S Pal v Accenture (UK) Ltd

For capability dismissals, the relevant work is ordinarily the work which the employee is contractually employed to perform. A progression-based requirement to demonstrate readiness for promotion may therefore fall outside capability, although it may potentially amount to some other substantial reason.

A Polkey reduction must predict what the actual employer would have done had it corrected the procedural defect. It cannot assume that the employer would have adopted a different policy or process without evidence. Disability must be assessed by properly analysing the impairment’s effects, medical treatment and possible recurrence. In a claim under section 15, disability-related matters need only be an effective cause of unfavourable treatment.

The claimant, a manager in a consulting business operating an “up or elsewhere” progression model, was dismissed following two “Not Progressing” ratings and concerns about her performance. The Employment Tribunal found the dismissal procedurally unfair because the respondent had breached its Disciplinary and Appeals Policy, but reduced compensation by 100 per cent under Polkey.

The claimant also alleged disability discrimination arising from endometriosis. The Employment Tribunal held that she was not disabled and, alternatively, that the respondent lacked knowledge and had not dismissed her because of anything arising from disability.

The appeal concerned the proper counterfactual for the Polkey assessment, the relationship between contractual duties and capability in a progression-based model, and the adequacy of the disability and section 15 analyses under the Equality Act 2010.

1. Appeal allowed. The 100 per cent Polkey reduction could not stand. The Tribunal had found the dismissal unfair because the respondent failed to comply with its applicable policy, including the requirements for an investigation and decision-makers not previously involved. It then used the wrong counterfactual by assuming that the respondent would have introduced a new policy matching the process it had actually used.

2. A Polkey assessment is predictive and evidence-based. It asks what this employer would or might have done had it corrected the unfairness, and whether any resulting dismissal would have been fair. It does not ask what a tribunal, or a hypothetical employer, would have done. On remission, the Tribunal must consider the consequences of compliance with the existing policy, including an investigation and independent decision-makers.

3. Capability under section 98(2)(a) of the Employment Rights Act 1996 concerns the employee’s capability to perform work which they are employed to do under the contract. A dismissal because an employee is not ready for promotion under an “up or elsewhere” model may not therefore be a capability dismissal, unless promotion-readiness forms part of the contractual work. Such a dismissal may instead potentially be for some other substantial reason, having regard to the employee’s statutory “position”.

4. The disability findings were inadequately reasoned. The Tribunal had to analyse the medical and other evidence about the effects of endometriosis, including effects ameliorated by treatment and the likelihood of recurrence. It also had to reconsider constructive knowledge, whether sickness absence and the phased return were effective causes of dismissal, and proportionality under section 15.

5. The issues were remitted to a differently constituted Employment Tribunal for fresh determination. The earlier Tribunal’s adverse credibility findings made a fresh tribunal necessary.

• Employment Appeal Tribunal: Allowed the claimant’s appeal and remitted the Polkey and disability-discrimination issues for fresh determination.
• Employment Tribunal: Employment Judge Baty, sitting with members, held the dismissal unfair for breach of the respondent’s policy, made a 100 per cent Polkey reduction, and dismissed the disability claims. Judgment sent to the parties on 8 July 2022.