When it comes to redundancy dismissals one of the main procedural requirements for a fair process/dismissal is that the proposal is subject to consultation, that the consultation is conducted by the employer in good faith, and that the consultation is not a sham (for example, the outcome is not predetermined).
The requirement to consult is both collective when required by a union recognition agreement or legislation (for example, with a recognised union) and also individual (although the extent can vary if there has been prior collective consultation). The basic structure of a fair redundancy process was most famously set out by the Employment Appeal Tribunal in Williams & Ors v Compair Maxam Ltd (1982).
As almost anyone who has dealt with redundancy processes will testify a common complaint of employees subject to redundancy processes, and especially those who go on to be dismissed is that the process was predetermined and that the exercise has been used by the employer to dismiss those who have previously made complaints, supported the union, been sick, etc. The concern is there for good reason, especially on smaller scale redundancy exercises it is not infrequent for the list of those selected for dismissal to disproportionately include individuals from that number.
My favourite example as a union representative (the recognition agreement required consultation on all redundancy proposals irrespective of the number affected) was being sighted on a proposed redundancy exercise aimed at reducing headcount by one. The unit affected numbered around twelve individuals, overwhelmingly male, and white. And yet, the redundancy pool just so happened to number one person only. And that one person happened to be one of the only female or disabled persons in the unit. If that was not enough, the individual was also the only non-white employee in the group and the only trade union representative. Needless to say, the union protested that this did not appear to be a fair and non-discriminatory selection process and the plan was promptly discontinued so we never needed to consider legal action to challenge the employer.
I was reminded of that experience reading the Employment Appeal Tribunal’s recent decision in Mogane v Bradford Teaching Hospitals NHS Foundation Trust (2022), albeit the legal case is somewhat milder. The case is a useful one for employees and trade union representatives to be aware of, particularly where the redundancy pool is a small one. The facts in Mogane are that an NHS Trust identified the need to make cost savings and identified the need to reduce the number of staff by one. It identified that it would do so by reducing the number of fixed term appointment (FTA) employees, of which there were two. The claimant was one of these FTA employees. The employer (or, more specifically, the management against challenge from HR advisers) decided that the most appropriate selection method is to select the person whose FTA appointment was due for renewal the soonest. And so, meetings were convened with the employee to consult on the situation, and to explore the possibility of alternative roles.
Cases of singular redundancies do tend to breed accusations of unfair, sham, and bad faith processes predetermined to reach a particular outcome and the dismissal of a particular individual. What is interesting about Mogane is that despite being unfair and predetermined it does not appear to have been in bad faith.
In its analysis the EAT found that while there was genuine consultation in redundancy avoidance (such as alternate roles) there was no consultation on the redundancy selection process itself. At the point the claimant was brought into the process the employer had already decided the method of selection, a method that would necessarily have resulted in the dismissal of the claimant personally and no-one else.
The EAT in its decision emphasised that for a consultation to be genuine and meaningful, and therefore meet the employer’s legal obligations:
It seems to us that the formative stage of a redundancy process is where consultation ought to take place according to the principles in Williams and the cases developed from it. The reason for consultation to take place at a formative stage is because that means that a consultation can be meaningful and genuine. That must mean that consultation, for a process to be fair, should occur at a stage when what an employee advances at that consultation can be considered and has the potential to affect the outcome.Paragraph 24 of Mogane Judgment.
If, as was the case in Mogane, the consultation commences when there is no practical prospect of a different decision being taken then an employer is unlikely to have adopted a fair process. The EAT go on to cite another famous redundancy case, nowadays better known for creating the idea of Polkey deductions, the House of Lords’ decision in Polkey v AE Dayton Services Ltd (1987):
in the case of redundancy, the employer will normally not act reasonably unless he warns and consults any employees affected or their representative, adopts a fair basis on which to select for redundancy arid takes such steps as may be reasonable to avoid or minimise redundancy by redeployment within his own organisation. If an employer has failed to take the appropriate procedural steps in any particular case, the one question the industrial tribunal is not permitted to ask in applying the test of reasonableness posed by section 57(3) [now section 98(4)] is the hypothetical question whether it would have made any difference to the outcome if the appropriate procedural steps had been takenLord Bridge in Polkey.
Usually, in an EAT case the issue is whether an employment tribunal has made an error of law and, if it has, the EAT will remit (send back) the matter to the employment tribunal to reconsider. It is noteworthy that in Magone that is not the path the EAT chose to take. Instead, finding that the failure to meaningfully consult on the pool selection process the EAT instead substituted a finding that the dismissal was unfair outright.
That fact, together with the clear statement of the necessity for individual consultation in redundancy procedures at a point when the outcome is not a foregone conclusion – which happens much more often than it should – makes this a useful decision for union representatives to be aware of.
Trust and Confidence
Finally, as outlined above Magone concerned the selection of one employee for redundancy over another without consultation. Generally, subject to non-discriminatory motives, employment tribunals will give a wide latitude to employers in what factors they sue to select a redundancy pool. Magone highlights an important contractual caveat to that general position, however. Every contract of employment has an implied term of mutual trust and confidence, and that term includes a requirement that an employer “will not act arbitrarily between employees” (26). In this case the failure of an employer to engage with affected employees before using an arbitrary factor to determine who would be dismissed is not just a matter of fair process under s.98 of the Employment Rights Act 1996 (factors to be considered in unfair dismissals) but also a contractual requirement. It is an additional factor that is is useful for union representatives to be aware of and, potentially, seek early legal advice on as it seems to me that where that type of situation applies the union may have more legal options beyond simply assisting in unfair dismissal challenges after the fact.
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