Key Cases: Polkey v A E Dayton Services Ltd

Polkey v AE Dayton Services Ltd [1987] UKHL 8[1]

This case brought about the Polkey rule which although was formulated in a case to do with redundancy it is applicable to all other dismissals as well.

The facts in this case are very simple. The employee Mr Polkey worked as a van driver for 4 years for the company however on the 27 August 1982 he was brought into the office and was made redundant on the spot. This is because they drastically needed to lower their costs and wanted to reduce the number of drivers and sales representatives so that there were only 2 van salesmen. There was no consultation about the redundancy what so ever and Mr Polkey had no idea that this was going to happen. He submitted a claim to the industrial tribunal but was unsuccessful (the tribunal we’re not happy to reject but had to do so in line with other cases). At the Employment Appeal Tribunal and the Court of Appeal the appeals were both again sadly rejected and so it reached the House of Lords. At the House of Lords it was remitted to the Tribunal to consider it again however they made some relevant points about how remedy should be considered in matters such as this and this is the relevant rule that has been brought about and is still considered to this day.

The House of Lords held that a Tribunal should not ask whether a different outcome might have resulted if a proper procedure was followed when they were trying to assess whether or not the dismissal was fair. Instead this question should be asked when it has to consider remedy and not liability.

If it is held that taking the appropriate steps which the employer failed to take before dismissing the employee would not have affected the outcome, this will often lead to the result that the employee, though fairly dismissed, will recover no compensation or, in the case of redundancy, no compensation in excess of his redundancy payment…An industrial tribunal may conclude, as in the instant case that the appropriate procedural steps would not have avoided the employee’s dismissal as redundant”

Key Questions the Tribunal has to Ask

So when assessing compensation in cases where procedural issues come into play there are two key questions that must be considered.

1)   What if the employer had followed procedure correctly?

2)   Would there have been a different outcome?

If after looking at those two points and the tribunal comes to the conclusion that although the dismissal was unfair the employee would still have been dismissed if the procedure was correct then compensation will most likely be reduced. The amount that is reduced will usually be expressed as a percentage of the compensation award and it is not unheard of for the tribunal to reduce the compensatory award by 100%.  However it should be clear that the Polkey reduction does not take into effect any basic award that you would be owed if the tribunal do come to the conclusion that you have been unfairly dismissed.