Redundancy Selection - 'Polkey' Reductions

If an employee is dismissed following an unfair redundancy selection process, the level of any compensatory award can be reduced if the employer can show that the employee would have been dismissed even if the correct procedures had been followed. This is referred to as a ‘Polkey reduction’, named after the case in which the point was first established (Polkey v A E Dayton Services Limited).

In Arhin v Enfield Primary Care Trust, Dr Dyna Arhin, who was employed as a consultant in public health and an assistant director, was dismissed by reason of redundancy after the Trust instigated a restructuring plan to make savings in staff costs. Mr Glenn Stewart, who was employed in the same two capacities, was retained after being selected for a newly created post. The Employment Tribunal (ET) found that Dr Arhin had been unfairly dismissed as the Trust had acted unfairly by failing to carry out a competitive selection procedure to fill the new post. It had simply resorted to ‘slotting in’, which was not appropriate when there was more than one employee eligible for the job. The ET declined to make a compensatory award, however. It concluded that Mr Stewart’s experience was more relevant to the new position and that Dr Arhin would have had no chance of succeeding in a competitive selection process. The ET was also satisfied that Dr Arhin would have been fairly dismissed on grounds of her ill health, under the Trust’s sickness absence procedures. In the ten months before she was dismissed on 30 June 2007, she had taken nine periods of sickness absence. Following her dismissal, she was certified as unfit to work until 31 May 2008. She had also requested a copy of the Trust’s ill-health retirement application form, which showed that she had considered the possibility of retiring on health grounds. The Employment Appeal Tribunal upheld the ET’s decision.

Dr Arhin appealed to the Court of Appeal on the ground that the decision not to make a compensatory award was perverse. The ET had decided that business interest would have dictated that Mr Stewart was best suited for the new position when there was no description of what that job involved, and it had failed to identify with specific precision the relative responsibilities of Dr Arhin and Mr Stewart prior to the reorganisation. The decision was, therefore, inherently flawed.

The Court of Appeal dismissed Dr Arhin’s appeal. Although the failure to produce a detailed job description played a significant part with regard to the issues at the liability hearing, there was sufficient evidence before the ET at the remedies hearing for it to form a tenable view of what the outcome of a fair competitive selection procedure would have been. The Court found neither legal error nor perversity in the decision. Furthermore, the finding that the Trust would have dismissed Dr Arhin on grounds of ill health was in no sense mere speculation, nor was it perverse.