Software 2000 Ltd v Andrews etc: EAT 17 Jan 2007

EAT Four employees successfully established before the Employment Tribunal that they had been unfairly dismissed for redundancy. The Tribunal found that there had been procedural defects. In particular the assessments in the redundancy exercise had been inadequate and subjective. The Tribunal considered whether the dismissals were fair under section 98A(2) of the Employment Rights Act 1996, or whether a Polkey reduction should apply. They appear to have concluded that there was no reliable evidence to find either.
Held: The Tribunal were entitled to find that the dismissals had not been shown to be fair by virtue of s.98A(2), but that there was evidence which they ought to have considered in order to decide whether, and to what extent, a Polkey reduction was appropriate. Case law on the application of Polkey considered and certain principles summarised.
The Article 130(4) ‘exercise of determining whether the employer has shown that the employee would have been dismissed if a fair procedure had been followed, and the assessment of whether, instead, the dismissal is unfair but subject to a Polkey reduction, are exercises which run in parallel.’
Elias J set out the principles: ‘(1) In assessing compensation the task of the tribunal is to assess the loss flowing from the dismissal, using its common sense, experience and sense of justice. In the normal case that requires it to assess for how long the employee would have been employed but for the dismissal.
(2) If the employer seeks to contend that the employee would or might have ceased to be employed in any event had fair procedures been followed, or alternatively would not have continued in employment indefinitely, it is for him to adduce any relevant evidence on which he wishes to reply. However, the tribunal must have regard to all the evidence when making that assessment, including any evidence from the employee himself. (He might, for example, have given evidence that he had intended to retire in the near future).
(3) However, there will be circumstances where the nature of the evidence which the employer wishes to adduce, or on which he seeks to rely, is so unreliable that the tribunal may take the view that the whole exercise of seeking to reconstruct what might have been is so riddled with uncertainty that no sensible prediction based on that evidence can properly be made.
(4) Whether that is the position is a matter of impression and judgment for the tribunal. But in reaching that decision the tribunal must direct itself properly. It must recognise that it should have regard to any material and reliable evidence which might assist it in fixing just compensation, even if there are limits to the extent to which it can confidently predict what might have been; and it must appreciate that a degree of uncertainty is an inevitable feature of the exercise. The mere fact that an element of speculation is involved is not a reason for refusing to have regard to the evidence.
(5) An appellate court must be wary about interfering with the tribunal’s assessment that the exercise is too speculative. However, it must interfere if the tribunal has not directed itself properly and has taken too narrow a view of its role.
(6) The s.98A(2) and Polkey exercises run in parallel and will often involve consideration of the same evidence, but they must not be conflated. It follows that even if a tribunal considers some of the evidence or potential evidence to be too speculative to form any sensible view as to whether dismissal would have occurred on the balance of probabilities, it must nevertheless take into account any evidence on which it considers it can properly rely and from which it could in principle conclude that the employment may have come to an end when it did, or alternatively would not have continued indefinitely.’
The Honourable Mr Justice Elias (President)
[2007] UKEAT 0533 – 06 – 2601, UKEAT/0533/06, [2007] IRLR 568, [2007] ICR 825
Bailii, EATn
Employment Rights Act 1996 98A 123
England and Wales
CitedJames Cook and Co (Wivenhoe) Ltd v Tipper CA 1990
A number of shipyard workers were dismissed by their employers but believed credibly that there was a realistic prospect that they might be re-employed. Only later did it come to their knowledge that the shipyard at which they worked was to close . .
CitedPolkey v A E Dayton Services Limited HL 19-Nov-1987
Mr Polkey was employed as a driver. The company decided to replace four van drivers with two van salesmen and a representative. Mr Polkey and two other van drivers were made redundant. Without warning, he was called in and informed that he had been . .
MentionedBritish Labour Pump Co Ltd v Byrne EAT 1979
The respondent had been dismissed for misconduct on the morning of the day on which he was dismissed. There had been previous misbehaviour but the industrial tribunal held that the case had to be determined on the basis of what had happened on that . .
CitedKing v Eaton Ltd (No 2) IHCS 1998
Employees were made redundant. The tribunal held the dismissals to be unfair because that there had been no consultation worthy of the name with any of the employees and because it was impossible to decide whether the selection criteria had been . .
CitedKelly-Madden v Manor Surgery EAT 19-Oct-2006
EAT The employee was the practice manager at a general medical practice. She was dismissed for dishonesty, taking unauthorised pay for overtime hours. She alleged that she had been told by the former practice . .
CitedO’Donoghue v Redcar and Cleveland Borough Council CA 17-May-2001
The Tribunal had been entitled to find on the evidence that an employee unfairly dismissed by reason of sex would have been fairly dismissed for misconduct six months later in any event because of her antagonistic and intransigent attitude. The . .
CitedMoeliker v Reyrolle and Co Ltd CA 1976
The court considered the principles for the award of damages for future loss of earning capacity.
Held: The court distinguished between an award for loss of earnings and compensation for loss of earning capacity. The latter head of damage . .
CitedScope v Thornett CA 27-Nov-2006
The employee was an engineer. She worked on field assessments and in the manufacture and adaptation of equipment. She was suspended for alleged bullying and harassment and given a final written warning. It was proposed that she should be relocated . .
CitedGover and others v Propertycare Ltd CA 28-Mar-2006
The claimants appealed dismissal of their claims for unfair dismissal, on the basis that they had been substantially dismissed as sales agents after rejecting conditions imposed unilaterally by their employers. Their damages had been limited to the . .
CitedLambe v 186K Ltd CA 29-Jul-2004
The claimant had been dismissed for redundancy, but the company had been found not to have consulted him properly, and he had therefore been unfairly dismissed. The tribunal had then found that even if consulted the result would not have been . .
CitedO’Dea v ISC Chemicals Ltd CA 4-Aug-1995
Where the performance of union duties stopped a worker from doing the job he was employed for properly, a redundancy selection was possible. Here there was no redundancy comparator for a shop steward spending half his time on union activities. The . .
CitedCarole Thornett v Scope EAT 7-Feb-2006
EAT Unfair Dismissal: Compensation
Compensation for unfair dismissal was capped at 6 months’ forward losses on the ground that the Claimant would have been dismissed at that stage. Since the parties could . .

