Riverside Industrial Equipment Ltd v Audsley

In a Polkey assessment, an Employment Tribunal must assess the realistic chance of a fair dismissal. It must not refuse the exercise merely because it involves uncertainty. It must address material and reliable evidence, including an extant final written warning and a finding that the employee contributed to dismissal.

Under section 123(6) of the Employment Rights Act 1996, the Tribunal’s discretion concerns whether a contributory-conduct reduction is just and equitable and the proportion of that reduction. Once fixed, that proportion must be applied to the compensatory award as a whole. It cannot be withheld from selected elements.

The employer appealed against an Employment Tribunal remedy judgment. The Tribunal had found that the employee was unfairly dismissed, but had contributed to the dismissal by 50%.

At remedy, the Tribunal made no Polkey reduction. It also declined to apply the 50% contributory-conduct reduction to notice pay, loss of statutory rights, and reimbursement of training costs. The appeal concerned whether those conclusions were legally sustainable and, if not, the appropriate disposal.

1. Appeal allowed. The Tribunal’s refusal to make any Polkey assessment could not stand. The correct question is not confined to whether dismissal would probably have occurred. It includes whether there was a realistic chance of dismissal following a fair process. A degree of uncertainty does not excuse a tribunal from assessing that risk where material and reliable evidence permits it.

2. The Tribunal’s language concerned what would have happened and therefore suggested an impermissible probability-based approach. More importantly, its reasons did not address the extant final written warning or reconcile the absence of a Polkey reduction with its finding that the employee had contributed to dismissal by 50%. Those omissions made its conclusion perverse or disclosed an error of approach.

3. The Tribunal also erred in treating notice pay and the reimbursement of training costs as if they arose from breach-of-contract claims. No such claims had been before it and no liability finding for breach of contract had been made.

4. Section 123(6) of the Employment Rights Act 1996 permits the Tribunal to decide whether a reduction for contributory conduct is just and equitable and, if so, its proportion. It does not permit different treatment of separate components of a compensatory award. The 50% reduction therefore applied to notice pay, loss of statutory rights, and reimbursement of training costs.

5. The EAT varied the award by making those reductions itself. The Polkey issue was remitted to the same Tribunal. Its earlier approach did not show prejudgment or a wholly flawed decision-making process, and remittal to that Tribunal was proportionate.

• Employment Appeal Tribunal: Allowed the employer’s appeal, varied the remedy award, and remitted the Polkey issue to the same Tribunal.
• Employment Tribunal: On 19 September 2012, with reasons sent on 13 November 2012, found the dismissal unfair, found 50% contributory conduct, and made its remedy award.