School re-organisation case provides insight into fair redundancy process
What are the hallmarks of a fair redundancy process?
Re-organisation and redundancy processes can be tricky. Part of the issue is that there is no one-size-fits-all fair process which every employer should follow. Unlike disciplinary and grievance processes, there is no statutory guidance to follow in redundancy dismissals. Instead, there are general principles gleaned from decades of unfair dismissal case law. There may also be relevant redundancy and redeployment policies which the employer should follow, and which may be contractual. For academy trusts, these may have transferred across from the local authority on academy conversion.
In this article, we consider some of the hallmarks of a fair redundancy process in the light of a recent Court of Appeal judgment in the context of a school closure and re-organisation.
This article does not cover the additional collective redundancy consultation obligations of employers who are contemplating 20 or more dismissals at one establishment within a 90-day period. If you would like more detail on these and on other aspects of the redundancy process, you may wish to register on our website to access our recorded Employment Law Breakfast Briefing: Redundancy - getting the process right.
Fairness is judged in the round
Before setting out on a re-organisation / redundancy exercise, it is useful to be aware of the way an employment tribunal will approach an employee’s claim that their redundancy dismissal was unfair.
The tribunal will focus first on whether there was a fair reason for the dismissal. In redundancy cases, the focus will initially be on whether there was in fact a genuine redundancy situation and whether the dismissal was by reason of redundancy.
Secondly, the tribunal will consider the overall fairness of the dismissal. In doing so, the tribunal will take into account all the circumstances of the dismissal, including “the size and administrative resources of the employer's undertaking” and whether the employer acted reasonably or unreasonably in treating the reason for the dismissal as a sufficient reason to dismiss the employee.
In practice, this means that the tribunal will take evidence on the re-organisation / redundancy process which was followed and assess whether this was fair when taking into consideration the wider context. Employers with considerable resources, such as larger schools and academy trusts, will often be held to a higher standard by tribunals and be expected to carry through a more rigorous process.
Steps a tribunal will expect to see in a fair redundancy process
Although there is no simple checklist for every scenario, case law suggests that the following are markers of a fair redundancy process:
- Consulting with employees and their representatives on the business case for re-organisation / redundancy, and the proposed timetable and process (including selection pools, processes and criteria);
- A transparent, fair, objective and non-discriminatory selection process;
- Meaningful individual consultation with those at risk of redundancy;
- Serious consideration of alternatives to redundancy, including seeking suitable alternative employment for those who are at risk of redundancy; and
- A right of appeal of any redundancy dismissal decision.
Case details: Gwynedd Council v Barratt & Hughes
The Court of Appeal has recently upheld an unfair dismissal decision in the context of school closure and re-organisation.
The two claimants were P.E. teachers employed by Gwynedd Council to work at a community secondary school (School 1). In 2015, the council decided to re-organise education provision by closing School 1 and nine primary schools in its catchment area, and opening a new community school for pupils aged 3 to 16 (School 2).
Staff were informed that their contracts would terminate at the end of the school year, that they would be able to apply and interview for roles at School 2, and that unsuccessful candidates would be made redundant if they were not redeployed.
The Claimants applied for positions at School 2, but they were unsuccessful and external candidates were appointed to the new roles. The claimants were dismissed on the ground of redundancy. The claimants queried the lack of an opportunity to make representations about the decision and the lack of an appeal process, correctly pointing out this was their contractual right. The chair of the governing body of School 1 apologised but stated that the lack of an appeal did not disadvantage the claimants as an appeal could not have reversed the decision to close the school.
The claimants brought claims for unfair dismissal which were upheld by an employment tribunal.
On appeal, the Employment Appeal Tribunal and subsequently the Court of Appeal both agreed with the tribunal that the dismissals were not fair in all the circumstances.
Key learning points
This case highlights the following useful learning points when planning for redundancy and re-organisation:
- an irreversible business decision (here a decision by the council to close a school) is not the same as an individual redundancy decision being inevitable;
- alternatives to redundancy for the individual should always be considered, and this will usually include giving those at risk of redundancy priority over external candidates for any suitable alternative vacancies;
- asking employees to apply for their existing jobs or equivalent jobs can be found to be unfair in some circumstances;
- employees who are at risk of redundancy should be properly consulted and allowed to make representations; and
- it is advisable to offer a right of appeal in all redundancy dismissals even though there is no statutory right of appeal, and even where there is no contractual right of appeal.
There are some circumstances where it will be appropriate to ask employees to apply for and interview for a role in a redundancy scenario. For example, this could be the case where a number of employees have been selected for redundancy and there is only one suitable alternative vacancy (which is not the employees’ current role) available for these employees.
The special protections for those on maternity leave who are selected for redundancy should not be overlooked. For more detail, please see our article from October 2020, Can we make an employee redundant during maternity leave or offer changed terms on her return to work? (available from our website).
How Wrigleys can help
The employment team at Wrigleys is expert in advising charities, third sector and education sector clients on employment-related processes, including small and large-scale re-organisations and redundancies.
We have extensive experience in advising employers on the business case for redundancy, and on selection and consultation processes, including with recognised trade unions. We specialise in offering timely, pragmatic advice to reduce the risk of conflict, grievances and claims.
Importantly, we work within the wider charities, social economy, and education teams at Wrigleys and so we also have in-depth understanding of how our clients’ governance and regulatory obligations impact on re-organisation decisions and employment litigation risks. Our CSE team can further help to minimise your risks by providing advice on charity law, trustee and director duties and delegation of powers, reporting to the regulator, and reputational risk.
If you would like to discuss any aspect of this article further, please contact Alacoque Marvin or any other member of the employment team on 0113 244 6100.
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The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.