When advising on redundancy procedures, employment lawyers tend to emphasise that employers should take care to ensure that they use objective criteria when selecting from a pool of employees. And very good advice it is too. Mitchells v Tattersall, however, shows that this does not inevitably mean a box ticking exercise is required.
Mitchells, the brewery, had a senior management team (“SMT”) of five. They ran into financial difficulties and the board decided to look at cutting the SMT to reduce expenses. They identified the property manager as the manager who contributed least, and was least likely to contribute, to bringing in revenue and on that basis decided that he should be made redundant. He successfully claimed unfair dismissal. The employment tribunal found that the dismissal was unfair because the board had used subjective criteria when selecting for redundancy, and that the procedure followed was unfair. However, they considered that he would have been made redundant if a fair selection method and procedure had been followed, and on the basis that there was a one in five chance of his being made redundant in any event, reduced compensation by 20%
Consideration of alternative employment is a part of a fair redundancy procedure and it is common practice for employees to be asked to attend interviews for alternative jobs, competing against other internal, and sometimes external, applicants.
In Samsung Electronics (UK) Ltd v Monte-D’Cruz the Employment Appeal Tribunal (EAT) overturned a finding of unfair dismissal by an employment tribunal, which held that a redundancy was unfair, in part because the criteria used for selecting candidates for an alternative job were subjective and “nebulous”. The competencies against which applicants were assessed were “creativity, challenge, speed, strategic focus, simplicity, self-control/empowerment, customer focus, crisis awareness, continuous innovation and teamwork/leadership”. The tribunal thought it would have been better to select by reference to a person specification, and that past performance was not properly taken into account.
Is it reasonable for someone to refuse a job offer as an alternative to redundancy if a reasonable person would have accepted the job offered? Yes, according to the Employment Appeal Tribunal in Readman v Devon Primary Care Trust.
Mrs Readman was at risk of being made redundant by her employer and was offered three posts as alternatives to redundancy. Two of them were at a lower grade and the other was at an equivalent grade. She tried one of the lower grade jobs for a four-week statutory trial period but she resigned from this and claimed a redundancy payment.
Instead she was offered the equivalent grade position as an alternative to redundancy. She was asked to accept the offer and, if she did not do so, the Trust would decide whether to make a redundancy payment or not, based on whether her refusal to take the job was unreasonable.
Critically Mrs Readman began her nursing career in 1976 and she had worked as a community nurse since 1985. The alternative job at an equivalent grade was as a Modern Matron and would require her to work in a hospital setting. She did not wish to do so. The Trust decided that her refusal of the job offer was unreasonable and therefore declined to make a redundancy payment.
The employment tribunal therefore had to decide:
(1) whether the offer of employment was an offer of suitable employment, and
(2) whether the employee had unreasonably refused that offer.
Two areas have been flagged for possible changes in the future. There are “calls for evidence” on both TUPE and redundancy consultation processes.
Under the current Regulations TUPE places an obligation on both the transferor and transferee to provide information to, and to consult with, the representatives of their respective employees who may be affected by the transfer.
This can include employees who are not part of the transfer, but who are affected by the transfer.
TUPE also has the effect of transferring trade union recognition agreements, as long as the transferring group of employees maintains a distinct identify from the rest of the transferee’s business.
