Can you shortcut the outcome of a redundancy process?
Navigating redundancies can be a tricky and daunting process, especially in smaller companies. We work with employers to navigate this process in a practical and effective way, and to identify the pitfalls to avoid.
If an employer knows they only need to make one person redundant, they may make the easy mistake of choosing a selection method which is guaranteed to deliver the desired result. However, with this, they risk facing a claim for unfair dismissal. The law is clear – a redundancy consultation is only meaningful before the decision on who to make redundant has been made. Employers need to be able to prove the date of their decision. Otherwise, there may be a claim for unfair dismissal on the grounds that the consultation only began once it was no longer possible for the employee to influence its outcome.
Redundancy case study
We explore an example where it seemed like the employer had done what was required, and show how this backfired instead. The employer is expected to know the law and to operate without an army of HR professionals helping them with the procedure.
The employee was one of the employer’s two senior staff. Both employees worked under fixed term contracts. The employer decided that the sole criterion for selecting who would be made redundant was the length of time remaining on each of the respective fixed-term contracts. This guaranteed which employee would be selected for redundancy.
The employee was not consulted regarding the decision to use this criterion for the redundancy process. The employer knew that the employee with the shorter term left on her contract would inevitably be the person selected for redundancy.
The Employment Tribunal dismissed the employee’s unfair dismissal claim and found that the employer had not acted unreasonably. This decision was appealed by the employee.
The Employment Appeal Tribunal (EAT) highlighted that a redundancy consultation is a fundamental aspect of a fair redundancy procedure. In practice, this means that two consultations are required by employers :-
- Stage 1 – At this point, you should tell your employees that their role is at risk of redundancy. This means that the employees have an opportunity to influence the outcome by, for example, suggesting they move to a part time role, or even that they give up certain responsibilities, or take on new ones.
- Stage 2 – Consult before a decision is made. Employers should consult on the criteria for redundancy. In the case in question, the employee was given no opportunity to impact the final result as the employer had already decided to use the length of time left on a fixed-term contract as the sole criterion for redundancy, before the consultation meeting took place. On this basis, the process was unfair.
The employer was unsuccessful and the employee won her case.
This case highlights the dangers of not following a full redundancy process from the start and failing to keep the paper trail. In an ideal world, employers should use a number of different selection criteria when considering redundancy. If anything, this shows that a fair process has been followed, and can help avoid criticism from staff, or in the worst case the Employment Tribunal, further down the line.
Extending a series of fixed term contracts is treated as continuity for employment law purposes. What that means is two one year fixed term contracts give rise to the right to claim unfair dismissal which arises on two years continuous service. In the right circumstances the two year rule can be avoided if there is a sufficient break between each contract but that may not be commercial.
If only one criterion is used, then the affected individual must be consulted before the decision is taken to use the criterion. Failure to do so will mean an unfair process has been followed. This may seem unfair on the employer, because, of course, an employee is going to object to a criterion if it means their job loss, but that is the law. We can help record the decisions made, in a fashion that protects the employer, if called to account.
I am a member of the dispute resolution team and love every minute. It is demanding as you are required to assimilate detail very quickly and apply the law being better of course than the other side. I work with a strong team which is a privilege.