Cited by:
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EAT Practice and Procedure – 2002 Act and Pre-action Requirements,br />Unfair Dismissal – Reasonableness of dismissal; Polkey deduction,br />Employee due to be dismissed for redundancy unfairly not told of an . .
CitedArcher v Department for Constitutional Affairs EAT 16-Feb-2007
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CitedCEX Ltd v Lewis EAT 10-Aug-2007
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CitedButler v GR Carr (Essex) Ltd EAT 15-Oct-2007
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CitedGMB Trade Union v Brown EAT 16-Oct-2007
EAT Unfair Dismissal: Reason for dismissal including substantial other reason / Compensation
The employee claimed constructive unfair dismissal because the employers refused to modify their grievance . .
CitedHastingsbury School v Clarke EAT 17-Dec-2007
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The employee, a school teacher, was subjected to a disciplinary procedure for alleged acts of misconduct of an inappropriate sexual nature . .
CitedIngram v Fairco Mcilhagga Ltd NIIT 2-Apr-2008
. .
CitedEnfield Technical Services Ltd v Payne and Another CA 22-Apr-2008
The appellant company appealed dismissal of their defence to a claim for unfair dismissal that the employment contract was tainted with illegality. The EAT had heard two cases with raised the question of the effect on unfair dismissal claims of . .
CitedCorpora Software Ltd v Perry EAT 1-May-2008
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The Appellants employed the Respondent as Sales Operation Director. She was dismissed on spurious grounds after she failed to agree a . .
CitedWilson UK Ltd v Turton and Another EAT 16-Sep-2008
EAT UNFAIR DISMISSAL: Polkey deduction
The Tribunal wrong to reject Polkey in view of genuineness of redundancy and that respondents would have been in the pool. . .
CitedHarris v The Multiple Sclerosis Society NIIT 14-Oct-2008
. .
CitedAllied Distillers Ltd v Handley and Others EAT 21-Oct-2008
EAT CONTRACT OF EMPLOYMENT: Damages for breach of contract
UNFAIR DISMISSAL: Polkey deduction
Claimants all dismissed for redundancy in circumstances which . .
CitedSmith Knight Fay Ltd v McCoy EAT 5-Mar-2009
Procedural fairness/automatically unfair dismissal
S.98A(2) ERA
Polkey deduction
The employee was told at a meeting that he or his post would be made redundant at a . .
CitedVirgin Media Ltd v Seddington and Another EAT 31-Mar-2009
EAT UNFAIR DISMISSAL: Polkey deduction
JURISDICTIONAL POINTS: 2002 Act and pre-action Requirements,
‘Automatic’ unfair dismissal for redundancy by reason of non-compliance with statutory procedure – . .
CitedAryeetey v Tuntum Housing Association EAT 8-Apr-2009
The Claimant was dismissed from his post as the respondent’s Finance Director by its Chief Executive. The Claimant brought . .
CitedFleming v PFG Plant Hire Ltd NIIT 9-Apr-2009
. .
CitedPunch Pub Company Ltd v O’Neill EAT 23-Jul-2010
Reasonableness of dismissal
Procedural fairness/automatically unfair dismissal
The Employment Tribunal failed to consider the effect of S98A(2) of the Employment Rights Act . .
CitedEnfield Technical Services Ltd v Payne; Grace v BF Components Ltd EAT 25-Jul-2007
EAT Unfair dismissal – Exclusions including worker/jurisdiction
These two appeals consider the circumstances in which contracts will be considered illegal so as to preclude an employee from taking claims . .
AppliedCartwright v Kings College London EAT 30-Apr-2012
EAT UNFAIR DISMISSAL – Polkey deduction
The Claimant was found (by the Court of Appeal) to have been unfairly dismissed by reason of failure to comply with Step 1 of the Standard Procedure. In all other . .
CitedCumbria County Council and Another v Bates EAT 13-Aug-2013
The Claimant was employed by the First Respondent as a teacher at Dowdales School. He was found to have been unfairly dismissed. Post dismissal he was convicted of common . .

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Updated: 11 May 2021; Ref: scu.258088