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Employment E-Bulletin - April 2013 - Focus on redundancy

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There have been a number of Employment Appeals Tribunal (EAT) decisions recently on the issue of redundancy and, when looked at collectively, those decisions appear to suggest that the EAT is showing a more relaxed attitude to the redundancy process. It is possible that this potential shift is connected to the Tribunal’s awareness of the difficult commercial environment now faced by many employers.

We consider some of these cases in more detail below:

Mental Health Care (UK) Ltd v Biluan and another

In this case, in order to select employees for redundancy, the employer used a series of competency tests which it normally used in its recruitment process. In an attempt to avoid subjectivity and bias, a complex selection procedure was developed. The procedure included the competency tests but did not include any input from the affected employees’ managers nor was there any reference to their previous appraisals.

As was perhaps to be expected, the use of this selection process led to some surprising results. Nonetheless the employer pressed on and dismissed the employees selected using the process. The Tribunal in the first instance found that the dismissals were unfair and the EAT upheld that decision stating that the employer’s “blind faith in process” had led to it losing touch with common sense and fairness.

This decision may surprise many in HR, as it is generally accepted that, when it comes to a redundancy selection process, subjectivity should be avoided at all costs. It appears that the employer in this case took the point to the extreme however and this resulted in a finding of unfair dismissal against it.

Whilst a redundancy selection process should not be a popularity contest, it appears that the EAT are showing greater acceptance of an element of subjectivity, provided it is used appropriately and in conjunction with objective criteria.

Malekout v Ahmed and others (t/a The Medical Centre)

In this case, the EAT upheld an Employment Tribunal’s decision that the reason for an employee’s dismissal was redundancy.

The Claimant was not performing satisfactorily in his job and this led to the employer recruiting another person to pick up and deal with the problems caused by his lack of performance. The other person remained with the employer. Subsequently, the employer made the Claimant redundant on the basis that only one person was needed to do the job.

The Claimant alleged that the real reason for his dismissal was that he had made protected disclosures. This argument was not successful and the Employment Tribunal concluded that the Claimant had been dismissed by reason of redundancy, meaning there was a fair reason for his dismissal. On the other hand, the dismissal was held to be procedurally unfair. Interestingly, the Claimant’s compensation was reduced by 100%, making it a pyrrhic victory.

This is an interesting decision from the EAT, not least because the redundancy situation appears to have been entirely created by the employer’s decision to recruit a better person to do the Claimant’s job. It could be argued that the employer should have addressed the Claimant’s poor performance by way of a performance management programme. Such a programme could have resulted in the employer dismissing the Claimant, fairly, on the grounds of capability, though it would arguably have taken longer to achieve a dismissal.

The total reduction of the compensation to nil is also far greater than one normally sees, and indicates that the Tribunal considered that there was no possibility that the Claimant would have remained employed, regardless of the procedural defects.

Overall, it seems that the Employment Tribunal wholly favoured the employer in this case, and thus found a way to decide in the employer’s favour. Whether the EAT’s support for the employer will be followed in future cases remains to be seen. Certainly, there are less risky strategies to achieve a redundancy.

Fish v. Glen Golf Club

The EAT has held that an Employment Tribunal’s finding that redundancy was the principal and real reason for dismissal was not perverse, even though there were other factors at play. The employer was clearly unimpressed by the employee’s conduct and capability, and possibly had hostile motives towards him. However, this did not negate the fact that redundancy was the principal (but not the only potential) reason for dismissal.

Comment

Taking the above cases together, it seems that Tribunals are becoming more prepared to accept an employer’s case that a dismissal was by reason of redundancy, even where that is one of a number of plausible possibilities. This is good news for employers, particularly since the Tribunals in these cases have found redundancies seemingly without looking in too much detail at the background and other potential reasons for dismissal.

Of course, prevention is always better than cure. We shall be considering in detail the lessons to be learned from the latest redundancy cases at our next Employment Law Workshop, which will include discussion around a case study on a redundancy procedure.

Rate increases

Finally, just a reminder that the rates of Statutory Maternity, Paternity and Adoption Pay all increased from 7th April 2013 to £136.78 per week.

Statutory Sick Pay has also increased to £86.70 per week.

For full details of the various rates and entitlements please download our Employment Fact Card at http://www.twmsolicitors.com/our-services/employment-law/

Go to the employment law pages.

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