Skip to content

Advice For Employers & HR Professionals

What is a Polkey deduction?

It will not be of much surprise to hear that an employer should follow the correct procedural steps and policies leading up to an employee’s dismissal. Otherwise, Tribunal may consider that an employee has been unfairly dismissed.

However, if this happens and the employee would have been dismissed anyway, the Tribunal can apply a ‘Polkey deduction’ to any compensatory award. This was decided by the House of Lords in the case of Polkey v AE Dayton Services Ltd (1987).

A Polkey deduction is when the compensation award by the Employment Tribunal claim in an unfair dismissal claim is reduced because it is likely there would have been a fair dismissal, even if the employer had followed the correct procedure.

What reduction can be made?

Polkey deductions are an important consideration because the reduction can be up to 100% if the employer’s procedural errors are considered not to have made a difference to the ultimate outcome. Therefore, there are some cases where an employee is technically successful in their claim for unfair dismissal, but the compensation is reduced to £0.

The Tribunal must weigh up and award what they consider to be just and equitable. This ensures the actual loss the employee received is reflected fairly in any award, but it does not override the decision as to whether a dismissal is found to be fair or not.  The Tribunal will  consider the probability and chance of the employer dismissing the employee or imposing a lesser penalty if the correct procedural steps and policies had been followed.

It is worth having Polkey deductions on your radar if you are an employer because although it is for the employee to prove their loss when considering the compensatory award, it will be up to the employer to put forward any arguments under Polkey and to support such arguments with evidence.

Summary

There are other types of deductions and uplifts that can be made to compensatory awards, such as a reduction for contributory fault and failure to follow the ACAS Code of Practice. If you would like further information or advice, please Torque to us about any employment claims.

 

Back to top