In a challenging economy, with interest rate hikes and continued productivity concerns, it's perhaps unsurprising that many employers are making large-scale redundancies. PWC, Deloitte and KPMG are just some of the major employers who have announced redundancy programmes.
Where 20 or more redundancies are being proposed at one establishment in a 90 day period, there are prescriptive rules about the way the employer must consult staff about the proposals, including a minimum period between the start of consultation and when any dismissals can be effected. Where there are fewer than 20 redundancies, and only individual (rather than collective) consultation is needed, it's usually seen as more straightforward. But a recent case highlights that employers must take care to consult fairly.
The case (De Bank Haycocks v ADP RPO UK Ltd) concerned redundancies made in the context of the COVID 19 pandemic. Employees were scored against selection criteria, the employer then decided to make the two lowest-scoring employees redundant. The Claimant was informed of the proposed redundancy at an initial meeting, a further consultation meeting took place and then a final meeting at which he was handed a dismissal letter. He was not told how he, or his colleagues, had been scored against the selection criteria, although he was given his own score during his (unsuccessful) appeal.
Although an Employment Tribunal rejected his claim, the Employment Appeal Tribunal ruled that his dismissal was unfair. It held that his employer had failed to consult meaningfully at the formative stage of the redundancy process, without good reason, and so the Claimant had had no opportunity to influence the employer's decision about the need for redundancies. The appeal process could not correct this failing.
Helpfully, the EAT highlighted some key aspects of a fair redundancy process:
- An employer will normally warn and consult either the employees affected or their representatives;
- Fair consultation occurs when proposals are at a formative stage and where adequate information and adequate time to respond are given, and the responses properly and genuinely considered;
- Early consultation should involve the wider workforce and give them an opportunity to propose alternatives to redundancy or ways of mitigating the impact;
- The purpose of consultation is to try to avoid dismissal; and
- The use of a scoring system does not automatically make a process fair.
This case should serve as a warning for employers. In our experience, redundancy consultation is too often treated as a ‘tick box’ exercise, and many employers do not involve employees outside of senior management in any discussions about whether redundancies are needed and how they could be avoided. Although such discussions do not need to be overly formal, they are an important part of a fair process and should be documented. Businesses which anticipate having to make redundancies should start thinking early on about how to engage with their workforces while their proposals are not yet set in stone, in order to minimise the avenues for legal challenge and ensure a fair process.
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