Budge (Was Known As Baker) & Anor v McGinley Support Services Ltd & Anor (Unfair Dismissal)

In assessing a Polkey reduction for a hypothetical fair redundancy dismissal, a tribunal must apply the likely selection criteria in the light of all of its material liability findings. It must not treat disadvantages under a decisive criterion as fixed facts where those disadvantages resulted from the employer’s own unfair conduct.

A substantial redundancy risk may remain, but a 100% reduction cannot stand if the tribunal has failed to consider whether fair treatment would have enabled the employees to regain accreditation, qualifications, pairing opportunities or other material advantages. The assessment is fact-sensitive and must be remitted where the necessary percentage cannot properly be fixed on appeal.

The Employment Tribunal found that the appellants, welders employed by the first respondent, had been constructively and unfairly dismissed. It found that work had not been allocated fairly and that the respondent’s conduct had contributed to one appellant’s loss of accreditation and registration, and to the other remaining untrained and being disadvantaged by removal of his van.

At the remedies stage, the Tribunal held that a fair redundancy procedure would have selected each appellant for redundancy with 100% probability and reduced their compensatory awards accordingly under Polkey.

The appellants appealed. The central question was whether the Tribunal had lawfully reached that 100% assessment without taking account of its earlier findings about the respondent’s unfair treatment.

1. Appeal allowed. The Tribunal erred in law in fixing a 100% Polkey reduction. Although it had correctly identified the hypothetical inquiry required by Polkey v A E Dayton Services Ltd [1988] AC 344, it failed to take account of material findings from its liability judgment.

2. The Tribunal was entitled to find that the severe reduction in welding work would have required substantial redundancies. It was also entitled, in the particular commercial circumstances, to conclude that a fair procedure would probably have used the criteria which the respondent had used to allocate the reduced work, including Amey accreditation, quality, reliability, pairing and geography.

3. However, Amey accreditation was the most important criterion. The liability findings showed that the respondent had made no effort to enable Mr Budge to regain Amey accreditation, despite the relative simplicity of reassessment, and had allowed his national registration to lapse through its own failures. They also showed that Mr Martin remained unqualified because the respondent had failed to provide promised training, and that removal of his van disadvantaged him geographically. A fair hypothetical procedure had to take those findings into account when assessing the effect of accreditation and pairing criteria.

4. The EAT rejected the submission that the redundancy risk was modest. It held that the risk exceeded 50%, but could not itself determine the appropriate percentage. The remedy issue was remitted to the same Employment Tribunal, which was best placed to make the assessment having regard to its earlier findings.

• Employment Appeal Tribunal: Allowed the appeal against the remedies judgment and remitted the Polkey assessment to the same Tribunal.
• Employment Tribunal: Found the appellants unfairly dismissed in a judgment dated 7 October 2010. In a remedies judgment dated 16 June 2011, it applied Polkey and made a 100% reduction to their compensatory awards.