Unfair Dismissal - Polkey Reductions - Some Speculation Inevitable

In Eversheds Legal Services Ltd. v de Belin, whilst upholding Mr de Belin’s claims of unfair dismissal and sex discrimination, the Employment Appeal Tribunal (EAT) found that the Employment Tribunal (ET) had failed to address Eversheds’ argument that the amount of the compensation award should have been discounted in order to reflect the possibility that the claimant would have been dismissed as a result of a subsequent redundancy exercise a year later. This is commonly known as a ‘Polkey’ reduction as this point was first established in the case of Polkey v A E Dayton Services Ltd.

Eversheds had produced evidence to show that, had he not already been made redundant, Mr de Belin would probably have been selected based on the criteria used in the later redundancy exercise. The ET dismissed the argument, describing the evidence as ‘speculative’ and insufficient for it to carry out a Polkey exercise.

The EAT held that this reasoning was ‘plainly unsatisfactory’. The ET had a duty, as part of its obligation to give reasons for its decision, to consider the evidence rather than dismiss it. In the EAT’s view, the ET was ‘seduced into abandoning its proper course, as tribunals still too often are, by the siren word “speculative”’. Although earlier case law warns against engaging in speculation, this caution should not be interpreted too widely. The authorities also state that any assessment of future loss will inevitably involve a speculative element. In assessing how long an employee would have been employed but for the dismissal, it is for the employer to adduce any relevant evidence on which it wishes to rely. When making its assessment, the ET must have regard to all the evidence presented. Whilst there will be circumstances where the evidence is such that no sensible prediction can be made, the ET has a duty to take account of any material that will assist it in determining a compensation award that is fair. A degree of uncertainty is an inevitable feature of the exercise and the mere fact that an element of speculation is involved is not a reason for failing to evaluate the evidence.

In the circumstances, there was clearly a case to answer and the question of compensation was remitted to a different ET for proper consideration.