This article applies to England, Wales and Scotland.
In brief: A Polkey reduction cuts the compensatory award in an unfair dismissal claim where the tribunal finds you might have been dismissed anyway had a fair procedure been followed. It comes from Polkey v AE Dayton Services Ltd [1987]. It is expressed as a percentage, can reach 100%, and does not touch the basic award.
Last updated: July 2026
By Yerty | This guide was created using analysis of tribunal cases and official ACAS/Gov.uk guidance.
Winning an unfair dismissal claim and receiving full compensation are two different things, and the gap between them catches people out more often than almost anything else in tribunal practice. A Polkey reduction is the most common reason for that gap.
This guide explains what a Polkey reduction 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 information about UK employment law. Yerty is not a law firm and does not provide legal advice. Every situation is different. If your employer is arguing for a Polkey reduction, consider speaking to a solicitor about your circumstances.
What Is a Polkey Reduction?
A Polkey reduction is a percentage cut applied to the compensatory award in an unfair dismissal claim, reflecting the chance that you would have been dismissed anyway if your employer had followed a fair procedure.
The name comes from Polkey v AE Dayton Services Ltd [1987] UKHL 8, 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 House of Lords held that a failure to follow a fair procedure makes a dismissal unfair, and that the question of whether the outcome would have been the same goes to compensation rather than to liability.
The statutory basis is section 123(1) of the Employment Rights Act 1996, which requires the compensatory award to be such amount as the tribunal considers just and equitable having regard to the loss you have suffered.
Why Tribunals Make Them
The logic is that compensation is meant to reflect actual loss, not to punish the employer.
If a tribunal finds your dismissal unfair only because your employer skipped a step, and also finds that a properly conducted process would very likely have ended in dismissal anyway, then the loss caused by the unfairness is smaller than the loss caused by the dismissal itself. The reduction is the tribunal's attempt to price that difference.
This is why a claim can succeed on liability and still produce a modest award. The finding of unfairness stands. The compensation reflects what the procedural failure actually cost you.
How It Is Applied
The tribunal assesses the likelihood that dismissal would have followed a fair procedure and expresses it as a percentage. A finding that dismissal was very likely produces a large reduction. A reduction of 100% is possible, and does happen, leaving no compensatory award at all.
Two points are worth knowing.
It applies to the compensatory award only. The basic award, which is calculated from your age, length of service and a capped weekly wage, is not reduced by Polkey. It can be reduced on other grounds, but not this one.
The burden sits with the employer. A tribunal cannot make a reduction on assertion alone. The employer needs to put forward evidence about what would have happened. Where there is no evidence, there is no basis for a reduction. Where the exercise would be so speculative that no reliable assessment is possible, a tribunal may decline to make one, though it is expected to do its best with the material it has rather than give up because the answer is uncertain.
Polkey Is Not the Same as Contributory Fault
These two get confused constantly, including in published guidance.
| Polkey reduction | Contributory fault | |
|---|---|---|
| What it asks | Would you have been dismissed anyway after a fair process? | Did your own conduct cause or contribute to the dismissal? |
| Statutory basis | Section 123(1) ERA 1996 | Section 123(6) and section 122(2) ERA 1996 |
| Affects basic award | No | Yes, can do |
| About your behaviour | No | Yes |
A Polkey reduction implies nothing about your conduct. It is a finding about process and probability. A contributory fault reduction is a finding that something you did played a part in the dismissal.
Both can be applied in the same case, which is how an award can end up substantially lower than the headline loss. Our guide to the compensatory award for unfair dismissal covers what that award is meant to cover before any reduction is applied.
What This Means If You Are Bringing a Claim
If your case rests entirely on procedure, expect the reduction to be raised. An employer who accepts the process was flawed will often argue that the outcome was inevitable, and that argument goes directly to what you recover.
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 result was inevitable. A dismissal where the conduct was admitted and serious is easier.
Keeping the documents that show what your employer actually knew, and when, is more useful here than almost anything else. Tribunal decisions turn on contemporaneous records far more often than on recollection.
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. The time limit for most claims is three months less one day from the date of dismissal, and that deadline applies regardless of how strong your case is.
Frequently Asked Questions
What is a Polkey reduction?
A percentage cut to the compensatory award in an unfair dismissal claim, reflecting the chance you would have been dismissed anyway had a fair procedure been followed. It comes from Polkey v AE Dayton Services Ltd [1987] UKHL 8.
Can a Polkey reduction be 100%?
Yes. Where a tribunal finds that dismissal was effectively certain even with a fair process, it can reduce the compensatory award to nothing. The finding of unfair dismissal still stands, and the basic award is unaffected.
Does Polkey reduce the basic award?
No. A Polkey reduction applies only to the compensatory award. The basic award, calculated from age, length of service and a capped weekly wage, can be reduced on other grounds but not by Polkey.
What is the difference between Polkey and contributory fault?
Polkey asks whether dismissal would have happened anyway after a fair process, under section 123(1) of the Employment Rights Act 1996. Contributory fault asks whether your own conduct contributed to the dismissal, and can reduce the basic award too.
Who has to prove a Polkey reduction?
The employer needs to put forward evidence supporting it. A tribunal should not reduce an award simply because the employer asserts dismissal was inevitable, though it is expected to assess the evidence it has rather than decline because the answer is uncertain.
Can I still win if a Polkey reduction is made?
Yes. A Polkey reduction affects compensation, not the finding. Your dismissal is still recorded as unfair. Depending on the percentage, the compensatory award may be significantly reduced or removed entirely.
Is the compensation cap changing?
The statutory cap on the compensatory award is £123,543, or 52 weeks' gross pay, whichever is lower, for dismissals on or after 6 April 2026. It is due to be abolished from 1 January 2027 under the Employment Rights Act 2025.
Sources
- Polkey v AE Dayton Services Ltd [1987] UKHL 8 — https://www.bailii.org/uk/cases/UKHL/1987/8.html
- Employment Rights Act 1996, section 123 — https://www.legislation.gov.uk/ukpga/1996/18/section/123
- Employment Rights Act 1996, section 122 — https://www.legislation.gov.uk/ukpga/1996/18/section/122
- "Dismissals: unfair dismissal", ACAS — https://www.acas.org.uk/dismissals