Case Report
Mogane v Bradford Teaching Hospitals NHS Foundation Trust – Redundancy Pay and Polkey Deductions
By William Webb Employment Rights Lawyer &
James Lenihan Regional Employment Rights Manager
Background
Mrs S Mogane, a Respiratory Research Nurse, was unfairly dismissed by Bradford Teaching Hospitals NHS Foundation Trust during a redundancy exercise. Although she received an enhanced redundancy payment, the Employment Tribunal found her dismissal unfair because she had been treated as a "pool of one" without a fair selection process, when, in reality, as she was in a “pool of two”, with one colleague in the same role who could also have been selected for redundancy. The tribunal concluded there was nevertheless a 50% chance she would have been dismissed anyway had a fair procedure been followed and a 50% Polkey reduction should be applied.
The issue on appeal was not whether the dismissal was unfair—that had already been determined—but how to calculate the compensation, particularly how to account for the enhanced redundancy payment she had received in light of the 50% Polkey reduction.
Key Issues
- Treatment of enhanced redundancy payments
Mrs Mogane argued that because there was a 50% chance she might have been dismissed fairly anyway, the calculation of her loss should reflect both the 50% chance she would not have been dismissed and would have continued to earn her wages and the 50% chance that she would have been dismissed fairly, in which case she would have lost her wages but still received her enhanced redundancy pay. On this basis and the fact that section 123(3)(3)(a) refers to loss of redundancy pay as an element of the compensatory award, the Claimant contended her loss calculation should include 50% of her lost wages and 50% of her enhanced redundancy payment. The Tribunal rejected this and instead deducted the full enhanced payment after applying the Polkey reduction. - Legal principles under Section 123
The Employment Appeal Tribunal (EAT) reaffirmed the principle that you cannot be compensated for something you haven’t lost. Mrs Mogane had received the enhanced redundancy payment—so it couldn’t count as a loss. - Binding authority from case law
The EAT applied the Court of Appeal’s decision in Digital Equipment Co Ltd v Clements (No.2), which requires enhanced redundancy payments to be deducted in full from the compensatory award after applying any Polkey reduction. The EAT found this approach fair, logical, and consistent with the legislative aim of not penalising employers for offering more generous redundancy terms than the statutory minimums. - Rejected alternative interpretation
The EAT firmly rejected the idea that only a portion of the enhanced redundancy payment (e.g. 50%) should be deducted in cases where a corresponding Polkey deduction had been applied to the compensatory award. It held this would effectively result in double compensation.
Employment Appeal Tribunal (EAT) Decision
The EAT dismissed the appeal. It ruled that:
- Compensation should reflect actual financial loss.
- Payments already received (like the enhanced redundancy sum) should not be treated as a loss.
- The enhanced redundancy payment must be fully deducted after the Polkey discount is applied.
This method avoids giving claimants a windfall and ensures fairness to employers who have offered more generous redundancy terms.
Significance
For trade union members and reps, this case is a technical but important clarification of how compensation is calculated following an unfair redundancy dismissal. It confirms that:
- Even where dismissals are unfair, payments already received—like enhanced redundancy—can reduce the overall award.
- The law discourages ‘double counting’ or compensating for something the claimant actually received.
- Tribunals are bound to follow the approach laid down in Digital Equipment, which gives clarity and predictability in redundancy disputes, absent any appeal to the Court of Appeal.
Union reps advising members in redundancy situations should ensure members understand how previous payments might affect any future award and support efforts to ensure selection processes are fair from the outset.
Outcome
The EAT upheld the tribunal’s approach. Mrs Mogane’s award was calculated by applying a 50% reduction for the likelihood of fair dismissal and then deducting the full value of her enhanced redundancy payment. Her appeal was dismissed.
