Tribunal success over redundancy process

We don’t normally go in for huge self promotion but given the Employment Judge’s comments in a tribunal last week we feel we ought to. Acting for a multi site international company we advised on a series of site closures across the UK resulting in a number of redundancies. At a tribunal claim resulting from the dismisssals recently the Employment Judge said:

“We also note, and the Respondent should take particular note of this, although the Claimant may not know this, the process followed by the Respondent, was almost worthy of being held out as a model examination answer. It is almost perfect. They warned of the prospect of redundancy in a general meetings, then specific individual meetings, the issues were discussed and considered at a management meeting, in the third week proposals were considered and some were adopted. Alternative employment was considered and then and only then were the individuals made redundant. It is a tribute the system operated by the Respondent of approximately 40 people who may have been made redundant nearly half were able to be retained”

A good guide as to how to operate a redundancy process is to imagine that it is your job that is being taken away. You would want to know why, to have a full explanation and a chance to genuinely influence the decision before it is made. You would also want to be treated with respect and listened to. Furthermore, you would want the company to do everything reasonable to retain you including giving you a good chance at any job you were suitable for.

The judgment in the case we have just done follows a recent EAT case where two existing employees at risk of redundancy competed for a vacant role with an existing employee who was not at risk. The facts of that case involved the tribunal considering selection for redundancy and alternative employment. The employer decided to remove a layer of management. Two managers were put at risk. A single new position was created which was open to internal competition. They both applied for the position, along with another candidate who was not at risk of redundancy.

One of the two was selected for the job on the basis that he had the ‘less insular’ management style and the other was made redundant. A tribunal, upheld by the EAT, decided that the dismissal was unfair because there was no objective selection between the candidates. The tribunal first held that the decision to appoint the successful candidate was based on the subjective view of one director only and that this made the dismissal unfair.

The tribunal also said that “If there was a question as to the capability of either person at risk of redundancy to undertake this role, then it should have been established that neither was suitable before opening the new role to further applicants.”

That case also reinforces the fact that selection for redundancy must be capable of being objectively justified.

A redundancy dismissal may be unfair for two reasons:

a) The method of selection made the dismissal automatically unfair, or

b) The dismissal was nevertheless unreasonable within the meaning of the general test of whether a dismissal is fair or unfair :

.. the determination of whether the dismissal was fair or unfair, having regard to the reasons shown by the employer, shall depend on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as sufficient reason for dismissing the employee; and that question shall be determined in accordance with equity and the substantial merits of the case.

Generally, if it has one, the Company should use an agreed selection procedure - either the customary one or one agreed with unions. If there is no such procedure then the one that is used must be objective, fair and carried out fairly. The sort of selection process that some companies carry out when choosing from a number of people is to have a number of factors and a score for each one. The forms are filled in by managers and discussed with the individuals. In each case, the individual should have as much information as possible including, if possible, the scores of others. It is a good idea to allow an appeal against the score.

In many cases, management’s decision as to who should go is intuitive at the start but this is fairly indefensible unless it is formalised and particularised. What is needed is a worked or structured system or argument, subject to consultation, as to why it is a particular individual and not someone else. My advice is that the more justification and logic there is for the selection and the more involved in and informed/consulted about the process the individuals are the more chance that they will accept it and not go to a tribunal. The Tribunal is looking for an objective system, not subjective views.

Williams v Compare Maxam Ltd [1982] IRLR 83,

“Whether or not an agreement as to the criteria to be adopted has been agreed with the union, the employer will seek to establish criteria for selection which so far as possible do not depend solely upon the opinion of the person making the selection but can be objectively checked against such things as attendance record, efficiency at the job, experience, or length of service.”

Note also the decision in Gwynedd Council v Barrett 2020. Before dealing with that case, however, we draw attention to the distinction between 2 scenarios:

a) a true ‘reduction in force’ program (as our US cousins call it) where X jobs are reducing to Y – in that case, there are no new vacancies and selection is simply as to who loses their job. The important case of Eversheds v De Belin was an example of this scenario, and

b) a situation where there are new vacancies and those at risk of dismissal are invited to apply. Thus, in this case, X jobs reduce to 0 but there are Y new jobs to apply for.

Cases such as Morgan v Welsh Rugby Union provide the general proposition that when it comes to deciding who gets a job it is mostly in the employer’s discretion. We say ‘mostly’ because, of course, the employer can’t illegally discriminate. The new case, in 2020, of Gwynedd Council v Barrett 2020 was a case where a group of teachers was required to interview for alternative employment. The dismissals were held to be unfair. In reality, the ex-employees had to apply for and be interviewed for their old jobs albeit at their existing workplace albeit that it was at a new school. There was no consultation over the proposals, no appeal against dismissal was offered and the dismissals were held to be unfair. The Employment Appeal Tribunal made a distinction between situations where employees were being considered for genuine new jobs (scenario b above) and situations where the number of old jobs was simply reducing. It said that where there were genuine vacancies an interview process was perfectly appropriate. However, in this case, where there were no genuine vacancies, as the teachers were effectively being asked to apply for the same or substantially the same job a process of consultation and selection from within the correct pool was appropriate. In this case, the employer had effectively asked the teachers to apply for their own jobs, with no consultation or appeal and this was unfair.

The general rule, however, is that previous cases on selection and redundancy do not provide mandatory rules that apply in every case.