Under section 98A of the Employment Rights Act 1996 (ERA), if an employer fails to follow the correct procedure in relation to the dismissal of an employee, this will not by itself make the employer's action unreasonable if he can demonstrate that he would have decided to dismiss the employee even if he had followed the proper procedure.
Also, if an employer's failure to follow the correct statutory dismissal and disciplinary procedures results in a finding of unfair dismissal at the Employment Tribunal (ET), the level of compensation awarded can be reduced if the employer can show that the employee would have been dismissed even if the correct procedures had been followed. This is referred to as a 'Polkey reduction' as this point was first established in the case of Polkey v A E Dayton Services Ltd.
The Employment Appeal Tribunal (EAT) recently dealt with these points in the case of Software 2000 Ltd. v Andrews & ors. Mr Andrews and three of his colleagues were all employed by Software 2000 Ltd. The company announced its intention to make redundancies. Employees were assessed under five headings including commitment/reliability and ability to relate to customers/colleagues. On 26 July 2005, the employees were informed at meetings that those with the lowest assessment scores would be made redundant. Managers were chosen to carry out assessments of employees but the majority were given no guidance as to how these should be conducted.
On 27 July, the four men received letters telling them that they were redundant, because of their low assessment scores, and inviting them to attend consultation meetings. They were escorted from the company's premises on the same day.
The consultations took place in August and the men were all sent letters confirming their redundancy.
Mr Andrews and his colleagues brought a claim of unfair dismissal. The ET decided that procedural defects in Software 2000's redundancy process rendered the dismissals unfair. Furthermore, the dismissals could not be considered fair on the ground that they were inevitable even had the correct procedure been followed. The ET therefore refused to make a Polkey reduction.
Software 2000 Ltd. appealed against the ET's decision to refuse to reduce compensation on the grounds that the men might have been dismissed anyway.
The EAT considered the terms of the ERA, as well as relevant case law, and identified a number of principles that should apply. These included:
- when an ET assesses compensation for dismissal, this involves a consideration of how long employment would have continued but for the dismissal
- if the employer claims that dismissal was inevitable even if the correct procedures had been followed, then it is up to the employer to provide evidence to support this. If it does so, then the ET must consider it; and
- the ET may consider the employer's evidence to be so speculative and 'riddled with uncertainty' that it is impossible to assess how long employment would have continued. However, an element of speculation by the ET is not sufficient reason for disregarding such evidence.
In this case, there was sufficient evidence to suggest that the individuals involved were still at some risk of dismissal. The EAT judged, therefore, that the ET misdirected itself. It must consider any reliable evidence which may make a Polkey reduction appropriate and the case was remitted to the same ET to consider this issue.
When making employees redundant, as well as complying with the statutory dismissal procedures, it is also important to ensure that the criteria used for the selection process are fair and that those carrying out the procedure fully understand how to operate it.
 |
 |
 |
 |
 |
 |
|
