This guide covers employment law in England, Wales and Scotland. It does not cover Northern Ireland.
In brief: A Polkey adjustment reduces the compensatory award in an unfair dismissal case to reflect the possibility that the employee would have been fairly dismissed anyway, either at the same time or after a further period. It is often expressed as a percentage and can reach 100%, but a tribunal may instead limit compensation to the period employment would probably have continued. It does not itself reduce the basic award.
Last updated: July 2026
By Yerty | Based on the Employment Rights Act 1996 and the leading appellate authorities on Polkey adjustments.
Winning an unfair dismissal claim and receiving full compensation are two different things, and the gap between them catches people out. A Polkey adjustment is one important reason why an award can be substantially lower than the loss originally claimed.
This guide explains what a Polkey adjustment is, why tribunals make them, how it differs from a reduction for your own conduct, and what it means if your employer raises it.
Important: This guide provides general information about employment law in Great Britain and does not cover Northern Ireland. Yerty is not a law firm and does not provide legal advice. Every situation is different. If your employer is arguing for a Polkey adjustment, consider speaking to a solicitor about your circumstances.
What a Polkey Adjustment Is
A Polkey adjustment is an adjustment to the compensatory award reflecting the possibility that, had the employer acted fairly, the employee would still have been dismissed, or would have remained employed for only a limited period.
A tribunal may reduce compensation by a percentage representing the chance of a fair dismissal. Alternatively, it may find that employment would have ended after a particular period and award loss only up to that point. A percentage is a common technique for dealing with uncertainty, not the legal definition.
The principle takes its name from Polkey v AE Dayton Services Ltd [1987] UKHL 8, [1988] ICR 142, decided by the House of Lords on 19 November 1987. Mr Polkey was a driver made redundant on the spot, with no warning and no consultation.
The statutory basis is section 123(1) of the Employment Rights Act 1996, under which the compensatory award must be such amount as the tribunal considers just and equitable having regard to the loss sustained because of the dismissal, so far as that loss is attributable to the employer's action.
Why Tribunals Make Them
Compensation is compensatory rather than punitive. It reflects loss caused by the dismissal.
The House of Lords in Polkey rejected the argument that an employer could treat a fair procedure as unnecessary merely because it believed the same outcome was inevitable. Whether the employer acted fairly is decided at the liability stage, under the statutory test in section 98(4) taken as a whole. The possibility that a fair dismissal might have occurred anyway is then relevant to compensation.
That does not mean every procedural imperfection makes a dismissal unfair. Fairness is judged overall. What it does mean is that a tribunal must assess what the employer actually did, and should not treat a defective dismissal as fair simply because a proper process might have produced the same result.
A Polkey adjustment is also not reserved for minor technical defects. It may be considered even where the failings were substantial. In Contract Bottling Ltd v Cave [2015] ICR 146 the tribunal had identified serious problems with a redundancy selection exercise, and there was still evidence of a real possibility that the claimants might have been fairly selected.
How It Is Applied
The tribunal assesses whether a fair dismissal might have occurred, when it might have occurred, and how likely that outcome was. It is assessing a chance, not applying an all-or-nothing test of whether dismissal was inevitable.
Two points on scope.
It does not itself reduce the basic award. The basic award is calculated from age, length of service and a capped weekly wage under section 122, and a Polkey adjustment operates through section 123. The basic award can be reduced for other reasons, including contributory conduct.
A 100% adjustment is possible. A tribunal may make one where it finds a fair dismissal would have occurred at the same time. It may instead award loss for a limited period where a fair dismissal would have occurred later.
On evidence, the employer normally carries the evidential burden of putting forward material supporting an adjustment. The tribunal must then consider all the evidence, including evidence given by the employee. A bare assertion that dismissal was inevitable is not enough, but there does not have to be a separate remedy-stage case: findings and evidence from the liability hearing can supply the basis.
In Software 2000 Ltd v Andrews [2007] ICR 825 the Employment Appeal Tribunal set out the approach, and in Thornett v Scope [2007] ICR 236 the Court of Appeal cautioned tribunals against declining the exercise merely because the evidence is incomplete or uncertain. A degree of speculation is inherent in any assessment of what would have happened. Only where no sensible prediction can be made from sufficiently reliable evidence may a tribunal reasonably decline to make an assessment at all.
Polkey and Contributory Conduct
These are distinct adjustments, although they are sometimes confused because both can reduce compensation in the same case.
| Polkey adjustment | Contributory conduct | |
|---|---|---|
| Central question | Would or might a fair dismissal have occurred anyway, and when? | Did culpable or blameworthy conduct cause or contribute to the dismissal? |
| Main statutory basis | Section 123(1) ERA 1996 | Sections 122(2) and 123(6) ERA 1996 |
| Can reduce compensatory award | Yes | Yes |
| Can reduce basic award | No | Yes, under section 122(2) |
| Requires employee blameworthiness | No | Yes |
| Can employee conduct be relevant | Yes | Yes |
A Polkey adjustment does not itself amount to a finding that you were blameworthy. Your conduct may nevertheless be central to the assessment. A common pattern is a dismissal for misconduct that was unfair because the investigation was defective, where the tribunal then finds that a fair investigation would probably have established the misconduct and led to dismissal. Our guide to the Burchell test explains how misconduct dismissals are judged at the liability stage.
