Redundancies and alternative employment: case update

With political turmoil and economic uncertainty across the world, many businesses have been making redundancies over the past year or so, and that looks set to continue.   Employers often perceive individual redundancy consultation to be a relatively straightforward process - and employees often feel that there is little they can do to challenge a dismissal for redundancy.  It's true that Employment Tribunals do not always scrutinise the business case for redundancies very closely; the “range of reasonable responses” test in unfair dismissal cases does not allow much second-guessing of the business rationale.   However, a recent case serves as a reminder that employers who simply “go through the motions” of consultation, without making a genuine effort to avoid redundancies, may be liable for unfair dismissal.

Background

The Claimant had been employed by Hendy Group Limited (Hendy) for over a decade, initially working in used cars, then managing a new distributorship, and later becoming a full-time trainer in their Training Academy. In 2020, he was made redundant, but claimed his dismissal was unfair because Hendy did not take adequate steps to help him secure alternative employment for him. Although he was told to apply for posts listed on Hendy's intranet, the Claimant's applications were rejected (in a couple of cases without interview) and either external candidates or internal candidates not facing redundancy were appointed. He also faced practical difficulties in applying, as he had limited access to internal job postings after being given notice of dismissal.

The Employment Appeal Tribunal (EAT) upheld the tribunal's decision that Hendy failed in its duty to take reasonable steps to find alternative employment for the Claimant and made his dismissal unfair.   The EAT also rejected Hendy's argument that the Claimant would have been dismissed fairly in any event, holding that had it acted as a reasonable employer, he would have been given another role. 

What steps should employers take? 

Employers must take proactive steps to assist employees at risk of redundancy in finding alternative employment. This involves more than just directing employees to internal job postings; it requires active support and engagement.  This may include:

1. Dedicated support: Assign HR personnel to assist employees in identifying suitable roles within the organisation. This includes helping with applications and providing guidance on the recruitment process.
2. Access to information: Ensure employees have full access to internal job postings and relevant information. This may involve providing temporary access to systems or platforms that employees might lose access to after receiving notice of dismissal.
3. Personalised assistance: Offer personalized career counselling and support, including reviewing CVs, preparing for interviews, and discussing potential career paths within the organisation.

Employers should ensure that these steps are properly documented, to put the business in a better position to defend any potential claims arising from the redundancy process.   It may be sensible to review the business' policy on handling internal applications from employees at risk of redundancy, to assess whether (and in what circumstances) they should be prioritised over external or other internal candidates for roles which are not a “suitable alternative role” but may still be within their skillset.    

Anecdotally, we are seeing more challenges to redundancy processes from disgruntled employees - possibly because in the current climate many employers are unable to offer as generous redundancy packages as they have in the past, and so fewer redundancies are dealt with via settlement agreements.   Employers should not assume that redundancy consultation is simply a matter of holding a couple of meetings and following a script - they are obliged to make genuine efforts to avoid the need for a redundancy, including looking at alternative employment. Failing to do so could expose them to legal liability and the cost and disruption of the Employment Tribunal process.