Redundancy consultation: what should employers consult on and when?
EAT: Redundancy dismissal of fixed term employee was unfair due to lack of consultation on pooling and selection.
In these uncertain times, some employers are unfortunately having to make difficult decisions about staffing, including carrying out redundancy exercises. A recent case in the Employment Appeal Tribunal provides a timely reminder of some of the fundamental principles of a fair redundancy process.
There is no statutory guidance (such as an Acas Code of Practice) on fair redundancy processes, although Acas has published useful non-statutory guidance on redundancies. In order to understand what a tribunal might consider fair or unfair in such a process, we need to consider guidance from case law in this area. Employers should also ensure they follow any relevant redundancy policy and/or collective agreement.
Steps the tribunal will usually expect to see in a fair redundancy process
The leading case on fair redundancy processes (Williams v Compair Maxam Ltd), indicates the importance of the following steps. (Please note that there are additional statutory requirements where 20 or more dismissals are contemplated within a 90 day period.)
• Warn employees of the possibility of redundancies in good time;
• Consult on the following before making any decisions:
a) the business case for redundancy; and
b) the proposed timetable and process (including selection pools, selection processes and selection criteria);
• Conduct a transparent, fair, objective and non-discriminatory selection process;
• Conduct meaningful consultation with those at risk of redundancy, including consultation on any selection scoring / decisions;
• Seriously consider alternatives to redundancy, including seeking alternative employment for those who are at risk of redundancy; and
• Offer a right of appeal of any redundancy dismissal decision.
Where employers take a different approach, they will need to be able to evidence good reasons for doing so.
A recent case has highlighted the crucial role of consulting with individuals about pooling and selection criteria at a stage when consultation can still influence decision making and before selecting an employee for redundancy.
The claimant, Ms Mogane was employed as a Band 6 nurse by the NHS trust on a series of one-year fixed term contracts and she had more than two years’ service. The trust decided that the number of staff in the research unit in which she worked should be reduced for financial reasons. The unit staff included another Band 6 nurse whose fixed term contract expired after that of the claimant.
The trust decided that Ms Mogane should be made redundant on the basis that her contract was due to be renewed soonest. There was no consideration of pooling Ms Mogane with the other Band 6 nurse and no selection criteria were applied. Consultation did take place after this decision was made; this was focused on seeking alternative employment for the claimant. A Band 5 role was offered to her, but Ms Mogane refused the role on the basis that it was a lower band and she did not have the particular qualification required for the post.
An employment tribunal found that the dismissal was fair but this decision was overturned by the Employment Appeal Tribunal (EAT).
Employer should have consulted on proposed pool and selection criteria
The EAT reiterated the importance of employers carrying out consultation with employees at a point where it can be meaningful; in other words when it can still influence the decision-making.
The EAT commented that the employer had made an “arbitrary choice” of redundancy pool based solely on the date on which the claimant’s fixed term contract would have ended and as a consequence it had made the decision that the Claimant should be dismissed before any consultation took place.
This case is a useful reminder that:
• Those on fixed term contracts who have two years’ service can bring an ordinary unfair dismissal claim and should not be treated differently to employees on permanent contracts;
• It is important to understand that there are two steps in the selection process:
a) the first to decide on the pool of employees from whom those at risk of redundancy will be selected; and
b) the second to apply the selection criteria or conduct the selection process to those in the pool;
• Employers should consult on proposals for these two steps at the outset of the process and before decisions are made; and
• Consultation should always take place on the proposed pool for redundancy, even where the number of employees in the pool is one.
It may have been possible for the employer in this case to carry out a fair redundancy dismissal by pooling together the two Band 6 nurses and applying fair and non-discriminatory criteria to both in order to select one for redundancy. However, in skipping a key element of the consultation process and applying an arbitrary method of selection, the employer’s decision to dismiss was found to be unfair.
This article does not cover the additional statutory collective redundancy consultation obligations of employers who are contemplating 20 or more dismissals at one establishment within a 90-day period. For more information on these obligations, you may wish to register to access our recorded webinar available on our website: Redundancy - getting the process right.
If you would like advice as an employer on any aspect of redundancy consultation and dismissal, please get in touch.
How Wrigleys can help
The employment team at Wrigleys is expert in advising charities, third sector and education sector employers on employment tribunal claims, including those relating to redundancy dismissals.
We also have extensive experience in advising employers on redundancy policies and undertaking redundancy exercises, including collective redundancy consultations.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 employment litigation risks and staff / union relations. 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.