Software 2000 v Andrews

In Polkey v AE Dayton Services Ltd (1987), the House of Lords said that if an employer used an unfair procedure to dismiss someone, the dismissal was unfair. However, it also said that if the employer could show that the outcome would have been the same, whatever the procedure, the dismissal would be fair and tribunals could reduce the claimant’s compensation.

That decision was partly reversed by section 98A of the Employment Rights Act 1996 (ERA) – see LELR 104. In Software 2000 v Andrews, the Employment Appeal Tribunal (EAT) has now set out a series of principles for tribunals to follow in relation to both the Polkey decision and section 98A.

Section 98A, ERA

This says that an employee is unfairly dismissed if the employer fails to comply with the statutory procedure set out in the Employment Act 2002 (the dismissal and disciplinary procedures).

However, it then goes on to say, in section 98A(2), that failure to follow a procedure is not unreasonable if the employer can show that the employee would have been dismissed anyway.

Basic facts

The company decided in July 2005 that it would have to make redundancies. It identified a number of pools and agreed five criteria for selecting staff. However, it did not explain to managers what the criteria meant in practice, nor how they should carry them out.

Once all the assessments had been done, the company did a review to check whether managers had adopted a reasonably consistent approach. It decided they had, despite the fact that there were some exceptions which it did not follow up. The four claimants were made redundant and all brought claims of unfair dismissal.

Tribunal decision

The tribunal decided that the dismissals were unfair because of the way in which the company had applied the criteria for selection, and the way in which staff had been consulted.

Applying the Polkey principle, the tribunal said that the selection process was so flawed that the company could not say whether any or all of the claimants would have been dismissed, even if they had applied the selection criteria fairly. It was not, therefore, convinced that a Polkey reduction should apply.Â