Redundancy law and practice - Part 1

REDUNDANCY: AN OUTLINE OF LAW AND PRACTICE

Redundancy, like much of employment law, is an increasingly complex concept. Its legal definition often bears little relationship with the reality of the distress, mental and physical, caused to workers who have lost their jobs. It is not unknown for employers to dispense with unwanted workers on the pretext of a fake “redundancy”, accompanied by minimally acceptable financial compensation. Such false redundancies can be attacked through an application of selected decided cases from the mass of case law.

Redundancy law and procedure is highly complex. The statutory provisions are overlaid with a mass of case law. Most of the concepts of redundancy law have been litigated, with complex results.

Areas of future research include the meaning of “workplace”, given the number of people working from home, and “affected” by redundancy – does this mean more than workers who are actually at risk of redundancy or who are made redundant?

KEY CONCEPTS

• Definition of redundancy: closure of business; closure of workplace; reduction of workforce

• Redundancy payments: suitable alternative employment; statutory trial period

• Lay-off and short-time

• Guarantee pay

• Unfair redundancy dismissal: no genuine redundancy situation; failure to consult; unfair selection; failure to offer alternative employment; reorganisation and new jobs

• Redundancy and discrimination: pregnancy/maternity dismissals; race discrimination; indirectly discriminatory selection criteria; Last in first out; disability

• Time off to look for work

• Collective consultation.

STATUTORY SOURCE MATERIAL: section 139, Employment Rights Act 1996 (ERA):

Redundancy.

1. For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to—

2. the fact that his employer has ceased or intends to cease—

3. to carry on the business for the purposes of which the employee was employed by him, or

4. to carry on that business in the place where the employee was so employed, or

5. the fact that the requirements of that business—

6. for employees to carry out work of a particular kind, or

7. for employees to carry out work of a particular kind in the place where the employee was employed by the employer,

8. have ceased or diminished or are expected to cease or diminish.

Sections 145 and 164, Employment Rights Act 1996

164 Claims for redundancy payment.

1. An employee does not have any right to a redundancy payment unless, before the end of the period of six months beginning with the relevant date—

2. the payment has been agreed and paid,

3. the employee has made a claim for the payment by notice in writing given to the employer,

4. a question as to the employee’s right to, or the amount of, the payment has been referred to an employment tribunal, or

5. a complaint relating to his dismissal has been presented by the employee under section 111.

6. An employee is not deprived of his right to a redundancy payment by subsection (1) if, during the period of six months immediately following the period mentioned in that subsection, the employee—

7. makes a claim for the payment by notice in writing given to the employer,

8. refers to an employment tribunal a question as to his right to, or the amount of, the payment, or

9. presents a complaint relating to his dismissal under section 111,

and it appears to the tribunal to be just and equitable that the employee should receive a redundancy payment.

• In determining under subsection (2) whether it is just and equitable that an employee should receive a redundancy payment an employment tribunal shall have regard to—

• the reason shown by the employee for his failure to take any such step as is referred to in subsection (2) within the period mentioned in subsection (1), and

• all the other relevant circumstances.

• Subsections (1)(c) and (2) are subject to section 207A (extension because of mediation in certain European cross-border disputes).

• Section 207B (extension of time limits to facilitate conciliation before institution of proceedings) applies for the purposes of subsections (1)(c) and (2).

Employers must act reasonably: this generally involves consultation and warning.

• Selection process must be fair

• Employer must make reasonable efforts, where practicable, to find suitable alternative employment

• Employer must consult and warn.

Polkey v AE Dayton Services Ltd (1988): test of reasonableness may be satisfied in following circumstances:

Employer taking view that, in exceptional circumstances of particular case, normal appropriate procedures would have been futile, would not have changed decision to dismiss, and could be dispensed with.

Effect of failure to consult is a question of fact for the ET.