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FL Memo Ltd © 2007 |
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Employment Memo 2007 Newsletter Issue 2 |
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RECENT CASES |
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Since the introduction of the “Polkey-reversal” provision, the principle behind the Polkey reduction continues to operate in conjunction with the new statutory dismissal and disciplinary procedures, albeit with some differences (see ¶8631). Prior to the reversal provision, a Polkey reduction of up to 100% might have been made to an employee’s compensatory award. This is still the case in circumstances where an employer has failed to comply with an applicable statutory procedure: any subsequent dismissal will be automatically unfair, but the employee’s compensatory award may nevertheless be reduced by up to 100% by way of a Polkey reduction since the Polkey-reversal provision will not apply. However, if an employer has complied with an applicable statutory procedure but the dismissal is otherwise procedurally unfair in other respects, it is probable that a Polkey reduction of only up to 50% can now be made since an employer will have a “defence” to a procedurally unfair dismissal if he can demonstrate on the balance of probabilities that he would have taken the decision to dismiss the employee in any event (i.e. the Polkey-reversal provision will apply and the dismissal will not be unfair on this ground). The EAT has recently given detailed consideration to the relationship between the “Polkey-reversal” section and the assessment of a “Polkey reduction” and has summarised the principles as follows: 1. In assessing compensation the tribunal must assess the loss flowing from the dismissal, using its common sense, experience and sense of justice. In the normal case that requires it to assess for how long the employee would have been employed but for the dismissal. 2. Where the employer argues that the employee would or might have ceased to be employed in any event had fair procedures been followed, or alternatively would not have continued in employment indefinitely, the burden of proof is on him to adduce evidence on which he wishes to rely. Nevertheless, the tribunal must take into account all the evidence available when making that assessment, including any evidence from the employee himself (for example, he may have given evidence that he had intended to retire in the near future). 3. There will be circumstances where the nature of the evidence which the employer wishes to adduce, or on which he seeks to rely, is so unreliable that the tribunal may take the view that the whole exercise of seeking to reconstruct what might have been is so riddled with uncertainty that no sensible prediction based on that evidence can properly be made. Whether that is the position is a matter of the tribunal’s impression and judgment after it has properly directed itself. However, the tribunal must regard to any material and reliable evidence which might assist it in fixing just compensation, even if there are limits to the extent to which it can confidently predict what might have been; and it must appreciate that a degree of uncertainty is an inevitable feature of the exercise. The mere fact that an element of speculation is involved is not a reason for refusing to have regard to the evidence. 4. Although the Polkey-reversal provision and Polkey compensatory reduction exercises run in parallel and will often involve consideration of the same evidence, they must not be combined into one exercise. Consequently, even if a tribunal considers that some of the evidence or potential evidence to be too speculative to form any sensible view as to whether dismissal would have occurred on the balance of probabilities, it must nevertheless take into account any evidence on which it considers it can properly rely and from which it could in principle conclude that the employment may have come to an end when it did, or alternatively would not have continued indefinitely. 5. After such proper consideration of the evidence, the tribunal must decide whether: – if fair procedures had been complied with, the employer has proved that on the balance of probabilities the dismissal would have occurred when it did in any event. The dismissal in such circumstances would be deemed fair by virtue of the Polkey-reversal provision. (This does not apply if the statutory dismissal and disciplinary procedure have not been complied with.):
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