Teixeira v Zaika Restaurant

The Employment Appeal Tribunal allowed the appellant's appeal against the Employment Tribunal's approach to the Polkey reduction of compensation under section 123 of the Employment Rights Act 1996. The Employment Tribunal had found that the claimant had been unfairly dismissed but reduced the compensatory award to nil on the basis that there was a 100% chance the claimant would have been fairly dismissed at the same date because he could reasonably have been placed in a pool of one. The EAT held that the Tribunal erred in law by treating the possibility of a pool of one as determinative of timing and by failing adequately to consider the requirement for some warning and consultation under the redundancy fairness principles in section 98 ERA and relevant case law. The EAT remitted the matter to the same Employment Tribunal for reconsideration of the Polkey issues, including the likely composition of any pool, the plausible selection criteria, the chances the claimant would have been dismissed and how long any consultation would have taken.

Background and parties:

• The appellant, Mr Archie Teixeira, was employed as a tandoor chef and dismissed on 1 April 2020 with an effective termination date of 29 April 2020. The employer is Zaika Restaurant Limited. The Employment Tribunal (Employment Judge Norris) found the dismissal procedurally unfair but held that there was a 100% chance a fair process would still have led to the claimant's dismissal at the same time.

Nature of the claim and relief sought:

• The claim concerned unfair dismissal and the correct compensatory remedy. The Employment Tribunal upheld the unfair dismissal complaint and applied a Polkey reduction under section 123 Employment Rights Act 1996 to reflect what would have happened had a fair procedure been followed.

Issues framed by the court:

• Whether the Tribunal was correct to conclude there was a 100% chance that, had a fair procedure been followed, the claimant would nevertheless have been fairly dismissed on the same date.
• Whether it was permissible to treat a pool of one as determinative without accounting for the general need for warning and consultation and the possibility that consultation could change the pool, selection criteria or timing.

Court's reasoning and decision:

• The EAT analysed the relevant statutory provisions (section 123 and section 98 ERA) and authorities concerning redundancy, pooling, consultation and Polkey reductions, including Polkey, Williams v Compair Maxam, Hill v Governing Body of Great Tey Primary School and others. The EAT emphasised that determination of what would have happened requires recreating the world as it would have been for the employer had it acted fairly, and that some warning and consultation would generally be required even in small businesses.
• The EAT concluded the Employment Tribunal's reasoning involved a non-sequitur: the fact that a pool of one might have been fairly chosen did not mean the dismissal would necessarily have occurred when it did. The Tribunal had not adequately explained why no warning or consultation would have been required or could not have affected timing, pool composition or selection criteria. As a result, the EAT allowed the appeal and remitted the matter for reconsideration of the Polkey reduction and compensatory award, including the likely duration and consequences of any consultation.

The EAT noted that while dismissal might ultimately be inevitable, the Tribunal must explain and evidence why consultation would have made no difference to outcome or timing before applying a 100% Polkey reduction.

Appeal allowed. The Employment Tribunal erred in concluding there was a 100% chance that a fair procedure would have resulted in the claimant's dismissal at the same time; the Tribunal failed to apply the correct legal principles concerning warning and consultation in redundancy situations and must reconsider the Polkey reduction. The matter is remitted to the same Employment Tribunal for further consideration of pool composition, selection criteria, the chances of dismissal and the likely duration of consultation.

Appeal from the Employment Tribunal decision of Employment Judge Norris following a hearing on 25–26 January 2021 (decision sent 8 March 2021). Determined by the Employment Appeal Tribunal ([2022] EAT 171).