Drive Assist UK Ltd v Alderson (Redundancy)

Where an employer establishes a real chance that an employee would have been dismissed even if a fair redundancy procedure had been followed, compensation may be reduced to reflect that chance. The assessment must consider all material and reliable evidence bearing on the employee’s individual position. A tribunal errs if it adopts a purely arithmetical probability derived only from the size of the selection pool.

The exercise remains one of broad estimation. The tribunal need not conduct a detailed re-scoring exercise, and the employer bears the burden of proving both the existence and extent of the relevant chance. An appellate tribunal need not remit a compensation assessment despite an error of reasoning where the result is plainly and unarguably of the correct order.

The employee was one of 21 drivers considered for six redundancies. He placed sixteenth under a detailed selection matrix, narrowly missing the cut-off. The Employment Tribunal found that the employer had inconsistently applied aspects of the scoring guidance and had committed consultation and appeal-process failures. It held the dismissal unfair.

When assessing compensation, the Tribunal applied a 29% Polkey reduction because six of the 21 drivers faced redundancy. The employer appealed that reduction, contending that the Tribunal should have considered the individual scoring evidence and that the reduction should instead have been 50%.

The central issue was how a tribunal should assess the chance that the employee would have been dismissed in any event following a fair redundancy process.

1. Appeal dismissed. The Employment Tribunal erred in law by fixing the Polkey reduction solely by reference to the numerical chance of six redundancies among 21 drivers. It had substantial evidence relevant to the employee’s individual prospects and should have considered it.

2. Under section 123(1) of the Employment Rights Act 1996, compensation is assessed on a just and equitable basis by reference to loss attributable to the dismissal. A tribunal may reduce compensation where there is a chance that a fair procedure would still have led to dismissal. It must use common sense, experience and a sense of justice, while considering all material and reliable evidence.

3. The assessment did not require a detailed re-scoring exercise. It required an evaluative estimate that allowed for uncertainty and for deficiencies in the evidence. The employer bore the burden of establishing both the existence and extent of the chance of dismissal in any event.

4. Relevant matters included that the employee was close to the cut-off; that two marks should have been added to his score; that proper consultation might have enabled further effective representations; and that several other employees had scores close to his. Those matters meant that a 50% reduction was not compelled.

5. Although reached by an erroneous route, the 29% estimate was plainly and unarguably of the correct order. As compensation assessments are estimates rather than precise factual findings, remittal would serve no useful purpose. The unfair-dismissal finding and the 29% reduction therefore stood.

• Employment Appeal Tribunal: appeal against the compensatory award dismissed. The Tribunal’s reasoning on the Polkey reduction was erroneous, but its 29% assessment was upheld as plainly and unarguably of the correct order.
• Employment Tribunal, North Shields: by judgment dated 5 January 2012, held that the employee had been unfairly dismissed and reduced compensation by 29% under Polkey.