Goodbye Procedures: Hello Polkey?
The Statutory Dismissal and Disciplinary Procedures have caused many unwanted outcomes for employers since their introduction to the workplace in October 2004. The two different systems, standard and modified, have been criticised for their complexity and it is clear that the government’s targets to reduce the number of tribunal claims in this area have not been achieved.
The Employment Bill gained its first reading on 6 December 2007 and is set to repeal the current procedures under sections 29-33 of the Employment Act 2002 and replace them with a governing code of practice. If the employer fails to comply with the code of practice, and that failure was unreasonable, the employment tribunal may increase any award it makes to the employee by up to 25%. Conversely, if the employee fails to comply with the code then the tribunal also has the power to reduce any award by 25%.
A main component of the reforms under the Employment Bill is the removal of the current Section 98A(2) Employment Act 2002. The statutory procedures were brought into force to put an end to the so-called ‘Polkey principle’ and the line of confusing case law, which had preceded this. However the repeal of the procedures means a reversion to the ‘Polkey principle’ and the possible chaos it could bring.
Polkey v A E Dayton Service Ltd involved a van driver who was dismissed following a company reorganisation. The House of Lords decision in this case overruled the previous position established by the EAT in British Labour Pump v Byrne that any procedural unfairness would not render the dismissal unfair if the tribunal considered that by following the correct procedure no difference would have been made to the outcome. In Polkey the House of Lords took a statutory approach and made it clear that a case should be decided upon what the employer actually did and not could have done, and whether the employer had acted reasonably in treating that reason as a reason for dismissal. However a ‘Polkey reduction’ could be made by a percentage so as to account for the likelihood of the dismissal.
When section 98A(2) came into force it rendered a dismissal fair if the employer shows ‘that he would have decided to dismiss the employee if he had followed the procedure.’ This then eradicated Polkey. However with the repeal of the statutory procedures and more importantly the removal of section 98A(2) it means tribunals will be forced back to the ‘Polkey principle’ and the uncertainty of before.
Anna Henderson, Professional Support Lawyer, at top law firm Herbert Smith comments: “Employers are likely to give the reforms a cautious welcome. On the upside, technical procedural failures will no longer automatically render a dismissal unfair nor incur a financial penalty if the employer can show he acted reasonably, and the potential uplift to compensation for unreasonable failures is reduced [from 50% to 25%]. On the downside, an employee`s failure to raise a proper grievance will no longer be a knockout blow preventing a tribunal claim. In any event, judgment should probably be reserved until we see the content of the revised Acas Code: the current version is much longer and more detailed than the statutory minimum procedures so it will need to be extensively revised if it is to achieve the simplification promised”.
Jo Mortlock
Seminar and Conference Producer
