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Reductions for Unfair Dismissal
In a case where a dismissal is unfair for procedural reasons (e.g. that there has been no consultation in a redundancy dismissal) a recent case has reminded Tribunals the need to consider the possibility of a “Polkey reduction” to compensation.
The recent case of Gover and Others -v- Propertycare Ltd has highlighted that it is necessary to consider whether a “Polkey reduction” to compensation for such unfair dismissals should be made, i.e. to reconstruct if a fair procedure had been followed what the outcome would have been with compensation then reflecting that hypothetical reconstruction.
The Employment Appeal Tribunal considered the case of King and Eaton when the lack of procedure made the dismissal so unfair that it was impossible to reconstruct hypothetically and so there was no reduction in compensation. The Employment Appeal Tribunal confirmed however that the situation where no reduction should be made because of the difficulty of reconstructing should rarely be adopted.
The Employment Appeal Tribunal split the Polkey “reconstruction” options into four categories; (1) length of time cases where a dismissal would have occurred in due course (where the compensation is therefore likely to be of a sum equivalent to the wages of the employee e.g. in a consultation period that didn’t happen); (2) loss of chance cases where there was a chance of surviving dismissal (in which case a percentage reduction would be applied reflecting the likelihood that the individual would not have lost their job) (3) cases where a reduction could be made because the Claimant was likely to have been dismissed on another ground (e.g. dismissed for poor performance but would have been dismissed for redundancy by a certain point); and (4) cases were there was no reduction because there was a complete sham (e.g. a conduct dismissal falsely labeled as redundancy).
Practical Tip
Although this case is good news for employers because Tribunals should almost always attempt to reconstruct which might therefore mean a reduction in compensation, it is still our advice that fair procedures are followed on all occasions since failure to follow a fair procedure leaves open the uncertainty of whether any award will be substantial even though there is the prospect of arguing a Polkey reduction.
This bulletin is for general guidance purposes only and should not be used for any other purpose. If you require any specific advice in connection with the material contained in this bulletin, or on any other Employment Law issues, please contact a member of the Brabners Chaffe Street LLP Employment Team on 0151 600 3000.
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