Contributory conduct is different. Section 123(6) is not engaged by any act that happened to contribute causally. The conduct must be culpable or blameworthy. For the basic award, section 122(2) asks whether conduct before dismissal makes it just and equitable to reduce the award.
Both adjustments can be made in the same case. Where they are, the tribunal should address the two questions separately and explain the basis and effect of each, rather than treating them as interchangeable or reducing twice for the same matter without analysis. Our guide to the compensatory award for unfair dismissal covers what that award is meant to cover before any adjustment.
What This Means If You Are Bringing a Claim
Where the alleged unfairness is mainly procedural, the employer may argue that a fair process would have produced the same result. That is a possibility to address in the evidence rather than assume, and not every employer raises it.
What tends to matter is the substance behind the procedure. A dismissal where the underlying reason was weak, the evidence thin, or the investigation incapable of supporting the conclusion is harder to defend on the basis that the outcome was likely anyway.
Contemporaneous records can be especially important here, because they may show what information and what alternatives would have been available during a fair process.
A Polkey adjustment affects compensation rather than the liability finding. The finding that the dismissal was unfair is unaffected, even if the compensatory award is reduced to zero.
Time Limits
For an unfair dismissal whose effective date of termination falls before 1 October 2026, the ordinary tribunal deadline is three months less one day. For dismissals taking effect on or after 1 October 2026, the ordinary limit will generally be six months.
ACAS early conciliation normally has to be started first and affects how the deadline is calculated. Where a claim is presented late, the tribunal will usually determine the limitation question as a jurisdictional issue, often at a preliminary hearing.
If you are at an earlier stage, our guide to employment tribunal claims sets out the process and the ET1 claim form guide covers how to start one.
Frequently Asked Questions
What is a Polkey adjustment?
An adjustment to the compensatory award in an unfair dismissal case reflecting the possibility that the employee would have been fairly dismissed anyway, or would have remained employed only for a limited period. It comes from Polkey v AE Dayton Services Ltd [1987] UKHL 8.
Is a Polkey adjustment always a percentage?
No. It is often expressed as a percentage reduction, but a tribunal may instead find that employment would have ended after a particular period and award loss only up to that point.
Can a Polkey adjustment be 100%?
Yes, where a tribunal finds that a fair dismissal would have occurred at the same time. The finding that the dismissal was unfair is unaffected, and the basic award is not reduced by a Polkey adjustment.
Does Polkey reduce the basic award?
No. A Polkey adjustment operates through section 123 of the Employment Rights Act 1996 and affects the compensatory award. The basic award, governed by section 122, can be reduced for other reasons including contributory conduct.
What is the difference between Polkey and contributory conduct?
Polkey asks whether a fair dismissal would or might have occurred anyway, and when. Contributory conduct asks whether culpable or blameworthy conduct by the employee caused or contributed to the dismissal, and can reduce the basic award as well.
Who has to prove a Polkey adjustment?
The employer normally carries the evidential burden of putting forward supporting material. The tribunal then considers all the evidence, including the employee's, and can rely on findings from the liability hearing. A bare assertion that dismissal was inevitable is not enough.
Is the compensation cap changing?
The general statutory cap on the compensatory award is currently the lower of £123,543 and 52 weeks' gross pay for dismissals taking effect on or after 6 April 2026. It is scheduled to be removed for dismissals from 1 January 2027. Some unfair dismissal claims are already exempt from it.
Will removing the cap change how Polkey works?
No. Compensation will continue to be assessed on a loss-based, just and equitable basis under section 123, so Polkey adjustments, contributory conduct reductions and mitigation all continue to apply.
Sources
- Polkey v AE Dayton Services Ltd [1987] UKHL 8, [1988] ICR 142 — https://www.bailii.org/uk/cases/UKHL/1987/8.html
- Software 2000 Ltd v Andrews [2007] ICR 825 (EAT) — https://www.bailii.org/uk/cases/UKEAT/2007/0533_06_2601.html
- Thornett v Scope [2007] ICR 236 (CA) — https://www.bailii.org/ew/cases/EWCA/Civ/2006/1600.html
- Contract Bottling Ltd v Cave [2015] ICR 146 (EAT)
- Employment Rights Act 1996, sections 98, 122, 123 and 124 — https://www.legislation.gov.uk/ukpga/1996/18
- The Employment Rights (Increase of Limits) Order 2026 — https://www.legislation.gov.uk/uksi/2026/348