Polkey reductions, progression models and disability analysis under scrutiny

Background

In the case of Pal v Accenture (UK) Ltd, the claimant was dismissed after two consecutive “Not Progressing” performance ratings under Accenture’s progression-based “up or elsewhere” model. The model required employees to demonstrate continuous improvement towards the next level, with a failure to do so constituting underperformance. Although the Employment Tribunal found that her dismissal was unfair because the employer had failed to follow its own disciplinary and appeals policy, it went on to apply a 100% Polkey reduction on the basis that she would have been dismissed in any event.

The claimant also brought claims of disability discrimination, relying on her diagnosis of endometriosis and related periods of sickness absence and phased return to work.

EAT decision

The EAT allowed the appeal. It held that the Tribunal had erred in law when applying the Polkey reduction by using the wrong counterfactual. The Tribunal had assumed that the employer would simply have adopted a different process that mirrored what it had actually done, rather than hearing evidence on what the employer would or might have done had it complied with its own policy. There was no evidential basis for concluding that a fair dismissal was inevitable, let alone certain.

The EAT also gave guidance on the interaction between progression-based performance models and potentially fair reasons for dismissal. It confirmed that capability must be assessed by reference to the work the employee was contractually employed to do, not their readiness for promotion to a higher role. Where dismissal is driven by failure to progress, the appropriate potentially fair reason may be some other substantial reason, but this requires careful analysis.

On disability, the EAT found that the Tribunal’s reasoning was inadequate. It had failed properly to analyse the medical evidence, the likelihood of recurrence, and the impact of treatment when assessing whether the claimant’s endometriosis amounted to a disability. As a result, the findings on disability, knowledge, discrimination arising from disability and justification were unsafe. All issues were remitted to a freshly constituted Tribunal.

Learning points for employers

This decision is a reminder to employers on the importance of following internal policies as procedural failings cannot be neutralised by an assumption that dismissal was inevitable. Polkey reductions require evidence-based, employer-specific analysis. Employers operating progression or “up or out” models should take care to identify the correct reason for dismissal instead of assuming that capability will be the correct reason. Where health conditions may be in play, Tribunals will expect a rigorous and structured approach to disability analysis, grounded in the medical evidence available at the time.

For more information or advice, please contact Sharmin Chowdhury in our Employment team.