• Robert Spicer

Redundancy law and practice - Part 4

UNFAIR REDUNDANCY DISMISSAL

  • Automatically unfair dismissal for specified reasons

  • No genuine redundancy situation

  • Failure to consult

  • Unfair selection for redundancy

  • Failure to offer alternative employment.

Key case: Williams v Compair Maxam Ltd

CM was losing business and decided to cut costs. It was decided to keep a team of core staff members. Other employees were dismissed on grounds of redundancy. This was based on personal preference and the trade union was not consulted. Some dismissed workers complained of unfair dismissal. The ET dismissed the complaints on the basis that personal preference was a reasonable method selection for redundancy. The workers appealed to the EAT which allowed the appeal and stated that there were five principles which employers should apply, as follows:

  • Early warning: employers should give as much warning as possible about redundancies.

  • Consultation with trade union.

  • Fair selection criteria: should not be based on personal opinion but should be judges against, for example, attendance record, efficiency, disciplinary record and attendance.

  • Fair selection in accordance with decided criteria.

  • Consideration of alternative employment.

The EAT also stated that the employer should do as much as is reasonably possible to mitigate the impact on the workforce and to satisfy workers that the selection has been made fairly and not on the basis of personal whim.

Employers must act reasonably. This generally involves consultation and warning.

  • Selection process must be fair

  • Employer must make reasonable efforts, where practicable, to find suitable alternative employment

  • Employer must consult and warn.

Polkey v AE Dayton Services Ltd (1988): test of reasonableness may be satisfied in following circumstances:

Employer taking view that, in exceptional circumstances of particular case, normal appropriate procedures would have been futile, would not have changed decision to dismiss, and could be dispensed with.

Effect of failure to consult is a question of fact for the ET.

No genuine redundancy situation

Moon v Homeworthy Furniture (Northern) Limited: In hearing a complaint of unfair dismissal for redundancy, an ET can investigate the origin of the redundancy situation, including questions such as unfair selection or lack of notice, but it cannot investigate the reasons for creating the redundancies. It cannot investigate the commercial and economic reasons which caused a closure nor investigate the rights and wrongs of the employer’s decision.

References:

James W Cook & Co (Wivenhoe) Ltd v Tipper and others [1990] IRLR 386, CA

Moon v Homeworthy Furniture (Northern) Ltd [1976] IRLR 298, EAT

Failure to consult

Williams v Compare Maxam Ltd: employer should give as much warning as possible of impending redundancies, to enable trade unions and affected employees to consider alternative solutions and to find possible alternative employment.

Case Examples:

University and College Union v University of Stirling (2015) Times, May 19, Supreme Court

In 2010 a Scottish employment tribunal decided that dismissal following the non-renewal of a limited term contract was not excluded from the definition of “dismissal as redundant” for the purposes of an employer’s duty to consult. This decision was reversed by the EAT. The Scots Inner House upheld the decision of the EAT. The claimants appealed to the Supreme Court.

The appeal was allowed.

An employee was dismissed as redundant for the purposes of an employer’s duty to consult on proposed collective redundancies if the reason for the dismissal was not something to do with him personally but was a reason relating to the employer, for example the need to effect business change.

The expiry and non-renewal of a limited-term contract amounts to a dismissal. The question is whether the dismissal related to the individual or to the needs of the business.

Keeping Kids Company (In Compulsory Liquidation) v Smith and others (2018) Morning Star, April 20, EAT

KKC applied for a government grant in June 2015. The application included a proposal to make half its staff redundant in September 2015. The application was successful and KKC received £3 million. Following a police investigation into child sexual abuse allegations reported in the media on July 30, KKC could not meet the requirement of obtaining matching funding from philanthropists and the government asked for the money to be returned. KKC went into liquidation and all its employees were made redundant. A number of employees claimed protective awards on the basis that the company had failed to consult. KKC argued that it had not known the names of employees being made redundant, and that adverse publicity related to the child abuse investigation amounted to “special circumstances”. The ET found that there had been a proposal to dismiss by June 2015 and the company should have started the consultation process promptly after that date. The full 90 days protective awards were made. KKC appealed to the EAT.

