Failure to consult with an individual may make dismissal unfair but compensation may be reduced (Polkey reduction) where it made no difference to decision to dismiss.
Consultation involves consideration of options to avoid redundancy. These may include early retirement, seeking volunteers, alternative employment, layoff and short-time working.
Consultation involves not just communicating a previous decision. Must be at a formative stage where there is adequate information for response, adequate time to respond and conscientious consideration of the response by the employer.
Definition of consultation: jointly examining and discussing problems of concern to management and workers to seek mutually acceptable solutions through a genuine exchange of views and information.
Fair consultation involves giving the body consulted a fair and proper opportunity to understand fully the matters about which it is being consulted, and to express its views on those subjects, with the consulter thereafter considering those views properly and genuinely.
The employee must be given sufficient information to challenge, correct and supplement the information which the employer may wrongly have considered when assessing selection for redundancy.
Mugford v Midland Bank: if the employer has not consulted with either the trade union or the employee, the dismissal will normally be unfair unless the tribunal decides that consultation would have been a futile exercise.
Alexander v Bridgen Enterprises Ltd: employers have to tell employees the reason for the redundancy, the selection criteria they are using and must give them their assessment. This includes an individual’s score in a selection process.
R v British Coal Corporation and Secretary of State for Trade ex p. Vardy [1993] IRLR 104, High Court:consultation requirements in respect of pit closures held matters of public law. A judicial review appropriate.
British United Shoe Machinery Co Ltd v Clarke [1977] IRLR 297, EAT: the question for the tribunal was whether failure of the employer to follow Code of Practice as to warnings and consultation would have made any difference. Where a lack of consultation would have made no difference to the overall result, then the finding of unfair dismissal cannot be justified.
GEC Ferranti Defence Systems Ltd v MSF [1993] IRLR 101, EAT: there was no fixed standard for amount of detail required to be supplied for statutory consultation procedure. A question of fact and circumstance.
Robinson v Carrickfergus Borough Council [1983] IRLR 122, CA: technical officer dismissed for redundancy. There was no agreed or customary redundancy procedure. The employer did not consider the possibility of alternative employment. There was no consultation with union. Held, as unfair dismissal.
Kelly v Upholstery & Cabinet Works (Amesbury) Ltd [1977] IRLR 91, EAT: a case of unfair dismissal where no consultation on redundancy unless exceptional circumstances.
Duffy v Yeomans & Partners Ltd [1993] IRLR 368, EAT: a test in relation to the consultation objective. Whether a reasonable employer could have dismissed employees for redundancy without consultation in light of facts known to the employer at the time.
Case examples:
Argos Ltd v Kuldo [2020] 2 WLUK 670, EAT
K was employed by A as a group central costs manager. In September 2016 A made a number of redundancies. K was not made redundant, but her responsibilities were changed. In 2017 A identified 55 positions as being at risk of redundancy. K was told that she would be placed in a pool with another worker and that they would both be considered for the new post of central costs manager. K was given information about the consultation process. She was then told that the other worker had resigned and that she would be given the new role without risk of redundancy. A stated that it had applied a 70:30 rule, whereby an old post could be transferred to a new post if there was a difference of not more than 30 per cent between the two roles.
K objected to the new post on the basis that it had lower status, fewer responsibilities and a change of job content. A treated this as a grievance and responded that K would be transferred to the new post. K asked A to confirm in writing that her employment was terminating on the ground of redundancy. A responded that K would be carrying out the same work as before, but under the job title of the new role. K appealed unsuccessfully against this decision. In November 2017 K resigned. She complained of unfair dismissal and wrongful dismissal and claimed a redundancy payment.
The ET found that there had been no individual consultation with K and this was a breach of the implied term of mutual trust and confidence.
A had failed to carry out a proper analysis of the similarities between the old post and the new post. This was also a breach of the implied term of mutual trust and confidence.
Further, A’s failure to conduct a proper assessment in relation to K’s grievance appeal also amounted to a breach of the implied term.
These breaches were repudiatory and K had been constructively dismissed.
A Ltd appealed to the EAT.
Decision:
1. The appeal against the finding of constructive dismissal was dismissed.
2. In relation to the unfairness of the dismissal, the appeal was upheld. There had been no clear finding in the ET of the reason for the dismissal.
3. In relation to the claim for redundancy pay, the suitability of alternative employment could be relevant to the fairness of the dismissal and to the question whether K was not entitled to a redundancy payment because she had unreasonably refused suitable alternative employment. The ET had not analysed this legal framework.
