Arriva London Ltd v Eleftheriou

Polkey concerns compensation for unfair dismissal, not the prior statutory decision whether reinstatement or re-engagement should be ordered. A Tribunal must consider reinstatement before compensation and has a wide discretion under sections 113 and 116 of the Employment Rights Act 1996. The percentage chance of a fair dismissal need not be considered as such when deciding reinstatement, although relevant underlying facts may be relevant. Alternative employment does not prevent reinstatement. Appellate intervention is justified only for legal error, failure to consider a required matter, reliance on an impermissible matter, or a wholly unreasonable conclusion.

An Employment Tribunal found that a bus driver had been unfairly dismissed for capability reasons because the employer had failed to obtain appropriate medical evidence and consider alternative work. It assessed a 60% chance that a fair procedure would nevertheless have led to dismissal. By the hearing, the employee had recovered and obtained other employment. The Tribunal ordered reinstatement but reduced interim compensation by 60%.

On the employer’s appeal and the employee’s cross-appeal, the issues were whether the Polkey assessment made reinstatement legally inconsistent or required express consideration in deciding that remedy, and whether the compensation deduction was lawful.

1. Outcome. The appeal was dismissed. The cross-appeal was allowed. The Tribunal’s order was varied by substituting £17,490.03 for loss to 18 January 2012, plus £131.04 per week until reinstatement.
2. The statutory scheme requires reinstatement to be considered before compensation. The Tribunal has a wide discretion under sections 113 and 116 of the Employment Rights Act 1996.
3. A Polkey assessment concerns the calculation of financial loss after dismissal. It does not govern the prior decision whether reinstatement or re-engagement should be ordered.
4. A finding that a fair procedure would probably have resulted in dismissal was not inconsistent with reinstatement after the employee had recovered. The percentage deduction itself was not a required consideration, although relevant underlying facts might be.
5. Alternative employment did not prevent reinstatement. Section 114(4) contemplated that a reinstated employee might have other employment, with its remuneration taken into account in calculating the financial award.
6. The Tribunal’s exercise of discretion was within its proper ambit. No error of law or wholly unreasonable conclusion was shown.

• Employment Appeal Tribunal: dismissed the employer’s appeal, allowed the employee’s cross-appeal, and varied the financial elements of the reinstatement order.
• Employment Tribunal: found the dismissal unfair, ordered reinstatement, and deducted 60% from interim compensation.