Polkey - Conflicting Cases
Daniel Barnett comments on two conflicting cases about Polkey
Statutory Dismissal Procedures
Reversal of Polkey
16 April 2006
Last week, [see below], I reported Alexander & Hatherley v Bridgen
Enterprises, in which the EAT (Elias P. presiding) considered
s98A(2) of the Employment Rights Act 1996. This section, which
partially reverses Polkey, provides:
"98A(2) Subject to subsection (1) [compliance with the statutory
minimum dismissal procedure], failure by an employer to follow a
procedure in relation to the dismissal of an employee shall not be
regarded for the purposes of section 98(4)(a) as by itself making
the employer's action unreasonable if he shows that he would have
decided to dismiss the employee if he had followed the procedure."
In Alexander & Hatherley v Bridgen Enterprises, Elias P. held that
s98A(2) enables employers to avoid a finding of unfair dismissal
in respect of any breaches of what might otherwise be regarded as
a 'fair' procedure, when the employer could establish that the
'fair' procedure would not have saved the employee from dismissal.
On the same day last week, another division of the EAT (HHJ
McMullen presiding) handed down a decision holding almost
precisely the opposite - see Mason v Ward End Primary School.
HHJ McMullen holds that s98A(2) only rescues employers when the
procedural breach amounts to breach of a formal procedure - either
one that is written down, or one which has arisen through custom
and practice. However, he considers it does not extend to more
general breaches of a 'fair' procedure, such as those envisaged by
the Acas Code of Practice.
In reaching this decision, HHJ McMullen repeats his views (far
more briefly expressed) in Pudney v Network Rail last month, which
were regarded by Elias P. at para. 56 of Alexander & Hatherley v
Bridgen Enterprises as wrong. However, in this more recent case,
HHJ McMullen has set out full reasoning for his conclusion, rather
than just asserted a principle.
Thus we are left with two inconsistent - and both, well-reasoned -
decisions of the EAT on a very important point of interpretation
of s98A(2). As I understand it, neither case is being appealed to
the Court of Appeal.
Mason v Ward End Primary School
EAT Judgment
Statutory Dismissal Procedures
13 April 2006
The EAT (Elias P. presiding) has handed down an important decision
on the impact of the statutory dismissal procedures. It is
authority for the proposition that:
* in a redundancy situation, the statutory dismissal procedure
requires an employer to tell an employee of the reason for the
redundancy, the selection criteria, his score, but NOT the
threshold (ie the 'break' score beyond which his job is safe) or
the scores of other employees. Failure to provide this information
renders the dismissal automatically unfair and leads to an
increase in the compensatory award
* s98A(2), which partially reverses Polkey v AE Dayton Services,
has a wide-ranging effect and cannot be narrowly construed to
rescue only employers who fail to comply with formal written
procedures over and above the statutory minimum.
The employer was making nine compulsory redundancies. It used a
matrix system to provisionally select the employees, and held two
meetings with them. At the first meeting, they were told the
selection criteria but not their personal scores. It was only at
the end of the second meeting, after the decision to dismiss had
ben taken, that they were told their scores. An appeal was
offered, but was held by the employment tribunal to be defective.
The Employment Appeal Tribunal held that the statutory dismissal
procedure:
* does not require detailed information to be given in writing at
step 1. It is only necessary to set out the reason for the
dismissal in broad terms, such as 'redundancy', or 'incapability'.
In a conduct case, this will be identifying the nature of the
misconduct such as 'fighting', 'insubordination' or 'dishonesty'
(para. 38)
* at step 2, the employer must inform the employee of the basis
for the grounds for dismissal - but this need not be in writing.
It must, though, give the employee sufficient detail of the case
against him to allow him to properly put his side of the story
(para. 39)
* in redundancy dismissals, where a matrix system is used, this
requires that the employee be told the selection criteria (para.
43) and the scores he has achieved (para. 45). It does not require
that the employee be told the threshold score he must achieve to
remain in employment, or the scores of other employees (para 46).
Accordingly, because the employer had not provided the individual
scores until the decision to dismiss had been taken, it was in
breach of the statutory dismissal procedure and the dismissals
were automatically unfair.
The Employment Appeal Tribunal went on to deal with the employer's
alternative argument that a lack of fairness under s98(4) did not
matter, because (assuming the employer had complied with the
statutory minimum procedure - which the EAT found it had not) the
effect of s98A(2) is to provide an escape route for employers who
comply with the statutory minimum procedure but make other
procedural errors, provided that the employer can establish that
complying with that procedure would still have resulted in
dismissal. The EAT held:
* it is inappropriate to draw a distinction between 'procedural'
and 'subtsantive' defects in the employer's actions (paras 55-56)
* if an employer fails to comply with any procedure which a
tribunal feels it ought, in fairness, to have carried out, it is
able to avail itself of the new statutory defence in s98A(2). This
is not limited to formal procedures, whether written down or not.
If the employer's actions are fundamental, then it is likely there
will be a breach of the statutory dismissal procedures anyway, in
which case s98A(2) does not assist (paras. 56-57)
* thus, where the statutory dismissal procedures are followed:
o any procedural failings where the chance of dismissal (had the
procedures been complied with) is more than 50% will be ignored,
and the dismissal will be fair; and,
o any procedural failings where the chance of dismissal (had the
procedures been complied with) is less than 50% will continue to
be governed by Polkey, so that the dismissal will be unfair but
compensation will be reduced to reflect the chance of dismissal
(obviously, by less than 50%) (para. 58)
I understand that a different division of the EAT handed down a
decision yesterday reaching precisely the opposite conclusion on
the scope of s98A(2), i.e. that it only applied to breaches of
formal procedures but not to more general concepts of unfairness
(such as failure to comply with the Acas code). I will send out a
further bulletin on this point when this other case appears on the
EAT website.
Alexander & Hatherley v Bridgen Enterprises
EAT Judgment