Employment Appeal Tribunal casts doubt over fairness of “up or elsewhere” performance management model

Background

The Claimant, Ms Pal, worked as a Manager for the Respondent Accenture (UK) Ltd, a management consultancy firm. Ms Pal worked in the Talent and Organisation practice group and had been promoted twice since she commenced work in 2009. Firstly, she was promoted from an Analyst to a Consultant in 2011, and then again to a Manager in 2013.

Accenture operates a progression-based performance model, whereby it expects its employees to be continuously developing towards the next level of seniority in the career model. Under this model if staff are not working at the next level, then they are deemed to be underperforming. Performance is assessed by Accenture twice yearly and if an employee is deemed to be underperforming, they are given an outcome of “Not Progressing”. Although the Respondent argued that this performance model was standard across the consulting industry, it is fairly unusual outside of this sphere. Usually, an employee’s performance is judged against the standard and responsibilities of their own role, rather than that of a more senior employee.

The next level of seniority in Accenture’s career model for Ms Pal, would have been that of Senior Manager. However, in August 2018 her performance was assessed as “Not Progressing”. In September of 2018, Ms Pal required an operation to remove an ovarian cyst and was absent from work for around a period of a month. She was also diagnosed with endometriosis and returned to work following her surgery against the advice of Occupational Health. She had further sickness absences thereafter before returning to work under a phased return plan. After her return, Ms Pal obtained a different post within Accenture and during her next performance review in this new role was again assessed as “Not Progressing”. A meeting was held to discuss her performance in July 2019 and thereafter she was dismissed, with her notice paid in lieu.

Ms Pal brought a claim for unfair dismissal as well as discrimination claims including discrimination arising from a disability.

The Employment Tribunal decision

In upholding Ms Pal’s complaint of unfair dismissal, the Tribunal were somewhat surprised that the policy which Accenture had followed to make the dismissal was their disciplinary and appeals policy, designed for use in instances of misconduct allegations, rather than capability. The Tribunal set out that employees are entitled to know the process that applies to them in dismissal situations and the fact that there was a non-alignment of the process actually used against Accenture’s disciplinary and appeals policy, was unreasonable and rendered the dismissal to be unfair.

In making their decision the Tribunal also said that Accenture were “absolutely entitled to use the progression-based model which it does”. It made no criticism of the Respondent for judging Ms Pal’s performance against that of a Senior Manager (rather than Manager) and said that it is up to an employer to set the standard asked of employees.

Despite their finding of unfair dismissal, the Tribunal said that they had “no doubt that, had the respondent used a policy which properly reflect the otherwise reasonable approach that it took in the dismissal, the claimant would have been dismissed fairly at the same time in any event”. They therefore decided to make a reduction of 100% to any compensatory award made to Miss Pal for unfair dismissal.

This marked a very big step for the Tribunal as reductions of this type are extremely rare. It meant that Ms Pal received only the basic award as compensation for her unfair dismissal, which is equivalent to that of a statutory redundancy payment.

Ms Pal’s discrimination complaints were all dismissed by the Tribunal. In fact, the Tribunal made a finding that Ms Pal was not disabled by reason of her endometriosis. The Tribunal were at pains to say that part of their reasoning behind this decision was because they were sceptical about the contents of an impact statement Ms Pal provided about her disability and concerns they had over her credibility as a witness.

Ms Pal appealed against the decision of the Tribunal.

The Employment Appeal Tribunal

Ground 1

The first ground of Ms Pal’s appeal concerned the deduction of 100% made by the Tribunal. In considering this, the EAT outlined that the purpose of a deduction of this sort (often referred to as a Polkey deduction) is to ensure that any compensation awarded to a Claimant is just and equitable in the circumstances. Any Polkey deduction made should reflect what an employer would, or might, have done had it had the opportunity to remedy any procedural defects in the process they have followed.

In this case, the Tribunal had criticised Accenture for following a disciplinary and appeals policy to make a decision about dismissal based on capability grounds, as well as not adhering to parts of that policy for example by not having independent decision makers. The Tribunal made a 100% Polkey deduction having decided that Accenture would have introduced a new policy that would have mirrored the process they had followed with Ms Pal, and this would have resolved the procedural defects and ended in the same result.

The Employment Appeal Tribunal upheld Ms Pal’s appeal on this point because they found that the Tribunal had applied a counterfactual position. The EAT said that the Tribunal had decided what they themselves would have done in the circumstances, instead of considering what Accenture would have done. The EAT held there was no evidence produced by Accenture during the Tribunal hearing which suggested that introducing a new policy is something they would have done.

Ground 2

Ms Pal’s second ground of appeal was that the Tribunal had erred in law in finding that the progression-based performance model was fair. The EAT also upheld this. The central issue in this ground of appeal is that Ms Pal’s dismissal was because of her alleged lack of ability to perform at the next rung of Accenture’s career model, namely that of Senior Manager. Ms Pal argued that this did not relate to her capability to undertake the role she was employed in, which was that of Manager. Importantly, when considering dismissal for capability reasons, the references in the Employment Rights Act 1996 are references to work that are in relation to work “the kind of which she was employed by the employer to do”.

In considering this question, the EAT assessed that dismissal under an “up or elsewhere” model might be potentially fair by reason of capability if an employee’s contract included a requirement to work at the next level on the career model but it would still be subject to a requirement on the employer to act fairly. The EAT also commented that there may be potential grounds for a “some other substantial reason” dismissal

Ground 3

Ms Pal’s third ground of appeal was against the Tribunal’s findings that she was not disabled by reason of her endometriosis. This ground was also upheld and like the other grounds, was again remitted back to a Tribunal for consideration.

The EAT found that the Tribunal had formed an extremely adverse view of Ms Pal’s credibility as a witness and as such, had totally disregarded her medical impact statement. In their judgment the Tribunal also made the following statement about endometriosis:

The EAT criticised the Tribunal for this statement, highlighting that these comments were irrelevant to Ms Pal who had both significant symptoms of endometriosis and whose condition had necessitated surgery. In considering the issue of whether a person’s day-to-day activities were substantially impacted by their impairment, the EAT noted that if a person was absent from work because of treatment for that impairment, this would generally amount to a substantial adverse effect, a point the Tribunal seemed not to have considered.

Conclusion

Although a less common performance management model, this case provides some useful insight for employers operating an “up or elsewhere” model and the consideration of whether any dismissals arising out of this could be examined for fairness by reason of “some other substantial reason” or capability against the provisions of an individual’s employment contract.

It more generally serves a useful reminder of the implementation of the Polkey principles and that a Tribunal must not consider what they would do in any given matter, but search for evidence which sets out what the individual employer would have done. Accordingly, employers engaged in Tribunal proceedings could consider adducing evidence of this, if they seek to rely on Polkey in the defence of any claim.

For Ms Pal, her case is to be remitted to the Employment Tribunal with the EAT determining that it must go before a differently constituted panel so that Ms Pal can have the confidence that the remitted matters will be considered afresh.