Redundancy Consultation
When it comes to collective redundancy consultation, legislation and case law is clear – a business must consult about redundancies at the point they are being considered.
Despite this, businesses still frequently take the decision to reduce headcount (and often where and how such reductions should be effected) before consulting employees. Whilst that may seem to make sense at the time from a business perspective, after all no business enjoys making redundancies (or wants the risk of good people jumping ship), consulting too late (or not consulting properly) does carry significant risk.
In the recent case of Joseph De Bank Haycocks v ADP RPO UK LTD [2023] the Employment Appeal Tribunal (EAT) reiterated that the failure to consult employees at the formative stage of a redundancy will render subsequent dismissals unfair and took the opportunity to set out some useful guidance. If you are advising a business that is considering headcount reductions the judgment itself is probably worth a read. But for a quick heads up……
Facts
At the beginning of June 2020 (granted a very strange time) the Claimant and 16 members of the team were, without their knowledge, ranked against 17 (entirely subjective) criteria. The scoring took place in early June 2020 and the decision was taken to make 2 people redundant on 18 June 2020.
On 30 June 2020 the affected team, together with the Claimant finally notified that headcount would be reduced and the business commenced a 14-day “consultation period”. The Claimant was dismissed on 14 July 2020.
Judgement
The EAT ruled that the dismissal was unfair, not least because the decision about who to dismiss was made before the consultation process began (the polar opposite of consulting at a formative stage)!
The judgment is a useful round up of previous authorities and principles, culminating in the EAT setting out some useful guidance for the principles to bear in mind when conducting a fair redundancy consultation. They are worth a read in full but in light of the EAT commentary, our essential reminders are:
- Warn employees that redundancies are being considered! Rather a fundamental part of the process – The clue is in the wording “warnings” happen in advance.
- Consultation must occur when proposals are at the formative stage! That means when proposals to make redundancies are being considered, not when it is proposed to effect dismissals. If you have decided what selection criteria to use, or scored individuals you are too late.
- Adequate information must be provided to employees and they must be given adequate time to respond. Conscience consideration must be given to the responses received. It’s hard to meaningfully consult if employees have neither information nor time. Consultation is not a box checking process, it must be genuine.
- The purpose of consultation (both collective and individual) must be to avoid redundancies or ameliorate the impact of the headcount reductions. Clearly that cannot happen if the decision to reduce headcount is set in stone – or the employees in question are already selected.
- The redundancy process must be viewed in its entirety and appeals may correct earlier flaws in the process – although not fundamental ones.
- Whether consultation is adequate will be a question of fact and degree in all the circumstances. Failing to consult on a particular aspect will not automatically made the redundancy unfair – although clearly that will depend on how fundamental that aspect is!
- The simple fact of using scoring does not make the process fair. There are a whole host of other ways you can make it unfair!
Take-away
If employers want to avoid claims it is imperative that they take their redundancy obligations seriously. The courts accept that redundancies are a necessary evil, but they must be a last resort and alternatives need to be considered in consultation with employees first.
Headcount reductions are happening across the board it seems and there is little benefit in reducing cost if you then end up spending large sums defending claims and making damages payments.
Consider ACAS guidance, consult appropriately and design a process that is not only fair but is also perceived by employees to be fair and you will dramatically reduce risk. Communication is key!
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