Grayson v. Paycare Ltd

A Polkey assessment is a counterfactual evaluation of what would or might have occurred had the employer followed a fair procedure. It necessarily involves uncertainty. The tribunal must apply the burden on the employer and assess all the evidence, including evidence from the employee, but it may reach a conclusion about the hypothetical conduct of either party that differs from their asserted evidence.

The percentage chance of dismissal is a fact-sensitive industrial assessment. Using fractions or quarters as an initial aid does not unlawfully fetter the assessment where the tribunal also considers whether the appropriate chance is higher or lower. A residual chance of continued employment may require an end-date assessment at the compensation stage.

The claimant, formerly the respondent’s Head of Sales and Business Development, was dismissed for redundancy after the respondent decided to remove its external sales team. The Employment Tribunal found a genuine redundancy situation but held the dismissal procedurally unfair because there had been no fair consultation about alternatives.

The Tribunal initially found that a fair process would have led to dismissal on the same date. On an earlier appeal, the Employment Appeal Tribunal remitted the Polkey issue for reconsideration without further evidence. The remitted Tribunal found a 75% chance that a fair process would still have resulted in dismissal by notice given on 6 September 2014. The claimant appealed and the respondent cross-appealed, respectively challenging the reasoning and the percentage assessment.

1. Appeal and cross-appeal dismissed. The remitted Tribunal had correctly addressed the question whether, on the hypothesis of a fair consultation, the claimant would probably have been dismissed and when that would have occurred.

2. A Polkey assessment is inherently hypothetical. Although evidence from both parties is relevant and the employer bears the burden, the Tribunal may assess how the parties would or might have behaved in the counterfactual fair process. It is not confined by the parties’ asserted evidence, which may carry limited weight in the final hypothetical assessment.

3. There was ample evidential basis for the Tribunal’s conclusion that the respondent was highly unlikely to have changed its view. The Tribunal had considered the financial deterioration, regulatory concerns about the commission structure, and the conclusion that the external sales team was not fit for purpose. It was also entitled, having heard the claimant’s evidence, to find it highly unlikely that he would have accepted a substantially lower-paid or lower-status alternative role.

4. The absence of cross-examination on whether the claimant would have accepted such a role did not invalidate that finding. This was not an allegation, such as dishonesty, that had to be put to the witness under the rule in Browne v Dunn. Further, the remission had expressly proceeded on the basis that no further evidence would be called.

5. The 25% residual chance of continued employment did not contradict the conclusion that there was a 75% chance of dismissal by the same date. If the residual chance materialised, the end date for loss would be determined at the next compensation stage. Nor had the Tribunal fettered its discretion by using quarters as a starting point: it expressly considered chances both above and below 75%, and the final percentage was for the Tribunal as industrial jury.

• Employment Appeal Tribunal: dismissed the claimant’s appeal and the respondent’s cross-appeal from the remitted Polkey decision.
• Employment Tribunal, Birmingham: following remission of the Polkey issue, held that there was a 75% chance that a fair process would have resulted in dismissal by notice given on 6 September 2014.
• Earlier Employment Appeal Tribunal decision: remitted the Polkey issue because the original assessment had not properly evaluated the hypothetical chance of dismissal and did not give adequate reasons; no further evidence was to be adduced.