4. The case was remitted to the ET to consider whether the constructive dismissal, for which the reason was redundancy, was fair in all the circumstances, and to determine the outstanding claims for wrongful dismissal and a redundancy payment.
Thomas v BNP Paribas Real Estate Advisory and Property Management UK Ltd (2017) Morning Star, January 6, EAT
T was one of five people identified as being at risk of redundancy. He was placed in a pool of one. In January 2014 he was told that he was at risk of redundancy. He attended two consultation meetings at which he was told that there were no alternative posts available. A letter to T was addressed with the wrong name. He was made redundant. He appealed against the decision, arguing that the consultation process had been a sham with a predetermined outcome and that he had been selected because he was aged 60. The appeal was rejected and he complained of age discrimination and unfair dismissal. The ET rejected the complaints. It found that the consultation had been reasonable and there was no evidence to show that the company had a practice which involved dismissing people who were approaching age 60. T appealed to the EAT.
The appeal was allowed in part. The tribunal had itself described the consultation as perfunctory and insensitive. Any dismissal was likely to have been unfair. The tribunal’s decision that the consultation was reasonable could not stand.
In relation to the claim of age discrimination, the tribunal had applied the law correctly. It had considered and rejected the evidence put forward by T. The reason for the dismissal had been redundancy and not age.
Unfair selection
The employer is under a duty to choose a fair pool from which to select redundant workers. Fulcrum Pharma (Europe) Ltd v Bonassera and another: The employer placed a human resources manager in a pool of one and made her redundant. It did not consider whether her assistant should have been placed in the pool. The ET found that this was an unfair dismissal. The decision was upheld by the EAT.
The inclusion of a subordinate worker, whose job is to be retained, in the pool, depends on factors including whether the senior employee can accept a junior role, differences in pay and work, the length of employment and qualifications.
Criteria for selection from the pool must be reasonable. Multiple selection criteria may include length of service, productivity, timekeeping and attendance and adaptability.
Chosen criteria must be applied fairly and objectively. Graham v ABF Ltd: G was selected for redundancy on the basis of his low score related to his attitude to work. He had used obscene language and displayed hostility. This had resulted in complaints by colleagues and his manager. Selection criteria included quality of work, efficiency in carrying out work and attitude. The EAT found that the dismissal had been fair.
Grant v BSS Group plc: Where there was a pool of two employees, the failure to carry out similar or identical levels of consultation, after provisionally selecting one person for redundancy, was unfair.
E-Zec Medical Transport Service Ltd v Gregory: G was employed by E, a private ambulance company, as an ambulance driver and administrator. She reduced her work hours to look after her disabled daughter. The company started redundancy proceedings. Selection criteria included service, absence, sickness, disciplinary record, performance, commitment, attitude, skill base and team working. This was not explained to workers and the union was not consulted. G was selected for redundancy and went to a meeting, described as a consultation meeting, where she was given a prepared notice of redundancy. G complained of sex discrimination, disability discrimination and unfair dismissal. The ET upheld the unfair dismissal complaint on the basis that E had failed to consult and that the criteria were based on personal judgment. The EAT upheld this decision. The redundancy process fell outside the range of reasonable responses.
The ET will not order disclosure of all assessments of workers in the redundancy pool unless these are relevant to unfairness. British Aerospace v Green and others: BA decided to make 530 workers redundant. All employees were assessed and scored. G and others complained of unfair dismissal and applied for disclosure of all employees’ scores. The Court of Appeal ruled that this would impose an excessive burden on BA. The question was whether the company had applied a fair procedure. If a selection process is to function effectively, its workings should not be officiously scrutinized or subjected to a minute analysis.
FDR Ltd v Holloway: the IT ruled that a worker claiming unfair selection for redundancy was entitled to disclosure of documents and particulars related to seven others in the selection pool who were not made redundant. This decision was upheld by the EAT which stated that disclosure was relevant and necessary for the proper determination of the claim that selection criteria were unfairly applied.
Large or medium-sized employers will normally be expected to use a methodical selection approach which awards potentially redundant workers with points and dismissing those who score least. Small employers must use a fair selection method.
Mental Health Care (UK) Ltd v Biluan and Makati: M carried out a redundancy exercise covering a pool of 48 workers, of whom 19 were to be made redundant. Workers were assessed with reference to criteria of competency, disciplinary record and sickness absence record. The competency assessment was based on a series of exercises designed for use in a recruitment process and did not take account of past performance. The results of the assessments were accepted by M as being surprising, but they were not reviewed. The claimants’ complaint of unfair dismissal was upheld by the ET and the EAT. The recruitment-style process was inappropriate.
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