CASE UPDATE: Deductions from Compensation Awards

A recent Employment Appeal Tribunal decision highlighted that even where an employee’s conduct has contributed to the decision to dismiss, the tribunal was not required to automatically reduce the amount of compensation awarded.

In cases of unfair dismissal, employers often argue that an employee’s behaviour has contributed to the dismissal, potentially reducing compensation. The Employment Rights Act 1996 specifically states that where contributory conduct by an employee is established, it may reduce the amount of compensation. Compensation for unfair dismissal typically reflects actual financial losses, particularly loss of earnings, however, the tribunal has the discretion to reduce the award by ‘such proportion as is just and equitable’ under section 123(6) Employment Rights Act 1996, taking the employee’s contributory actions into account. 

In the recent case of N Notaro Homes Ltd v 1 Miss C Keirle Others 2024 EAT 122 the Employment Appeal Tribunal (EAT) was asked to determine whether it could ever be deemed ‘just and equitable’ to apply no reduction to an award after a contributory fault has been found. The Claimants were dismissed, with the employer citing inappropriate social media posts as the reason for the dismissals. The Claimants, however, asserted that the true motive behind their dismissals was related to protected disclosures they had made, and they claimed automatic unfair dismissal on the grounds of whistleblowing.

The tribunal ruled that, although the Claimants had indeed made blameworthy social media posts, the actual reason for their dismissals were the protected disclosures they made. The social media posts were used merely as a “cloak” to justify the dismissals. As a result, the claims for unfair dismissal succeeded.

At the remedy stage, the tribunal decided not to reduce the compensatory awards despite the Claimants’ contributory conduct. The employer appealed, arguing that once contributory conduct is identified, some reduction must be applied. The EAT rejected the appeal, acknowledging that while contributory conduct typically leads to a reduced compensatory award, there is no legal requirement that means a reduction must always be made. In this case, the tribunal was justified in deciding that no reduction was appropriate in all the circumstances of the case.

If you have any questions regarding employment law or need advice on a particular matter, feel free to contact our Employment Team at 01635 896336 or hello@fentonelliott.co.uk.