Polkey v Dayton [1988] ICR 142

• Plaintiff was dismissed on the grounds of redundancy (no prior warning, etc.).

• Defendant argued that this was fair because it was of ‘urgent necessity’ to the business.

• HL held that the case had to be remitted to the tribunal because the tribunal was wrong to say that ‘urgent necessity’ alone was enough. 

Lord Bridge

• Claiming one of the potentially fair grounds for dismissal in s.98(2) isn’t enough - there are certain procedural requirements that have to accompany each of these reasons (even if the reasons given are genuinely present):

  • If the reason is incompetence the employer must give the employee fair warning so that he can improve;

  • If misconduct is alleged then the employer must investigate fully and give the employee the chance to deny/mitigate the allegations;

  • If redundancy is the reason, the employer must have warned and consulted with employees/their representatives and work out a fair basis on which to select staff to be made redundant and must try to take steps to minimise redundancy within the organisation.

• Failure to take these procedural steps will render the dismissal unreasonable.

• If the procedural steps would not have prevented Plaintiff from being dismissed then there may be no compensation beyond redundancy payments, but if they would have prevented the dismissal, the tribunal may have to consider re-engagement / reinstatement as possible remedies.

  • NB following this decision, parl. Legislated to modify the decision. S.98A ERA says that failure to follow a procedure in relation to dismissal of an employee does not of itself render that dismissal unfair unless the employer would not have dismissed the employee had he followed the procedure.

  • Under s.207A TULRCA 1992 compensation can be increased by 25% where an employer fails to follow the ACAS code of practice.