Sometimes a legal case takes on a life of its own and becomes synonymous with a certain point of law somewhat removed from its factual history – Burchell is probably the clearest example. The story that underlies the case is forgotten. I quite enjoyed writing my piece on dismissal for gymnastics recently so thought it’d be interesting to revisit that approach with a look at the story behind a key legal case.
Following closely behind Burchell possibly the most referenced case in employment tribunals in which the facts of a case has been forgotten is the case of Polkey v AE Dayton Services Ltd, a case that would eventually be concluded by the House of Lords in 1987.
Mr Polkey was one of four delivery drivers for AE Dayton Services Ltd. As at 1982 he had been employed for four years. Unknown to Mr Polkey the company was in financial distress and word was handed down (the exact date is not clear) to the Branch Manager that in the future they could only support 2 delivery drivers with an instruction being given that the manager had to decide who would be dismissed.
Under the law at the time, as set out in the then current Code of Practice, an employer in this situation was advised that: “If redundancy becomes necessary, management in consultation, as appropriate, with employees or their representatives, should: (i) give as much warning as practicable to the employees concerned . . . ; (iii) establish which employees are to be made redundant and the order of discharge; . . .”
On 20 August 2023, the Branch manager decided that in fact three of the four delivery drives were not capable and should be dismissed. Throughout this time Mr Polkey and the other three workers with their heads on the chop were oblivious to their impending peril. This was a scandalous breach of the employer’s duties to consult on the redundancy situation. One week later, on 27 August 1983, Mr Polkey was called into his manager’s office and, as the final judgment put it the manager “told him quite out of the blue that he was redundant and handed to him his redundancy letter. The appellant was immediately driven home by a fellow
employee.”
In the Industrial Tribunal judgment this employer’s conduct was observed that there “could be no more heartless disregard of the provisions of the code of practice than that.” I wonder whether Sophia Khan, escorted out of her office by an armed police officer, would agree?
Mr Polkey went on to allege he was unfairly dismissed. When the Industrial Tribunal (the precursor to the Employment Tribunal) came to consider the case they found that deplorable though the employer’s conduct had been that even if the employer had consulted the workforce and adopted a fair procedure Mr Polkey would have been dismissed and because “the result would not have been any different we have therefore unhappily to reject this application.”
Mr Polkey appealed this dismissal to the Employment Appeal Tribunal and were clearly unhappy with the decision they had to make. Unfair dismissal law had developed something called the British Labour Pump principle, named after the decision in British Labour Pump Co Ltd v Byrne (1979). The principle had later been affirmed by the Court of Appeal in W & J Wass Ltd v Binns (1982). Because of the way the system of precedent works even though it doubted the lawfulness of the principle the Employment Appeal Tribunal was bound to follow it.
So what was the British Labour Pump principle? In essence it is that if the Tribunal analyses a dismissal decision and finds that the dismissal was unreasonable (for example, it did not hold a formal meeting and get an employees side of the story before reaching a decision) but, nevertheless, the outcome would have been the same then the legal decision should be that the dismissal was not unfair. Therefore, for Mr Polkey, he had been dismissed unreasonably but, nevertheless, would still have been dismissed anyway and so there was no unfair dismissal.
Presumably buoyed by the Employment Appeal Tribunal’s criticisms of the British Labour Pump principle, Mr Polkey went on to appeal the decision to the Court of Appeal. The Court of Appeal also found they must reject the appeal but referred the duly refused to hear the appeal but granted leave to appeal the decision to the House of Lords as the most senior Court (now replaced by the Supreme Court).
The House of Lords decision overruled the British Labour Pump principle as being inconsistent with unfair dismissal legislation. The principle, found the House of Lords, exhibited “a confusion between unreasonable conduct in reaching the conclusion to dismiss, which is a necessary ingredient of an unfair dismissal, and injustice to the employee which is not a necessary ingredient of an unfair dismissal, although its absence will be important in relation to a compensatory award.”
In short, the principle illegitimately pooled together two distinct questions. The first is whether the employer acted reasonably in treating the reason for dismissal as sufficient for dismissal. The focus of that question is on the conduct of the employer. The second question is what a just decision would be in respect of compensation, and in this the focus is on the employee.
And so Mr Polkey won his appeal and the case was remitted again to the Industrial Tribunal. The outcome of that remittal seems to be lost to time. Although the callous employer, AE Dayton Services Ltd, managed to survive its financial services right up to 2010 when the company was dissolved following insolvency proceedings. I do not know what happened to Mr Polkey after 1987, but I sincerely hope he managed to outlive AE Dayton Services Ltd!
From Polkey this case comes the idea of the Polkey deduction, the idea that despite winning a case the claimant has their compensation reduced substantially because they would have been dismissed fairly. Recipients of such deductions often feel hard done by and with some merit. If an employer has breached the law to the extent that an employee has had his her statutory rights infringed I think it is right that the employer should be expected to pay for that infringement; if it is inappropriate for a claimant to benefit from such an award (and such cases do occur) then perhaps the employer should pay the full fund into a social fund facilitating access to justice or some other just cause.
However, every employee since 1987 has been the recipient of benfits bestowed by Mr Polkey’s challenge. He ensured that every tribunal must not look at a case in the round but focus specifically on whether the employer adopted a fair process and had a sufficient reason to dismiss them and, only then (after the unfair dismissal complaint has been determined), can arguments be made about whether a fair process would have made any difference to the outcome.
Twenty five years after Mr Polkey’s brave stand employees are still in a better position to challenge employers than would have been the case had Mr Polkey not decided that “no difference” really did makes a difference to whether his rights at work were protected.
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