Employment News: Redundancy – Case Law Update

Over the last 6 months, there have been a number of redundancy-related cases heard in the Employment Tribunal and Employment Appeal Tribunal. These cases provide useful guidance on a number of tricky issues.

Scoring employees on maternity leave

In De Belin v Eversheds, the EAT held that a male lawyer, De Belin, had been discriminated against on grounds of sex when, in a redundancy scoring exercise, Eversheds inflated the score of his female colleague to take account of the fact that she was on maternity leave.

In one particular criteria, De Belin scored 0.5 points, the lowest possible score, whereas the employee on maternity leave was automatically given the highest possible score of 2, despite being absent for the relevant period which was being assessed.

The EAT decided that the employee on maternity leave had been favoured disproportionately by Eversheds in the scoring exercise, which meant that De Belin had been discriminated against on the grounds of sex. This discriminatory application of the selection criteria also rendered his dismissal unfair.

Redundancy and disability

In Lancaster v TBWA Manchester, the EAT held that the employer did not breach its duty to make reasonable adjustments in respect of a disabled employee by failing to adjust its redundancy selection criteria. It was held that the suggested adjustments put forward by the employee were not reasonable given that they would not have prevented the employee from being selected for redundancy.

Selecting employees for new roles

There are two types of selection criteria used in redundancy procedures – the first is used to assess which roles should be reduced, the second can be used to determine which of the displaced employees will be successful in the application for new roles.

In Morgan v The Welsh Rugby Union, the EAT stated that the requirements for displacing staff and offering new roles are not the same as the requirements that apply when reducing the roles. Initial selection for redundancy is typically based on an individual’s prior performance, which is assessed using objective scoring criteria which are applied fairly.

In contrast, when selecting ‘at risk’ employees for a new role, the EAT advised that an employer can have a much greater degree of freedom to choose who would be best suited to the role. This is because the new position is not simply an existing role with a new name, but is an entirely new post. When appointing employees to new roles, the EAT stated that employers are not required to adhere “slavishly” to the terms of the job description for the new role, but can exercise a much more substantial element of judgment during an interview process.

This case is reassuring, as often employers are worried about how to balance their obligations to offer suitable alternative work with their desire to ensure that the correct staff are retained in the business going forward. This case advises employers as long as the appointment process is fair overall, their exposure to claims by those who are unsuccessful will be limited even if they exercise a greater degree of discretion and subjectivity when appointing to new roles.

Collective redundancies – representatives

In Phillips v Xtera Communications, the EAT considered the obligations imposed on an employer to ‘elect’ employee representatives during a collective consultation process. It held that where the employer receives the same number of nominations as the number of employee representatives it requires, there is no obligation on the employer to go on to hold a vote or a ballot. It is sufficient for those nominees to be treated as ‘elected’ and so then act as the employee representatives.

This is good news for employers, as the election of representatives is often a time consuming exercise which lengthens the whole information and consultation process. However, in any collective redundancy situation, it is important for managers/HR to factor in sufficient time to request nominations and if necessary hold an election, in addition to the minimum 30/90 days’ information and consultation.

Often when planning collective redundancy exercises, managers incorrectly assume that the whole process can be concluded in just 30/90 days. However, this is not the case where employee reps need to be elected, as the 30/90 day information and consultation process can only commence when the required information has been provided to the employee reps once they have been elected.

Collective redundancies – protective award

In Independent Insurance v Aspinall, the EAT looked at the circumstances in which individual employees are entitled to claim the protective award (90 days pay) where collective information and consultation has not been done properly. It held that individual employees can only claim the protective award on their own behalf if there are no employee representatives. Individual employees are not entitled to claim the protective award on behalf of other employees.

This means that in a collective consultation exercise, it is very important that employers embark upon a nomination/election process if there is no recognised trade union. Even if there are other flaws in the information and consultation process, the simple act of electing representatives greatly reduces the number of potential claimants for the protective award, as individual employees are precluded from claiming themselves if reps have been correctly put in place.

Redundancies and compromise agreements

In Garratt v Mirror Group Newspapers, Garratt, who was made redundant, claimed an enhanced redundancy entitlement of two weeks’ pay for each year of service. He argued he was entitled to this payment as a result of a collective agreement which had been reached with his union, and so had been incorporated into his individual contract of employment. MGM stated that entitlement to the enhanced redundancy pay was conditional on signing a compromise agreement, even though there was no reference to the requirement to sign a compromise agreement in the collective agreement.

The Court agreed with MGM and stated that although there was no term in the collective agreement about enhanced redundancy payments being conditional on signing compromise agreements, such a term could be implied because no employee had been paid an enhanced redundancy payment without signing a compromise agreement for over 15 years. In addition, the requirement to sign a compromise was expressly notified to all employees identified as redundant, and was a matter of standard practice and of universal application.

If you have any specific queries relating to the content of this newsletter or would like additional information on the issues covered please contact Felicity Fortune.