Awards in unfair dismissal cases
Where an award is made to a successful claimant in an Employment Tribunal unfair dismissal case, it will normally be made up of two distinct component parts.
Firstly, there is the “basic award”, which is calculated as a sum equivalent to the notional statutory redundancy pay entitlement of the employee concerned.
Secondly, there is the “compensatory award” which quantifies the financial loss suffered by the employee as a result of the dismissal. Both of these elements of any overall award are subject to maximum limits and can also be subject to potential reductions, if the Employment Tribunal sees fit.
The 'Polkey' reduction
One of the most frequently applied reductions to the compensatory award is commonly known as the “Polkey” reduction.
This can occur in cases where an employer is found to have acted unfairly in dismissing an employee by virtue of a failure to follow the appropriate procedure, either in part or at all.
(More information on fair dismissals ) If however, in a case of this type, an Employment Tribunal concludes that the employee would have been dismissed in any event, it can impose a reduction of the compensatory award to reflect this situation.
Such reductions are based upon the Tribunal’s own opinion of the percentage likelihood that a dismissal would still have followed, once the relevant procedure had been applied and exhausted. Thus, if a Tribunal took the view that a dismissal was completely inevitable, a compensatory award would be reduced by 100 per cent.
This principle has been in place since the House Of Lords decision in the case of Polkey v A. E. Dayton Services Limited (Formerly Edmunds Walker (Holdings) Limited), way back in 1987. This final decision followed some five years of legal wrangling, appeals and counter appeals before this date.
The facts of this case in brief were that Mr Polkey was employed from 19 June 1978 until 27 August 1982 as a van driver. On that date, he was dismissed as redundant.
On 8 November 1982, he applied to an industrial tribunal (now Employment Tribunal) to claim that he had had an unfair dismissal.
On 23 February 1983, the industrial tribunal dismissed the application.
It was accepted on behalf of Mr Polkey before the industrial tribunal that, at the time of his dismissal, it was urgently necessary for the employers to reduce their overheads in their undertaking and that in consequence, it was necessary to make certain of their van drivers redundant.
They had three male van drivers and one female van driver and it was decided that, for the future, only two van salesmen should be appointed.
The manager immediately responsible for Mr Polkey decided that none of the three male van drivers was capable of performing the task of a van salesman but that the female van driver was so capable.
Some four weeks after his dismissal, a second van salesman was appointed from outside the employers' workforce.
On 20 August, Mr Polkey’s branch manager informed his superior of his decision to make the male van drivers redundant. Without any consultation with the employees or their representatives or earlier warning, his branch manager called Mr Polkey into his office on the afternoon of 27 August, told him quite out of the blue that he was redundant. He handed to him his redundancy letter.
Mr Polkey was immediately driven home by a fellow employee.
The industrial tribunal characterised this aspect of the dismissal by saying - “There could be no more heartless disregard of the provisions of the code of practice than that."
They went on to say that "there is nothing that excuses their failure to consult but … at the end of the day we have no alternative but to find that in this case had they acted in accordance with the code of practice, … the result would not have been any different, and we have therefore unhappily to reject this application."
In the event, the House of Lords overturned the finding of a fair dismissal and sent the case back into the system for a fresh Tribunal to determine the outcome.
The current percentage reduction that is in operation today arose from the judgment in this remitted case. Since 1987, other decisions have embellished the original
“Polkey” reduction principle by confirming that:
- The Employment Tribunal must consider the employer’s likely thought processes in arriving at its decision to reduce an award.
- The Employment Tribunal must have regard to all of the evidence available, not just that submitted by the employer.
- The Employment Tribunal should be able to make an assessment with sufficient confidence about what is likely to have happened, using its common sense, experience and sense of justice.
Even if the employer has behaved unreasonably, an Employment Tribunal must still consider the question of a “Polkey” reduction.
“Polkey” deductions can be made when the dismissal is either procedurally and/or substantively unfair.
The main consideration for employers in any dismissal situation is of course to minimise the risk of any claim arising by following best practice in the way that disciplinary matters are handled and procedures applied.
Quest HR can advise on all types of circumstances that may lead to the dismissal of an employee. Reduce your risk of having to request a “Polkey” reduction and contact us today.
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