Polkey v A E Dayton Services Ltd

A dismissal does not become fair merely because a fair procedure would have produced the same result. Under section 57(3) of the Employment Protection (Consolidation) Act 1978, fairness turns on what the employer actually did, assessed by the circumstances known at dismissal. Failure to warn, consult or investigate does not automatically make dismissal unfair. The omission may be reasonable where the employer could reasonably conclude at that time that the procedure would be futile. The tribunal must not determine liability by speculating whether proper procedure would have changed the outcome. That question belongs to remedy. Compensation may be reduced, including by a percentage reflecting the chance that dismissal would have occurred after a fair procedure.

The appellant was dismissed as redundant without warning or consultation. His employer had decided that the existing male van drivers, including the appellant, could not become van salesmen. The industrial tribunal strongly criticised the procedure but dismissed his unfair-dismissal application because it found that compliance with the applicable code of practice would not have changed the result.

The Employment Appeal Tribunal dismissed the appeal because it considered itself bound by authority. The Court of Appeal, in Polkey v A E Dayton Services Ltd [1987] 1 W.L.R. 1147, likewise dismissed the appeal while granting leave to appeal. The central question was whether section 57(3) of the Employment Protection (Consolidation) Act 1978 permitted the tribunal to treat a procedurally defective dismissal as fair because proper warning or consultation would probably have made no difference.

1. Appeal allowed unanimously. Lord Mackay LC delivered the leading speech. Lords Keith, Bridge, Brandon and Ackner expressly agreed with it. The Court of Appeal and Employment Appeal Tribunal orders were reversed, the industrial tribunal's decision was set aside, and the case was remitted to a differently constituted tribunal.

2. Per Lord Mackay LC, section 57(3) of the Employment Protection (Consolidation) Act 1978 requires the tribunal to judge the employer's actual action in treating the stated reason as sufficient for dismissal. The relevant circumstances are those known to the employer when dismissal was decided. The tribunal must not substitute the hypothetical question whether the employee would have been dismissed if the employer had acted differently. Aspects of the manner of dismissal form part of the employer's action and cannot be separated categorically from the reason for dismissal.

3. Per Lord Mackay LC, failure to follow requirements concerning consultation or warning does not invariably make dismissal unfair. The tribunal must evaluate that failure by reference to the circumstances known to the employer. An employer may act reasonably without following the usual procedure where the employer could reasonably conclude at the time that consultation or warning would be utterly useless. Lord Bridge agreed, describing such cases as exceptional.

4. Per Lord Mackay LC, the British Labour Pump principle confused the reasonableness of the employer's conduct with the separate question whether the employee suffered injustice. The principle permitted liability to depend impermissibly on facts established only after dismissal. It was inconsistent with section 57(3), and the principle and the decisions supporting it were overruled. In particular, W & J Wass Ltd v Binns [1982] I.C.R. 486 was overruled. The House instead adopted the analysis in Sillifant v Powell Duffryn Timber Ltd [1983] I.R.L.R. 91 and applied the distinction established by W Devis & Sons Ltd v Atkins [1977] A.C. 931.

5. Per Lord Mackay LC, evidence that a fair procedure would not have prevented dismissal remains relevant to compensation, although it does not determine fairness. Lord Bridge added that compensation may be reduced by a percentage representing the chance that the employee would still have lost the employment. He also considered that inevitable redundancy at the original dismissal date would not necessarily prevent a discretionary re-engagement order under section 69. The existing findings did not permit the House to decide whether this particular dismissal was fair, so a fresh tribunal had to apply the correct test.

1. House of Lords: The appeal was allowed unanimously. The Court of Appeal and Employment Appeal Tribunal orders were reversed, the industrial tribunal's decision was set aside, and the case was remitted to a differently constituted industrial tribunal.
2. Court of Appeal: In Polkey v A E Dayton Services Ltd [1987] 1 W.L.R. 1147, the court dismissed the appeal because it considered itself bound by W & J Wass Ltd v Binns, but granted leave to appeal.
3. Employment Appeal Tribunal: The appeal was dismissed following a concession that existing authority bound the tribunal. Leave to appeal was granted.
4. Industrial Tribunal: The unfair-dismissal application was dismissed. Although the employer's failure to consult was inexcusable, the tribunal found that observance of the code of practice would not have changed the result.