In the case of Contract Bottling Ltd v Cave, Ms Cave and her colleague were awarded one year's salary for being unfairly dismissed following a defective redundancy process. They were accounts staff who had been made redundant from a pool of 10 employees when the company had to reduce overheads. The tribunal had to decide whether to make a reduction to the award to reflect the fact that the employees may have been dismissed anyway, even if the employer had followed the correct procedure (known as a 'Polkey' reduction, after the key case on this point).
The tribunal decided that there should be no reduction and the employer appealed to the EAT. The EAT decided that a 33% cut should be applied to the awards. It set out the reasons for and against a finding that the dismissals might have happened anyway. For example, new accounting software would have reduced the need for accounts staff (leading to a greater likelihood of their redundancy). However, the employees might not have been made redundant if the employer had fairly considered their offer to accept a lower salary.
Ultimately, tribunals have considerable discretion on how much of a reduction to make although they cannot make a Polkey reduction unless the employer provides evidence that the dismissal would have taken place anyway. Employers should ensure that a clear rationale for the redundancy is documented and that the process, including the choice of selection pools, is consistent with this.
If the employer finds itself in the tribunal and wants to argue that a Polkey reduction should be made, it should present clear evidence as to why the redundancy would have happened anyway.