Fair redundancy process

An Employment Tribunal incorrectly found that an employee was fairly dismissed on the grounds of redundancy where the employer’s only criteria for selection was adopted without prior consultation and relied on the fact that her fixed-term contract was due to be renewed before that of another colleague. The Employment Appeal Tribunal found that a fair redundancy procedure requires that consultation take place at a stage when the employee can still potentially influence the outcome. Where the selection criteria adopted immediately identified the employee to be made redundant, consultation should take place prior to that decision being made.

In Mogane v Bradford Teaching Hospitals NHS Foundation Trust and another, the Claimant was employed by the Trust as a Band 6 nurse on a series of fixed-term contracts since 2016. Another Band 6 nurse was also employed on fixed-term contracts. In March 2019, the Claimant was invited to a meeting and informed that her employer faced financial difficulties. Shortly after this meeting her employer decided that she should be made redundant as her contract was the one that was due to be renewed earlier. The remainder of the redundancy process related to an attempt to find alternative employment for her - her contract was terminated by December 2019. The Claimant claimed unfair dismissal and the employment tribunal rejected her claim finding that she had been fairly selected for redundancy.

Upon appeal to the Employment Appeal Tribunal (EAT), the EAT allowed the appeal and it noted that the case of Williams v Compair Maxam Ltd 1982 and Polkey v AE Dayton Services Ltd 1988 established that consultation is a fundamental aspect of a fair redundancy procedure. This aspect applies equally to redundancy situations where there is no collective representation. In order that consultation is genuine and meaningful, a fair procedure requires that consultation takes place at a stage when an employee or employee representative (where collective consultation applies) can still potentially influence the outcome. If the choice of selection criteria adopted for redundancy has the outcome that the selection is made by that decision itself, consultation should take place prior to that decision being made. It follows that it is not within the band of reasonable responses, in the absence of consultation, to adopt one criteria only which decides the pool of employees and which employee is to be dismissed.

Moreover, the implied term of trust and confidence in contracts requires that employers do not act arbitrarily towards employees in the methods of selection for redundancy. Although a pool of one can be fair in appropriate circumstances, it should not be considered without prior consultation where there is more than one employee. In the Claimant’s case, her employer’s decision to dismiss the employee whose contract was up for renewal immediately identified her as a pool of one and as the person to be dismissed, before any type of consultation took place with her.

Given that the Claimant was effectively chosen to be the employee dismissed before any consultation took place, the EAT found that she was unfairly dismissed for redundancy.

It is therefore always important for employers to ensure that they follow a fair redundancy process if there is a risk of redundancies which involves employees who have attained at least two years’ service; otherwise, it could amount to a finding of unfair dismissal.

Employers should ensure that:

1. Genuine and meaningful consultation takes place with the employee at the earliest opportunity if redundancies are on the horizon to assist with reducing or mitigating redundancies.
2. There is a fair selection pool.
3. Fair selection criteria is adopted and the employee is consulted about this. The selection criteria should be reasonable and objective.
4. Suitable alternative work is considered.

If you would like to speak to a member of our Employment team about your redundancy selection criteria and procedure, please contact 01689 887 887.