FM Fabrications appealed this decision to the Employment Appeal Tribunal (“EAT”) and claimed that the Employment Tribunal had erred in law by not considering a Polkey reduction. If a decision is held to be procedurally unfair, the Employment Tribunal will ask itself whether this failure would have ultimately made a difference in the outcome. If not, then compensation will be limited to the period it would have taken for a proper procedure to take place before a fair dismissal could have occurred. This is commonly known as a Polkey reduction.

The EAT ruled that:

▪ The ET had not considered whether a Polkey reduction should be made;

▪ The ET must address a two stage question when calculating compensation for unfair dismissal:

1) Would an offer of employment have resulted had the proper procedure been followed?; and

2) If so, what would that employment have been and what wages would have been paid?

▪ The appeal was allowed and remitted to the Employment Tribunal for a new judgment.

Comment: Please contact us if you have any questions about assessing compensation for an unfair dismissal.