• Robert Spicer

Redundancy law and practice section 2: definition

Closure of the workplace

· An employee is dismissed for redundancy if it is attributable wholly or mainly to the fact that the employer has ceased or intends to cease to carry on business where the employee was employed.

· Bass Leisure Ltd v Thomas: an employee’s place of work for the purposes of redundancy is a question of fact. The place where the worker actually worked is a key factor. Mobility clauses are irrelevant for this purpose. This decision was approved by the Court of Appeal in High Table v Horst. Where an employee has worked in only one location, that is the place of work regardless of any mobility clause. Where an employee has worked in several locations, the place of work is established by inquiry into the facts, taking account of contractual terms which might be relevant.

· Where an employee is instructed to work at a different location or branch and the employee refuses, right to redundancy pay may be lost because she/he has refused offer of suitable alternative employment.

· Where there is a mobility clause, this may be invoked by the employer to avoid making redundancy payments. In Home Office v Evans, the Court of Appeal ruled that an employer was entitled to invoke a mobility clause to avoid a redundancy situation on the closure of part of its business. The motives of the employer were not important. The issue was whether it was legally entitled to invoke the mobility clause.

Case Examples:

Xerox Business Services Philippines Inc Ltd v Zeb UKEAT/0121/16/DM

Z was employed by X. His contract stated that his place of work was Leeds or Wakefield. X decided to transfer some work to the Philippines. Workers were given the choice of rejecting the transfer and being made redundant with a generous redundancy package or to transfer and be made redundant with statutory redundancy pay. X would not be required to carry out the transferring work in the UK. Z asked to be transferred to the Philippines on his existing terms. X rejected the request. It stated that the effect of TUPE was that Z would transfer on his existing terms. He was not employed to work in the Philippines, so his role was redundant because there was no requirement for his work in Wakefield. X dismissed Z and paid his statutory redundancy pay. Z complained of unfair dismissal. His complaint was upheld. The ET found that there was a vacancy in the Philippines. If Z had accepted local terms and conditions, X would have facilitated a move to the Philippines. There had been no redundancy. X appealed to the EAT.

The appeal was allowed. There had been no variation of the contract.

Following the transfer, X was required to employ Z at Wakefield. It was not obliged to employ him in the Philippines at the same salary.

TUPE did not entitle Z to vary his contract unilaterally so as to change his place of work.

References:

Bass Leisure Ltd v Thomas [1994] IRLR 104, EAT

High Table Ltd v Horst and others [1997] IRLR 513, CA

Home Office v Evans [2008] IRLR 59, CA

Reduction of workforce

· See section 139(1)(b), ERA 1996.

· The employer requires fewer employees to do a particular kind of work. There need not necessarily be less work to be done. In McRea v Cullen & Davison Ltd, the employer wished to make better use of its resources. A manager who had been on sick leave for a long period was made redundant on his return to work because the employer had decided that the work could be done without him. The IT found that the dismissal was attributable to redundancy.

· Where the employee is dismissed because of diminished requirements, this is dismissal for redundancy. In Safeway Stores v Burrell, B started work with S as a petrol station manager. S reorganised management and B’s post disappeared. He was told that his position had been made redundant. He complained of unfair dismissal. The ET found in his favour, applying the function test to decide that the requirements of the business to carry out work which B was doing had not ceased or diminished. S appealed to the EAT. The appeal was allowed. If the requirement for employees to do work of a particular kind remained the same, there could be no dismissal by reason of redundancy. The tribunal had erred in failing to ask itself whether there was a true redundancy situation, looking at the overall requirement for employees to carry out work of a particular kind and whether that situation caused B’s dismissal.

· Murray and another v Foyle Meats. The claimants had contracts with FM to work in a slaughterhouse. The contracts contained a flexibility clause which stated that the claimants could be required to work in other parts of the plant. The market declined and FM made 35% of slaughterhouse workers redundant. The claimants complained of unfair dismissal, arguing that they were not redundant because they could be required to work under the same conditions, although in different departments. The House of Lords found that the claimants had been made redundant. It applied a test of actual causation: was there a reduction in the workforce? Was the dismissal wholly or mainly attributable to that reduction?

· Where the employer retains the same number of employees, but on different work: redundancy where particular job has disappeared altogether. Where job has been changed, for example because of changes in technology see Amos and others v Max-Arc Ltd. The test is whether the changed job requires different aptitudes, skill or knowledge.

· Where the employer dismisses an employee because there is less work to do and the employee refuses to accept a cut in hours, this is redundancy. Packman t/a Packman Lucas Associates v Fauchon. F was a bookkeeper employed by P Ltd. P Ltd introduced a software package which reduced the number of hours to be worked by a bookkeeper. P Ltd asked F to reduce the number of hours which she worked. She refused and she was dismissed. The ET found that the reason for dismissal was redundancy. This decision was upheld by the EAT.

· Particular kind of work

· Styles & Sons Ltd v Sanders [1968] 3 ITR 126, DC: indoor carpenter required to work outside. Held, work unchanged.

· Kykot v Smith Hartley Ltd [1975] IRLR 372, High Court: redundancy where employer has same type of work available but needs fewer workers on different time schedule.

· Arnold v Thomas Harington Ltd [1969] 1 QB 312: resident emergency fitter taken off emergency work and asked to leave flat above garage. Held, no redundancy. The nature of work as fitter remained the same.

· Amos v Max-Arc Ltd [1973] IRLR 285, NIRC: “work of particular kind” means work distinguished from other work of same general kind by requiring special aptitudes, skills or knowledge.

· European Chefs Ltd v Currell [1971] 6 ITR 37, DC: pastrycook dismissed as employers wished to produce continental pastries made by a replacement cook. Held, dismissed for redundancy. The requirements for specialised employee had ceased or diminished.

· Murphy v Epsom College [1984] IRLR 271, CA: redundancy not only where reduction in number of employees. Key factor is whether kind of work being done has changed. May still be redundancy where quantity of work is not reduced and number of employees unchanged. Tribunal must examine closely elements of job as currently carried out and changes in employer’s requirement.

· ER Sutton v Revlon Overseas Corporation Ltd [1973] IRLR 173, NIRC:redundancy where job of chief accountant redistributed among junior employees.

· Managers (Holborn) Ltd v Hohne [1977] IRLR 230, EAT: unilateral reduction in pay and status held to amount to constructive dismissal with entitlement to redundancy payment.

· Rank Xerox Ltd v Churchill [1988] IRLR 280, EAT: No redundancy where employees refuse to move to new place of work. Contracts of employment stated that they might be required to change location.

· Bumping: when an employer offers a redundant employee another employee’s job and that employee is dismissed for redundancy. See Gimber and Sons v Spurrett.

References:

McRea v Cullen & Davison Ltd [1988] IRLR 200, EAT

Safeway Stores plc v Burrell [1997] IRLR 200, EAT

Murray and another v Foyle Meats Ltd [1999] IRLR 562, HL

Amos and others v Max-Arc Ltd [1973] IRLR 285, NIRC

Packman t/a Packman Lucas Associates v Fauchon UKEAT/0017/12

Gimber and Sons v Spurrett [1967] ITR 308, QBD

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