First Bristol Ltd v Bailes

A Polkey assessment requires the tribunal to assess, on all material and reliable evidence, the likelihood that the actual employer would have dismissed fairly and when that dismissal would have occurred. It is a predictive assessment, not an all-or-nothing decision or a determination of what a hypothetical employer would have done.

A tribunal may not disregard a material item of evidence. If it proceeds on an important factual basis that is plainly and incontrovertibly wrong, that is an error of law. Uncertainty does not justify declining to assess the evidence; it may instead be reflected in the percentage reduction awarded.

The claimant, a long-serving bus driver, was dismissed after a saliva test was positive for cocaine. He maintained that cocaine contamination from banknotes, followed by eating without washing his hands, might explain the result.

The Employment Tribunal held the dismissal unfair because the employer had not properly investigated that possibility. It made no Polkey reduction, having considered a report for each side on the contamination issue.

The employer appealed only the absence of a Polkey reduction. It contended that the Employment Judge had overlooked a further, directly responsive expert statement obtained by the employer after dismissal.

1. Appeal allowed. The Employment Judge made an error of law in determining the Polkey issue on the implicit basis that there was one relevant expert report for each side. She had overlooked Mr O'Sullivan's statement, which directly responded to the claimant's expert evidence and was material to the risk of contamination from banknotes.

2. A tribunal must assess Polkey compensation in the round, using all material and reliable evidence. The exercise is predictive. It asks what the actual employer would have done had it acted fairly, and permits an assessment expressed as a percentage rather than an all-or-nothing conclusion. A tribunal must also consider when a fair dismissal might have occurred.

3. The overlooked statement did not compel the conclusion that the claimant would certainly have been dismissed, whether in September 2012 or at all. The tribunal could take account of the employer's initial view, the claimant's long service, the negative hair test, the scope of any further fair investigation, and the need for a disciplinary and appeal process.

4. The Employment Appeal Tribunal could not substitute its own assessment because the correct result was not inevitable. The Polkey issue was remitted to the same Employment Judge for reconsideration, with Mr O'Sullivan's statement and further submissions from the parties taken into account.

• Employment Appeal Tribunal: Allowed the employer's appeal against the absence of a Polkey reduction and remitted that issue to the same Employment Judge.

• Employment Tribunal, Bristol: On 4 April 2013, upheld the claimant's unfair-dismissal claim and made no Polkey reduction. The citation is not stated in the judgment.