V v Hertfordshire County Council & Anor

A Polkey assessment is a predictive assessment of the chance that a fair dismissal would have occurred. It is not a balance-of-probabilities decision about whether a fair dismissal could have occurred. A tribunal may express the assessment through a percentage reduction, a future period, or a realistic scenario. Its reasons must nevertheless show that it has weighed the competing possibilities.

A 100% reduction requires reasons demonstrating why there was no significant prospect of continued employment. An appellate court should read tribunal reasons fairly and as a whole, but may intervene where their language and reasoning show that possibility has been substituted for an assessment of chance.

The claimant, a school site manager, was dismissed after concerns about his interactions with children. The Employment Tribunal found the dismissal unfair and discriminatory. On remedy, it reduced future loss to four weeks on the basis that the school could fairly have dismissed him for some other substantial reason after a further process.

The claimant appealed the Polkey reduction. He contended that the Tribunal had treated a possible fair dismissal as certain, had speculated without an adequate evidential basis, had failed to model a fair process, and had not afforded a proper opportunity to address its proposed hypothetical scenario.

The central issue was whether the Tribunal had assessed the chance of a fair dismissal, rather than merely deciding that one could have occurred.

1. Appeal allowed on the Polkey ground and remitted. The Employment Tribunal's four-week award amounted in substance to a 100% Polkey reduction. Its reasons did not sufficiently demonstrate an assessment of the chance that the claimant, although cleared of misconduct, would nevertheless have been fairly dismissed for reputational reasons or loss of trust and confidence.

2. The predictive exercise required by Polkey v AE Dayton Services Ltd, [1987] IRLR 503, concerns chance or risk, not proof on the balance of probabilities. A tribunal must not ask simply whether a fair dismissal could have occurred. It must assess the competing possibilities and make a fair and equitable allowance for the prospect of dismissal.

3. The Tribunal's repeated use of “could”, its statement that events were “more likely than not”, and its conclusion that dismissal was inevitable showed that it had probably decided what would happen in the hypothetical future. It recognised alternatives but made no allowance for the possibility that they would not occur. Reading the reasons as a whole did not cure that error.

4. A tribunal may assess future loss by identifying a period, a scenario, or a percentage reduction. Whichever form it chooses, its reasoning must show a proper balance of the relevant contingencies. Although appellate courts should not dissect tribunal language over-pernickety, a full deduction requires sufficiently clear reasoning.

5. The remaining grounds failed. There was evidence capable of supporting a Polkey assessment, and the Tribunal was entitled to undertake the necessarily impressionistic exercise. On reconsideration, however, it should scrutinise the information available to any further strategy meeting. That body was more closely connected to the employer than the independent third parties considered in Leach v Ofcom, [2012] IRLR 839. The parties had had a sufficient opportunity to address a possible dismissal for some other substantial reason.

6. The case was remitted to the same Employment Tribunal to determine the Polkey issue afresh, with any further submissions the parties wished to make.

• Employment Appeal Tribunal: Allowed the appeal against the remedy decision on the Polkey issue and remitted that issue to the same Tribunal.
• Employment Tribunal, Watford: By reasons delivered on 12 August 2014, limited future loss to four weeks by applying a full Polkey reduction. Its earlier liability reasons, delivered on 13 May 2014, upheld claims of unfair dismissal and sex discrimination.