Dev v Lloyds Tsb Asset Finance Division Ltd

In assessing a Polkey deduction, an Employment Tribunal must assess the chance that a fair dismissal would have occurred. It must not decide, on the balance of probabilities, what would have happened. The assessment is predictive and may range from 0 to 100 per cent, but it must consider the actual employer acting fairly and remedying the procedural defects found in the liability decision.

A conclusion expressed as a 100 per cent prospect may be permissible only where the Tribunal has genuinely assessed the relevant possibilities. The judgment must be read as a whole, but its language and reasoning must show that it considered what might have happened.

The Claimant had been employed under a fixed-term contract. The Respondent dismissed him because of concerns about his immigration status. At the liability hearing, the Employment Tribunal held the dismissal unfair because the Respondent had failed adequately to investigate information that might have established his right to continue working.

At a subsequent remedies hearing, the Tribunal made a 100 per cent Polkey deduction from compensation. It reasoned that the Claimant would have been dismissed in any event. The sole permitted ground of appeal was whether the Tribunal had applied the correct approach to the deduction.

1. Appeal allowed. The Employment Tribunal had erred in its approach to the Polkey issue and the question of any deduction was remitted to the same Tribunal.

2. The correct inquiry under Polkey v A E Dayton Services Limited [1987] IRLR 503 is not what would have happened. It is what might have happened if the employer had acted fairly. The Tribunal must make an assessment of the chances of a fair dismissal by the actual employer, on the assumption that the employer would have remedied the unfairness. The outcome may exceptionally be 0 or 100 per cent, but it is ordinarily an evaluative assessment within that range.

3. The remedies decision, read as a whole, showed that the Tribunal had attempted to identify a single future outcome. Its repeated unqualified use of “would have”, and its question of what would actually have occurred, indicated a balance-of-probabilities approach rather than an assessment of competing chances.

4. The Tribunal had also failed to ask what might have occurred if the identified deficiencies in the Respondent’s investigation had been rectified. That was material where both parties had wished the employment to continue and the Claimant’s entitlement to work was recognised shortly after dismissal. Those circumstances did not compel a particular percentage, but made a finding of no chance of continued employment surprising without a proper assessment.

5. The Tribunal could reconsider the issue without further evidence unless it considered further evidence necessary. Remittal to the same Tribunal was appropriate and proportionate.

• Employment Appeal Tribunal: allowed the appeal and remitted the Polkey deduction issue to the same Tribunal: [2014] UKEAT 0281_13_1802.
• Employment Tribunal, Cardiff: at a remedies hearing, made a 100 per cent Polkey deduction after an earlier liability decision had found the dismissal unfair.