Managing director dismissed after bankruptcy: unfair dismissal for lack of procedure
A managing director was unfairly dismissed after his bankruptcy triggered a summary dismissal without any investigation or hearing. The tribunal awarded £4,630 but applied a 60% Polkey deduction.
1 min read · Last updated 18 May 2026
Case details
Key facts
- The claimant was employed as Managing Director from 5 July 2016 to 24 March 2022.
- On 23 March 2022, the claimant was made bankrupt and his work emails were cut off without explanation.
- The claimant attempted to restore his emails, causing disruption to the respondent's email system.
- The respondent dismissed the claimant summarily on 24 March 2022, citing bankruptcy and breakdown of trust.
- The tribunal found the reason for dismissal was some other substantial reason (SOSR) but the dismissal was procedurally unfair.
- A 60% Polkey deduction was applied for the chance the claimant would have been fairly dismissed if a fair procedure had been followed.
Timeline
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Employment started
The claimant began employment as Managing Director of the respondent.
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Bankruptcy order and email cut-off
The claimant was made bankrupt. His work emails were cut off without communication. He attempted to restore them, causing disruption.
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Dismissal
The respondent dismissed the claimant summarily by letter, citing bankruptcy and breakdown of trust.
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Claim presented
The claimant presented a claim for unfair dismissal and other claims.
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Preliminary hearing
Employment Judge Grewal determined that only the unfair dismissal claim could proceed.
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Liability hearing (day 1)
The liability hearing began. The claimant gave evidence and cross-examination started.
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Liability hearing (day 2)
Cross-examination continued. The respondent's witness remained under oath overnight.
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Liability hearing (day 3) and judgment
The hearing concluded. The tribunal found the claimant unfairly dismissed and made a 60% Polkey deduction.
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Remedy hearing
The tribunal awarded a basic award of £1379.93 and a compensatory award of £3259.24.
The legal issue
The tribunal had to decide whether the managing director's dismissal was unfair, given that the employer cited bankruptcy and breakdown of trust as the reason but conducted no investigation or disciplinary process before dismissing him summarily.
The outcome
The tribunal found the claimant was unfairly dismissed. The reason for dismissal (bankruptcy and breakdown of trust) was a potentially fair 'some other substantial reason', but the employer acted unreasonably by dismissing without any investigation or procedure.
Compensation was reduced by 60% under the Polkey principle to reflect the chance that a fair procedure would still have led to dismissal.
- Basic award: £1,379.93
- Compensatory award: £3,259.24
- Total: £4,630.17
Lessons & takeaways
- Even if an employee's bankruptcy seems to justify dismissal, employers must still carry out a fair process, including investigation and a hearing.
- A Polkey deduction can significantly reduce compensation if the tribunal thinks a fair procedure would likely have led to the same outcome.
- Managing directors are not exempt from basic procedural fairness; a summary dismissal without any process is highly likely to be unfair.
- If you are dismissed without any investigation or chance to respond, you may have a strong unfair dismissal claim even if the underlying reason seems valid.
This case shows how even a senior employee can be unfairly dismissed when an employer reacts swiftly to a change in circumstances without following any procedure. The managing director had worked for the company for over five years when he was made bankrupt. The next day, his work emails were cut off without explanation. When he tried to restore them, it caused disruption to the email system. The employer then dismissed him summarily by letter, citing the bankruptcy and a breakdown of trust.
What went wrong for the employer
The employer had a potentially fair reason for dismissal – bankruptcy can be a 'some other substantial reason' justifying dismissal. But the tribunal found that the employer did nothing to investigate the situation or give the managing director a chance to explain. There was no meeting, no disciplinary process, and no consideration of alternatives. The dismissal was procedurally unfair.
Why the compensation was reduced
Despite finding the dismissal unfair, the tribunal applied a 60% Polkey deduction. This means that even if a fair procedure had been followed, there was a 60% chance the managing director would still have been dismissed. The tribunal considered that the bankruptcy and the email disruption were serious issues that would have likely led to dismissal in any event. The final award of £4,630 reflected this reduction.
What this means for similar claims
This case is a reminder that procedural fairness matters, even for senior employees and even when the reason for dismissal seems clear-cut. Employers who skip the process risk an unfair dismissal finding, but the compensation may be reduced if the outcome would have been the same anyway. For employees, it shows that a dismissal can be unfair even if the employer had a valid reason – the key is whether the employer acted reasonably in all the circumstances.
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