The Polkey reduction

A percentage cut to unfair dismissal compensation where the employer can show that a fair procedure would have made no difference — or would have led to dismissal anyway, just later. Named after a 1987 House of Lords decision that changed the law.

Can a Polkey reduction reduce compensation to zero?

Theoretically yes — if the tribunal is satisfied to a high degree of probability that a fair procedure would have resulted in immediate dismissal, a 100 per cent reduction is possible. In practice it is rare. Most strong employer cases see reductions of 50 to 80 per cent. The tribunal is making an estimate under uncertainty, and an absolute finding of inevitability is hard to sustain unless the evidence overwhelmingly points one way.

Does Polkey apply to discrimination claims?

No. A Polkey-style reduction applies specifically to unfair dismissal compensation under the Employment Rights Act 1996, section 123(1). In discrimination cases the assessment of compensation is different — the focus is on financial loss and injury to feelings flowing from the discriminatory act. There is no equivalent mechanism to reduce compensation on the basis that dismissal would have occurred anyway.

Does Polkey apply in redundancy cases?

Yes. Where a redundancy dismissal was unfair because of procedural failings — such as a failure to consult individually or to consider alternative roles — a Polkey reduction may apply if the employer can show the employee would have been selected for redundancy in any event. The bar is high: the employer must show the redundancy outcome was effectively inevitable, not merely likely.

What if the employer does not raise a Polkey argument?

The tribunal cannot apply a Polkey reduction of its own motion where the employer has not raised the point. It is for the respondent to adduce evidence and argument that dismissal was inevitable. If the employer does not pursue it, no reduction is made on that basis. That said, the tribunal may raise it as a possibility and invite submissions.

How does Polkey interact with contributory fault?

They are separate adjustments, both of which can reduce the compensatory award, and they apply independently. A Polkey reduction reflects what the employer would have done in a fair procedure. A contributory fault reduction reflects what the employee did. Both can be applied in the same case and their combined effect can be significant, but they address different questions and must not be conflated.

Is there a difference between a percentage Polkey reduction and a time-limited one?

Yes, and the distinction matters for the calculation. A percentage reduction — say 40 per cent — applies across the whole compensatory award. A time-limited Polkey finding says dismissal would have happened anyway, but only after, say, three months. In that case compensation runs normally for those three months and is then cut to zero from that point. Which approach the tribunal takes depends on the evidence about when dismissal would have occurred.

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Glossary · Employment Tribunal

The Polkey reduction

Last reviewed: June 2026

Employment Tribunal track

is a percentage deduction from the compensatory award in an unfair dismissal case, applied where the tribunal finds that a

fair procedure would have made no difference

— either because dismissal was inevitable anyway, or would have occurred within a shorter period — so it would be

unjust to award full compensation

for procedural failings that altered nothing.

Where this comes from

Polkey v AE Dayton Services Ltd [1987] UKHL 8

, [1988] AC 344 (HL) — the House of Lords decision reversing the "no difference" rule and establishing that procedural unfairness must be found, but can be reflected in a reduced award.

Employment Rights Act 1996, s.123(1)

— the compensatory award shall be such amount as the tribunal considers just and equitable having regard to the loss sustained. This "just and equitable" language is the statutory basis for the Polkey reduction.

Software 2000 Ltd v Andrews [2007] IRLR 568 (EAT)

— the EAT gave detailed guidance on how tribunals should assess the percentage reduction, including the use of percentage chances where certainty is impossible.

Employment tribunals

The reduction in plain English

Before 1987, employers sometimes escaped unfair dismissal liability by arguing that even if they had followed a fair procedure, the employee would have been dismissed anyway, so the procedural failing caused no loss. Courts accepted this and found dismissals fair even where procedures were badly handled, on the basis that the outcome was inevitable.

The House of Lords in

Polkey v AE Dayton Services Ltd

changed that. Mr Polkey was a van driver made redundant without any consultation — his employer simply handed him a letter and sent him home. The House of Lords held that a procedurally unfair dismissal is unfair regardless of what a fair procedure would have achieved. The tribunal must find the dismissal unfair. But it held that the "just and equitable" language in what is now section 123(1) of the Employment Rights Act 1996 allows the tribunal to reduce the compensatory award to reflect that the same outcome might have followed even from a proper process.

The practical result is that unfair dismissal remains established — and compensation is awarded — but the amount can be reduced by a percentage reflecting the likelihood that a fair procedure would have made no difference. A claimant who would have been dismissed anyway, but slightly later, still recovers something; they just do not recover the full amount they would have received if dismissal could have been avoided entirely.

The reduction is an estimate, not a precise calculation. The tribunal is assessing what might have happened in a world where the employer acted properly. It is inherently uncertain, and the EAT in

Software 2000 Ltd v Andrews

confirmed that tribunals should approach this as a question of probability rather than striving for false precision.

How it works in practice

Diane works as a sales coordinator. Her employer restructures and her role is made redundant. They post a letter through her door on a Friday afternoon telling her she has been made redundant with immediate effect. No consultation occurred. There was no pool exercise. No alternative roles were discussed.

At the tribunal, the dismissal is found unfair — the failure to consult individually is a clear procedural breach. But the employer provides evidence that the role genuinely ceased to exist, that no comparable vacancies were available at the relevant time, and that three other employees in the same team were also made redundant. The employer argues that proper consultation would have made no difference to the outcome.

Net weekly loss (after tax / NI)

Months out of work before new job

Full compensatory award (before Polkey)

Polkey reduction: tribunal finds 60% chance dismissal was inevitable

Award after Polkey reduction

approximately £3,050

in compensatory loss — the full four months of actual financial loss, reduced by 60 per cent to reflect the probability that a proper consultation would not have saved Diane's role. The basic award (calculated on service and age) is not subject to the Polkey reduction and is paid in addition.

Diane might argue for a lower reduction by pointing to evidence that consultation would genuinely have opened up redeployment options, or that the pool selection process was inadequate. If the tribunal accepts this, the reduction falls and the award rises.

Polkey versus contributory fault

These are two distinct deductions that can both apply to the same compensatory award, but they address entirely different questions and must not be confused.

is prospective and employer-focused: what would the employer have done if they had followed a proper procedure? It does not depend on any fault by the employee. A claimant with an entirely clean record can still face a Polkey reduction if their role was genuinely disappearing.

contributory fault reduction

under section 123(6) of the Employment Rights Act 1996 is backward-looking and employee-focused: did the employee do something culpable that caused or contributed to the dismissal? If yes, it is just and equitable to reduce compensation by a percentage reflecting that contribution.

Both reductions apply independently. An employee dismissed after a procedurally unfair process who was also genuinely at fault — say, by repeatedly ignoring clear warnings — may face both a Polkey reduction (dismissal was likely anyway) and a contributory fault reduction (their conduct contributed to the outcome). The combined effect can significantly reduce the final award, though the two reductions must be assessed and applied separately.

Common pitfalls for claimants

Frequently asked questions

Sources & further reading

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Last reviewed: June 2026.

Statutory references checked against the Employment Rights Act 1996 as in force on 25 May 2026.

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