The transferor and transferee must inform and consult the recognised trade union. If there is no recognised trade union, the employees must be given the opportunity to elect their own representatives. Continue reading →
A Ms. O’Farrell worked for Publicis Consultants UK Ltd. Her contract provided for three months’ notice. She was made redundant in May 2009 and was provided with statutory redundancy pay and holiday pay. Her dismissal letter also said that she would receive an ex-gratia payment equivalent to three months’ salary (£20,625) free of Tax and NI deductions. Continue reading →
Although sometimes used as a euphemism for dismissal, “redundancy” is nothing of the sort. It is a reason for dismissal, which may of course be fair or unfair dismissal. Three recent cases have shown that the Employment Appeal Tribunal will take a practical, pragmatic view of what is fair and unfair. The first two are concerned with selection of employees for redundancy dismissal and the third concerns consultation obligations. Continue reading →
From the number of enquiries I deal with relating to redundancy at the moment, there appears to be an increasing incidence of employers failing to consult potentially redundant employees, and relying on the argument that “they would have been made redundant anyway, and the statutory procedure has been done away with now, hasn’t it?”, in an attempt to speed the process up. That is in many cases far too hasty and could end up being very expensive! Tribunals are loath to support employers in that situation where absolutely no consultation has taken place. What if two employees were prepared to do a 50/50% jobshare? The Tribunals won’t simply accept the argument that “that wouldn’t work in our company” unless there is clear and convincing evidence that that is the case. Are you sure that the redundancy pool has been correctly decided on? Some posts which are deemed to be stand-alone posts, (i.e. where only one person carries out that function, so there is no need to carry out a selection process) turn out not to be so, because there is someone else only slightly more senior who carries out essentially the same function, or someone at the same level who works at the branch down the road who does the same job.
It is a sad reflection on contemporary society that the law has become so complex that a sensible, fair minded employer ( or employee for that matter) cannot either understand the law or get through the redundancy process without ending up in Tribunal, but in my opinion that’s where we’re at.
Which bit of redundancy do you find most difficult to follow?
It is fairly well known that a complaint of unfair dismissal should be presented no later than three months following the date of termination of employment, unless it is not reasonably practicable to do so. Application of the time limit is strict and there have been cases in which applications received a few minutes let alone a few hours after the deadline have been refused. What constitutes “not reasonably practicable” is narrowly interpreted so the circumstances causing the delay normally have to be pretty exceptional.
In the case of Teva (UK) -v- Heslip (Employment Appeal Tribunal – 9/7/09), Ms Heslip, a sales manager, was dismissed on the ground of redundancy on 2nd May 2008 because her employer decided to stop selling their products in her area. She was notified by letter and was given a month’s pay in lieu of notice. On 13th August she discovered that the area was still being covered by the employer. She obtained legal advice on 19th August and her claim of unfair dismissal was presented to the tribunal on 29th August.
The tribunal decided that she had been unfairly dismissed because the letter of termination of employment was construed as being ambiguous and because it was only on 13th August that she became aware that the dismissal might be unfair. It was also decided that she had acted quickly enough thereafter.
The Employment Appeal Tribunal decided that the letter was clear enough so that the date of termination was 2nd May and the claim therefore appeared to be out of time. However it was allowed because, applying a decision in another case in 1996 (Marley (UK) Ltd -v- Anderson), it was not reasonably practicable for someone to present a claim of unfair dismissal at a time when they could not reasonably have known that such a claim existed. In theory, this approach could lead to unfair dismissal claims being brought long after the date of termination of employment.
Cases of this nature are interesting because they require consideration of the “subjective state of mind” of the employee. Ms Heslip considered from the outset that she had been unfairly dismissed but it was only when she discovered that her work was still being done that she had reasonable grounds for that belief.
However, it is important to remember that in the vast majority of cases, redundancy will be fair if the circumstances leading to it genuinely exist at the date of termination of employment. For example, if an employer unexpectedly won a new contract a short time after redundancies were implemented, the need to recruit new employees to undertake the new work would not of itself render the prior redundancies unfair. Of course, the grey area is determining what the employer actually knew at the time when the redundancies were implemented. The answer for employers is to be honest and open about their business, to provide appropriate information to employees, to consult with them and to bear in mind that they may be called on to demonstrate the grounds for their belief.
Ex-employees with over 150 years service between them have stated that the Club, who are said to be in increasing financial difficulty, have given them no valid reason for their dismissals along with inadequate ‘pay off’ packages.
It is thought that some of the ex-employees are preparing unfair dismissal claims against Liverpool FC which could see the Club having to pay out significant amounts of compensation.
Liverpool seem to be arguing that the dismissals are part of a redundancy consultation in an attempt to reduce staff expenses, however the ex-employees are under the impression that they will shortly be replaced by Rafas ever increasing Spanish contingent – watch this space!