The Claimant was found to have been unfairly dismissed when selected for redundancy. She was paid an enhanced redundancy payment exceeding the statutory redundancy by c£17,000. Her loss of earnings were calculated as c£58,000. The ET applied a 50% Polkey reduction to her compensatory award, bringing it down to c£29,000 and then reduced it further by the excess of the enhanced redundancy payment, resulting in an award of c£12,000. The Claimant appealed against this calculation, arguing that the loss of earnings and enhanced redundancy payments should be added together to make c£75,000, for that figure to be reduced by 50% to get c£37,500 and for the enhanced redundancy figure of c£17,000 to be deducted, leaving the Claimant with c£20,500.

The EAT dismissed the appeal. In Ground 1, the Claimant contended that the ET should have assessed her loss, prior to the deduction in respect of the enhanced redundancy payment under section 123(7), as consisting of 50% of her loss of earnings, plus 50% of the value of her enhanced redundancy payment. The EAT rejected this argument, on the basis that this would involve giving credit, in the calculation of the Claimant’s loss, for something that she had actually received, namely the enhanced redundancy payment. Also, the approach to calculation of loss put forward on behalf of the Claimant was incompatible with the approach that the ET was required to follow, in accordance with the judgment of the Court of Appeal in Digital Equipment Co. Ltd v Clements (No.2) [1998] ICR 258. Ground 2 was that the reduction under section 123(7) for the enhanced redundancy payment actually received should itself be subject to the Polkey deduction, so that the Claimant’s compensatory award should only be reduced by 50% of her enhanced redundancy payment. The Claimant accepted, rightly, that the EAT is bound by the Court of Appeal’s ruling in Digital Equipment Co. Ltd v Clements (No.2) to reject this argument.