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POLKEY AND THE PROBLEM OF “DEFINITELY MAYBE”

Nicholas Siddall considers the recent decision of the EAT in Zebrowski-v-Concentric Birmingham Ltd [2017] UKEAT/0245/16/DA and analyses the guidance there to be found as regards the proper approach to a Polkey deduction.

 

The Facts

Zebrowski involved a successful complaint of constructive dismissal. The Respondent on remedy had argued that even if the Claimant had not been constructively dismissed that he would have been fairly dismissed in any event in short order. The Employment Tribunal partially accepted that submission and determined that there was a 60% chance that the Claimant would have been dismissed within two months of the date of dismissal. It thus appeared to intend to award the Claimant 40% of the value of his losses for a period of two months. The Claimant appealed against the Employment Tribunal’s determination of the Polkey issue.

The Law as to Polkey

Whilst the decision of Polkey sprung from a redundancy context it is a concept of much wider application and is simply a recognition of the statutory question posed by s123(1) of the Employment Rights Act 1996 (“ERA”); namely what compensation is just and equitable to be awarded to a Claimant.

The classic discussion of the approach in Polkey by Lord Bridge admitted of three possibilities:

  1. A finding that there was no chance of a dismissal and thus no deduction;
  2. A finding that the employee would have been dismissed in any event and thus no award of financial loss; or
  3. A finding that a dismissal was not certain but that there was a substantial chance of the same and thus the employee’s losses are reduced to reflect that possibility.


The flexibility of the Polkey concept has been recognised in a number of subsequent decisions. For example in O'Donoghue v Redcar BC [2001] IRLR 615 CA the Court of Appeal upheld a finding that despite an unfair dismissal the Claimant would have been dismissed within 6 months for reasons unconnected with those which led to her dismissal (there an abrasive personality). The reasoning of the Court of Appeal (paragraph 53) was that in effect the Employment Tribunal had found that by a certain date there was a 100% chance of the Claimant being fairly dismissed. Further in Thornett v Scope [2007] ICR 236 the Court of Appeal affirmed the obligation on an Employment Tribunal to speculate as to what the future may hold for the employee’s ongoing employment.

The Appeal in Zobrowski

The Claimant argued that a finding that his employment would have continued for two months only and that there was a 60% chance of his dismissal was contradictory and impermissible. In essence he argued that there was an erroneous “double” Polkey deduction. Whilst not cited to the EAT this mirrored a submission advanced in the earlier EAT decision of Pybus-v-Geoquip [2010] UKEAT/0093/10/SM which the EAT (HHJ Birtles) had not considered necessary to address in its judgment.

Counsel for the Appellant's submission was encapsulated as follows “…when considering compensation an ET could either fix a period after which a Claimant could have been fairly dismissed or make a deduction from the compensation to reflect the chances that the employment might have ended fairly in any event. What it cannot do is a mixture of the two.”

The Decision of Laing J

The EAT considered that the Employment Tribunal judgment was not a masterpiece of clarity but it agreed that had the Employment Tribunal made a reduction of the Claimant's award to a period of 2 months and then reduced the same by a further 60% this was an error of law.

Laing J’s analysis was as follows (Paragraph 54):

“In other words, in my judgment, the approach of the Court of Appeal in O'Donoghue, properly understood, is that it is only open to an ET to limit compensation to a period as opposed to making a percentage deduction where the ET is 100 per cent confident that dismissal would have occurred within that period….”

The matter was then remitted to the Employment Tribunal to explain if it had intended to limit the Claimant's compensation by 60% generally or to hold that the 60% deduction would apply only from the two month point post dismissal.

Analysis

Laing J was keen to avoid introducing complex procedural rules into what is, in essence, a matter of impression and judgment. However it is suggested that the EAT’s analysis is plainly correct and serves as a warning to Employment Tribunals as to the proper analytical approach when making a Polkey deduction. It is only if the Employment Tribunal is certain that dismissal would occur at a point in the future that a time limited award is appropriate. If a level of doubt remains as to whether employment could continue then a percentage deduction approach is the sole appropriate means of reflecting its uncertainty in that regard. What is plainly not permissible is the introduction of a longstop date and then the application of a percentage discount to reflect the prospects of an earlier dismissal as it applies to the same contingency to the Claimant twice.

Nicholas Siddall was counsel for the Appellant in the decision in Pybus-v-Geoquip referred to in the body of this article. A link to his web profile is found HERE

Posted: 09.05.2017 at 15:32
Tags:  Comments  Employment Law
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