King v Eaton Ltd (No 2) [1998] IRLR 686

In this long-running unfair dismissal case, the Inner House of the Court of Session (the Scottish equivalent of the Court of Appeal) emphasize once again the importance of meaningful consultations with unions and employees at the early stages of a redundancy dismissal.

Mr King and others were made redundant by Eaton Ltd, having been selected on the basis of criteria drawn up by management. The unions involved, and also the employees affected, were not consulted on the method of selection, nor the selection criteria, though they were advised in advance of the Company's intention to make redundancies and of the selection criteria to be used.

The Employment Tribunal, upheld by the Employment Appeal Tribunal and the Court of Session, (King v Eaton Ltd No 1) held that the employees had been unfairly dismissed on two main grounds. Firstly, there had been inadequate consultation. Secondly, there had been no evidence from those who had actually carried out the selection assessments, to enable the Tribunal to decide whether or not the assessments had been fairly applied. The cases were therefore remitted to the Tribunal for compensation to be determined.

At the reconvened hearing (King v Eaton Ltd No 2 ) the Company sought to argue that compensation should be reduced, relying on the Polkey principle that even if the correct procedure had been followed and appropriate consultation taken place, it would have made no difference and the employees would have been selected anyway. Rejecting this argument, the Tribunal decided that it might be appropriate to reduce compensation in a case where there was a flaw in procedure alone, but this principle did not apply in a case like this which was "riddled with unfairness throughout."

It was against this second Tribunal decision that the Company again appealed to the Employment Appeal Tribunal and then to the Inner House. Their argument was that it was incorrect to distinguish in this way between procedural and substantive flaws in the dismissal process. However, both the Appeal Tribunal and the Inner House unequivocally reject this position : "In broad terms, it appears to us that there will be situations where one can say that what went wrong was "merely" procedural. Equally, in broad terms, we think there will be situations where one can say that an employee has been deprived of 'something of substantive importance'."

Although it may be a more straightforward exercise where there was a "merely" procedural lapse, in a situation where something fundamental has gone wrong with the dismissals in a way that goes to the heart of the matter, then, according to the Inner House, " it may well be difficult to envisage what track one would be on, in the hypothetical situation of the unfairness not having occurred."

In this case, where there was an absence of consultation with unions and employees alike at the crucial stage of deciding what the selection criteria were to be, there was a substantive flaw that went to "the heart of the matter" in a way that could not be classified as purely procedural. To try and establish what might have happened would be pure speculation, and as a result the Tribunal were justified in refusing to allow the employers to put forward evidence.

Read with the House of Lords decision in Polkey, and the previous Court of Session decision in King v Eaton Ltd (No 1), the case provides a useful reminder of the importance of consultation at all stages of the redundancy process, but most particularly at the stage where redundancies are first being contemplated and selection criteria determined.