Polkey v AE Dayton Services Ltd

An employment tribunal may make a reduction to the amount of compensation awarded to an individual in an unfair dismissal claim where the individual could have been dismissed fairly at a later date or should a proper procedure have been followed. Respondent representatives will often be heard to argue ‘Polkey’ where they admit that the required dismissal procedure was not followed by the employer, but it made no difference, because the same result would have occurred even if it had been.

Whilst this will not affect the tribunal’s decision to the point of making what would otherwise have been an unfair dismissal fair, the tribunal is entitled to reduce the compensation received by the claimant.

In Polkey v AE Dayton Services Ltd 1998 ICR 142, HL, Mr. Polkey was a van driver whose employer decided that a reorganisation was needed and that 4 van drivers would be replaced by 3 van salesmen. Mr Polkey was not considered suitable for one of the new roles and was therefore made redundant. No consultation was undertaken and he was dismissed without notice.

Mr Polkey claimed unfair dismissal on the grounds that his employer had acted unfairly and unreasonably in undertaking a redundancy dismissal without consultation. His employer claimed consultation would have made no difference and he would still have been the one employee made redundant.

The case reached the House of Lords who decided that procedural fairness (in this case the failure to consult) was an integral part in the determination of whether an employer had acted reasonably or not and therefore the unfair actions of an employer could not turn an otherwise unfair dismissal into a fair one.

Prior to this case, it had been common for a tribunal to find that where procedural unfairness had occurred, the dismissal was still fair because a fair procedure would have ended in the same result (i.e. dismissal). The Polkey case therefore put a stop to that.

However, because tribunals must award compensation that is ‘just and equitable’ in the circumstances, the ‘no difference’ concept is reflected in the amount of money awarded. In extreme cases where dismissal is inevitable, compensation may be reduced to nil, however, a finding of unfair dismissal will stand.