Employers beware: a recent ruling raises the bar for redundancy consultations

Jo Mackie, head of employment law at Lawrence Stephens, explains why a recent decision by the Employment Appeal Tribunal serves as a loud and clear warning to employers looking to make redundancies

Two Businesswomen Talking At Desk In Office

As businesses continue to grapple with high costs and general political and macroeconomic uncertainty, many employers will regrettably be forced to make redundancies. But firms should be aware of a recent ruling by the Employment Appeal Tribunal (EAT), which could have a significant impact on employers’ redundancy procedures. 

The matter of Joseph d Bank Haycocks v ADP RPO UK Limited concerned the adequacy of an employer’s workforce consultation in a redundancy situation. In the appeal, the EAT considered whether actions taken in the initial stages of a redundancy process namely, holding meaningful workforce consultations early on in the process help to determine the fairness of the redundancy.

A summary of the consultation and redundancy

The respondent was a recruitment firm and a subsidiary of a US parent company, while the claimant was part of a team of 16 UK-based workers acting as recruitment consultants for clients of the respondent company. At the end of May 2020, the respondent decided to reduce headcount in the claimant’s team as a result of reduced demand owing to the Covid pandemic.

The claimant’s manager was given some standard selection criteria for the purposes of undertaking the redundancy scoring process and was asked to assess individuals in the claimant’s team using these criteria. The claimant scored the lowest in every ranking. In June 2020, following the conclusion of the scoring process, the respondent set its timetable for the redundancy process. 

Redundancy consultation must begin at the earliest stage possible, when employees have a chance of influencing the final outcome

An initial consultation would be held on 30 June, followed by a consultation period of 14 days. Those whose employment was to be terminated would be informed of their redundancy at a meeting on 14 July. This is common in redundancy situations – once the decision is made at a senior level it is usually something that businesses are keen to expedite.

On 30 June, the claimant was called to a meeting and told that there was a requirement for redundancies and that the purpose of the meeting was to inform him of the situation (ie, that his job was under threat). He was then allowed to ask questions and suggest alternative approaches, as is proper in law. The claimant was invited to another meeting on 8 July and a final meeting on 14 July, at which point he was handed a letter terminating his employment on the grounds of redundancy.

The claimant appealed against his redundancy to his employer, arguing that he had not been given any information about his scores or the selection criteria, which would enable him to challenge his scoring. At this point, as part of the appeal process, the claimant’s scores and the selection criteria were made available to him.

The claimant’s appeal was unsuccessful and he decided to bring his claim to the Employment Tribunal (ET), arguing unfair dismissal. The claimant alleged that his redundancy was procedurally unfair and that the scoring criteria used by the respondent were purely subjective. He argued further that for the consultation process to be fair, the details of the selection criteria and his scores would have to be provided at an early stage so that he would have an opportunity to comment on and challenge the criteria.

At first instance the ET dismissed the claimant’s arguments. It found that although there may have been deficiencies in the initial consultation process, this had been rectified during the appeal and at no stage in the process had the claimant been able to give any evidence that would have improved his scoring and reduce his likelihood of being chosen for redundancy.

The decision of the Employment Appeal Tribunal

The claimant then appealed to the EAT, which took an opposing view to the ET. The EAT decided that there had in fact been a lack of meaningful consultation at the initial stages of the redundancy process. The EAT commented that although the claimant had been provided with the redundancy criteria during the internal appeal process, the absence of a meaningful consultation at the initial stages of the redundancy process could not be ignored. Ultimately, the EAT decided that the respondent’s failure to communicate the redundancy criteria early in the process made the company liable for unfair dismissal. 

The judgement concluded: “The ET had overlooked aspects of the issue of consultation in its deliberations. An important general principle is that consultation in a redundancy situation should take place at a formative stage. The appeal did not correct the failure to meaningfully consult at the formative stage and so the dismissal was unfair.”

This should strike a loud and clear warning to employers who are considering redundancies. Although it is not uncommon for redundancy consultations to commence only after business has deemed that redundancies are inevitable, the EAT judgement clarifies that redundancy consultation with employees must begin at the earliest stage possible when employees have a real chance of influencing the final outcome. Otherwise, businesses make themselves liable for findings of unfair dismissal and the associated costs and reputational damage that this can bring.

Jo Mackie will be writing a monthly bulletin for Raconteur covering the latest news in employment law and regulation and what it means for your business. Her first bulletin will be published later this month.