In an Employment Tribunal claim, a ‘Polkey Deduction’ is something that can reduce your compensatory award in an Unfair Dismissal claim.
If you win a claim for unfair dismissal, you will be awarded a basic award, which is based on a fixed calculation, depending on your age and your length of service. You will also normally receive a compensatory award which will depend on several factors. If your dismissal was unfair because of a problem with the process the employer followed when it dismissed you, the Employment Tribunal may decide to reduce your compensatory award if it decides that you would have been dismissed anyway, even without the problem with the procedure.
The Employment Tribunal will look at what the problems were with the procedure the employer followed. It may be that the employer did not carry out a proper investigation, or did not give the employee a chance to appeal. The Employment Tribunal will then decide whether the employee would have been dismissed anyway.
The Polkey Deduction is calculated on a percentage basis, and then applied to the compensatory award for the unfair dismissal. If the Employment Tribunal considers that the dismissal would have happened whether or not the proper procedure was followed, the compensatory award could be reduced by 100%, so that the employee is left with the basic award only.
Polkey Deductions are frequently argued for by employers when there is likely to be a finding that an employee has been unfairly dismissed, but the employee would, they say, have been dismissed in any event.