Polkey v AE Dayton Services Ltd [1987] UKHL 8 is a UK labour law case, concerning unfair dismissal, now governed by the Employment Rights Act 1996.

The phrase 'Polkey deduction' has become a standard concept in UK Employment Tribunals, as a result of this case and later ones, meaning that even if a Tribunal decides a dismissal was unfair, it must separately decide whether the compensatory award is to be awarded in full, or be reduced by a percentage based on their estimate of the probability that the dismissal would have occurred anyway, even had a fair process been followed.

[1] Mr Polkey drove a van for 4 years until he was told to come to his manager’s office and informed that he was being made redundant on the spot.

But if the end result would be the same, then this will go to remedy not liability: If it is held that taking the appropriate steps which the employer failed to take before dismissing the employee would not have affected the outcome, this will often lead to the result that the employee, though unfairly dismissed, will recover no compensation or, in the case of redundancy, no compensation in excess of his redundancy payment...[2] ... An industrial tribunal may conclude, as in the instant case, that the appropriate procedural steps would not have avoided the employee’s dismissal as redundant.Prior to the decision in Polkey, the law set out in the British Labour Pump v Byrne ruling of 1979 [3] was a so-called "no difference" rule.

[4] The Byrne case concerned whether trade union representation would have affected the outcome, and the Employment Appeal Tribunal ruled that the dismissal was unfair.