The appeal was allowed in part.

Events which occur after a proposal to make more than 20 employees redundant cannot be used as a defence for failing to consult.

E Ivor Hughes Educational Foundation v Morris and others [2015] IRLR 696, EAT

Statute reference: Trade Union and Labour Relations (Consolidation) Act 1992, ss. 188, 189

M and others were employed as teachers at a private school. At a meeting in February 2013 the employer decided that the school would close at the end of the summer term if pupil numbers did not increase. In April 2013 all the teachers were dismissed for redundancy with effect from July 2013. There was no consultation. The ET found that the duty to consult had arisen in February 2013 and awarded the maximum 90 days protective award. The employer appealed to the EAT.

The appeal was dismissed.The duty to consult had arisen in February 2013 and there were no special circumstances which made it impracticable to consult.

Vining v London Borough of Wandsworth (2017) Morning Star, September 15, Court of Appeal

The claimants were employed as parks constables by LBW. They were dismissed for redundancy following a reorganisation of the parks police service and complained of unfair dismissal. Unison brought proceedings seeking protective awards for LBW’s failure to consult about proposed redundancies. LBW argued that the claimants were employed in the police service and were not employees protected from unfair dismissal and were excluded from the obligation to consult. The ET found that they were not employed in the police service. The EAT reversed this decision in the light of the decision in London Borough of Redbridge v Dhinsa that parks police were employed under police service contracts. The claimants appealed to the Court of Appeal.

The appeal was allowed.

The right to be consulted was one of the essential elements protected by Article 11 (freedom of association) of the European Convention on Human Rights.

A union must be allowed to pursue a claim for a protective award about whether there has been a failure to consult, even if its members do not have collective consultation rights.

The case would be remitted to the ET to decide whether or not there had been a failure to consult.

Note: Police forces have remedies to replace employment rights from which they are excluded. Parks police have no such remedies. This could not be justified.

Kelly v The Hesley Group Ltd [2013] IRLR 514, EAT

Statute reference: Trade Union and Labour Relations (Consolidation) Act 1992, s.188

H Ltd employed 300 people at a school. The company decided that, because of financial pressures, it needed to change the employees’ contracts by reducing their hours and freezing their salaries. The company proposed the changes in August 2010. It sought agreement to the changes. By November 2010 it was realised that job losses were possible if the contracts were not agreed. In December 2010 the company decided to terminate the original contracts and offer re-employment on revised terms. 32 employees did not accept the new terms. The company advised them that it was entering into collective consultation in relation to the 32 and consulted with a joint consultative committee. This committee did not have a negotiating function. Its constitution provided for the nomination and election of members, but the employer co-opted people onto it.

The claimants brought proceedings on the basis that they were entitled to a protective award for failures in the consultation process. They argued that the word “proposing” in section 188 of the 1992 Act should have been interpreted as “contemplating” and that consultation should have begun at an earlier stage, in November 2010. The ET rejected the claims on the ground that there was no duty to consult before the employer had formulated its proposals, applying the decision in MSF v Refuge Assurance plc. The claimants appealed to the EAT.

The appeal was allowed.

It was clearly established that there was no duty to consult before an employer had formulated its proposals.

The tribunal had failed to determine whether the committee representatives were appropriate.

Consultation with a view to reaching agreement was not to be equated merely to the passive receipt of information about an employer’s plans. The fact that the committee was not a negotiating body was problematic.

It is not enough to provide an opportunity for consultation on particular topics. The requirement to consult with a view to reaching agreement does not mean that the employer is disentitled from having a firm position. It does mean that he must be prepared to listen and to move from it of good reason is shown.

To the extent that compliance with the legislation is technical, this may be reflected in compensation but not in liability.

References:

Heron v City Link-Nottingham [1993] IRLR 372, EAT

R v British Coal Corporation ex p Price [1994] IRLR 72, DC

Rowell v Hubbard Group Services Ltd [1995] IRLR 195, EAT

Mugford v Midland Bank plc [1997] IRLR 208, EAT

Davies v Farnborough College of Technology [2008] IRLR 14, EAT

Alexander v Brigden Enterprises Ltd [2006] IRLR 422, EAT

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