Polkey v AE Dayton Services Ltd | |
---|---|
Court | House of Lords |
Decided | 19 November 1987 |
Citations | [1987] UKHL 8, [1988] ICR 142 |
Case opinions | |
Lord Bridge | |
Keywords | |
Unfair dismissal, Polkey deduction |
Polkey v AE Dayton Services Ltd [1987] UKHL 8 is a UK labour law case, concerning unfair dismissal, now governed by the Employment Rights Act 1996.
The phrase 'Polkey deduction' has become a standard concept in UK Employment Tribunals, as a result of this case and later ones, meaning that even if a Tribunal decides a dismissal was unfair, it must separately decide whether the compensatory award is to be awarded in full, or be reduced by a percentage based on their estimate of the probability that the dismissal would have occurred anyway, even had a fair process been followed. [1]
Mr Polkey drove a van for 4 years until he was told to come to his manager’s office and informed that he was being made redundant on the spot.
The Tribunal said this was "heartless disregard of the provisions of the code of practice" but recognized that redundancies were necessary.
Lord Bridge held that on the proper construction of the fairness test in the Employment Protection (Consolidation) Act 1978 (the predecessor to the Employment Rights Act 1996 section 98), it was irrelevant to ask whether a different outcome may have resulted from a proper procedure, and it was not open for a tribunal to ask that. An employer does not act unreasonably if (1) employees who underperform are warned and given an opportunity to improve (2) employees who engage in misconduct are investigated and given a hearing (3) employees who are redundant are given good warning and a consultation with steps to minimise losses. But if the end result would be the same, then this will go to remedy 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 unfairly dismissed, will recover no compensation or, in the case of redundancy, no compensation in excess of his redundancy payment... [2] ... 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.
Prior to the decision in Polkey, the law set out in the British Labour Pump v Byrne ruling of 1979 [3] was a so-called "no difference" rule. This case established that, where there was a procedural irregularity in an otherwise fair dismissal, but it could be shown that carrying out the proper procedure would have made no difference to the outcome, then the dismissal was considered fair. [4] The Byrne case concerned whether trade union representation would have affected the outcome, and the Employment Appeal Tribunal ruled that the dismissal was unfair. The ruling was therefore technically obiter because the rule was not integral to an "otherwise fair dismissal" in the case concerned. [5]
After the development of a requirement for procedural fairness in dismissal was introduced by Polkey, an attempt was made in 2002 to amend the Employment Rights Act 1996 to add a statutory basis for procedural fairness. In 2008, the government repealed this attempt at statutory codification and reverted to relying on the case law developed in Polkey. [6]
United Kingdom labour law regulates the relations between workers, employers and trade unions. People at work in the UK have a minimum set of employment rights, from Acts of Parliament, Regulations, common law and equity. This includes the right to a minimum wage of £11.44 for over-23-year-olds from April 2023 under the National Minimum Wage Act 1998. The Working Time Regulations 1998 give the right to 28 days paid holidays, breaks from work, and attempt to limit long working hours. The Employment Rights Act 1996 gives the right to leave for child care, and the right to request flexible working patterns. The Pensions Act 2008 gives the right to be automatically enrolled in a basic occupational pension, whose funds must be protected according to the Pensions Act 1995. Workers must be able to vote for trustees of their occupational pensions under the Pensions Act 2004. In some enterprises, such as universities or NHS foundation trusts, staff can vote for the directors of the organisation. In enterprises with over 50 staff, workers must be negotiated with, with a view to agreement on any contract or workplace organisation changes, major economic developments or difficulties. The UK Corporate Governance Code recommends worker involvement in voting for a listed company's board of directors but does not yet follow international standards in protecting the right to vote in law. Collective bargaining, between democratically organised trade unions and the enterprise's management, has been seen as a "single channel" for individual workers to counteract the employer's abuse of power when it dismisses staff or fix the terms of work. Collective agreements are ultimately backed up by a trade union's right to strike: a fundamental requirement of democratic society in international law. Under the Trade Union and Labour Relations (Consolidation) Act 1992 strike action is protected when it is "in contemplation or furtherance of a trade dispute".
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