In a recent Employment Appeal Tribunal case, a ruling was made which clarifies how the Polkey deduction should be applied in a redundancy situation where the correct procedures have not been followed.

After a significant downturn in its business, Wilson UK Ltd made Mr Little and Mr Turton redundant, but, in doing so, failed to follow the statutory processes. In the original case, the tribunal did not apply a Polkey deduction to the compensation (which is designed to take into account the fact that the employees may have been dismissed anyway if correct procedures had been followed), ruling that, as two other employees had been retained, it “could not be certain” that the two men would “inevitably” have been made redundant. Wilson appealed on this point, and the EAT upheld their appeal.

The judge presiding over the case pointed out that when a dismissal is procedurally unfair, the calculation of compensation must go through two distinct stages.

At the outset, the Employment Rights Act 1996 s.98A(2) must be considered. This means that the employer must show that there was more than a 50% likelihood that the employee would have been dismissed anyway. If this is the case, then the dismissal is deemed fair and the calculation need go no further.

The second stage is followed if the tribunal believes that there was a chance the employee may have been dismissed if the proper procedures had been followed, but if the chance of dismissal was less than 50%. In such cases the compensation should be reduced accordingly – this is the Polkey deduction.

In this case, the EAT determined that the original tribunal’s finding was incorrect in that it has looked for certainty at the second stage, when actually it should have been weighing possibilities. The appeal was upheld and the Polkey question was remitted for reconsideration by the same tribunal.

If you are facing issues concerning unfair dismissal, redundancy or any other point of employment law, your initial action should always be to seek professional legal advice. Ashby Cohen are specialist employment law solicitors with many years of experience in all areas of UK employment law, advising and representing clients on a wide range of work-related issues. If you think we can help you, contact us today for a free initial telephone consultation.

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