It’s a word no one particularly likes to hear – redundancy. Nevertheless, it actually serves an important purpose. When it comes to a redundancy situation, companies can’t just make dismiss an employee on a whim – there are strict rules that they have to follow as part of the redundancy process.
A key aspect of this is the consultation period, which varies largely based on the reasons for redundancy and the size of the company. It is the consultation period aspect of redundancy which we will be looking at in more detail today.
High profiles events such as Elon Musk’s takeover of Twitter reminds us of the need for rigorous and thorough redundancy procedure. Following Musk’s takeover of Twitter, news quickly broke that employees had been sacked overnight without the proper consultation period in the UK. The same has also happened in the US, which has prompted legal action.
In today’s case, we take a look at a redundancy dispute between a nurse, Ms Mogane, and Bradford Teaching Hospitals NHS Foundation Trust. The significance of this case is that the Employment Appeal Tribunal (EAT) held that in a redundancy situation, consultation of employees concerned will have to be meaningful and genuine.
Keep reading to learn more about redundancy consultation and why the employer fell foul of the rules in this case.
What is redundancy?
Redundancy is often a fair statutory reason for dismissal. Employees dismissed by reason of redundancy usually have the rights to:
- A statutory redundancy payment
- The application of a fair redundancy procedure
- Reasonable time off work to look for alternative employment or arrange training
A previous case, Williams vs Compare Maxam, outlines the elements which are required for a fair dismissal procedure in a collective redundancy situation. These elements include the following:
- Warning
- Consultation
- Objective selection criteria
- Fair application of selection criteria
- Consideration of alternative employment
Failure to follow this procedure in a collective redundancy situation will most likely render the dismissal unfair.
Background of the case
The claimant in this case was one of two band 6 nurses employed on fixed-term contracts by the respondent. While the claimant had been employed since 2016 on a series of one-year fixed term contracts, the other nurse was employed on a two year fixed-term contract. The claimant’s fixed-term contract was due for renewal prior to the renewal of the second nurse’s fixed-term contract. The decision of which of the two nurses to make redundant represented the selection criteria process.
The redundancy situation was precipitated by a change in financial circumstances at the respondent’s research unit. This required a reduction in staff numbers by the Trust. The claimant was subsequently told of the financial position the respondent was facing in a meeting. Shortly afterwards, it was decided that as the claimant’s contract was due to be renewed soonest, she should be the one who should be made redundant.
This was challenged by the respondent’s internal HR function without success. For the remainder of the process, there was an unsuccessful attempt to find the claimant suitable alternative employment.
Following the conclusion of this process, the claimant was dismissed and later brought proceedings for unfair dismissal in an employment tribunal.
Decision of the employment tribunal
The employment tribunal dismissed this claim.
Their reasoning for this was that in a situation where all relevant employees are on short-term contracts, it is within the band of reasonable responses to base a decision on which of the employees is due for renewal at the point where there are perceived economical difficulties. It was also deemed that it is acceptable in a situation where there is a reduction in the requirement for employees in the relevant position.
The claimant did not accept this outcome. Ms Mogan subsequently appealed to the Employment Appeal Tribunal on the following grounds:
- The issue of consultation in a redundancy process
- The issue of the correct pool for selection
- The criteria for selection
- That the use of one criterion for selection was not one that could be considered as properly within the bounds of reasonable responses
- That the reasons for the Tribunal’s decisions were not Meek-compliant and did not provide adequate information
Employment Appeal Tribunal decision
The Employment Appeal Tribunal allowed the appeal on the grounds that there had not been proper consultation. As briefly touched upon earlier, for a redundancy consultation to be deemed genuine and meaningful, it must take place at a stage where the employee is still able to influence the outcome.
The Tribunal decided that consultation should have taken place prior to the adoption of the selection criteria. This is because the choice of criteria which was chosen to select for redundancy essentially determined who would be made redundant.
The EAT therefore found that the claimant, Ms Mogane, was unfairly dismissed.
Our thoughts
This decision by the Employment Appeal Tribunal is an important reminder of the need to provide consultation with staff before the redundancy selection criteria is confirmed. It also provides useful guidance on the application of redundancy selection more generally.
In a redundancy situation, employers should consult with relevant employees on the selection criteria. If they do not do this, then the redundancy is likely to be hold as unlawful. While employers may want to formulate a selection criteria prior to communicating with the affected employees in order to maintain stability, it is important to be transparent about this processed, as this case demonstrates.
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