of the dismissal(not if the employer found out about it afterwards)
- However, compensation may be reduced in at least three ways: where it is not ‘just and equitable’ for the employee to be compensated for the full amount of their loss; where pre-dismissal conduct may give rise to a deduction for ‘contributory fault’; and where post-dismissal conduct breaks the ‘chain of causation’ of the employer’s liability for the employee’s future loss of earnings.