Small scale redundancies – important Court of Appeal case

When it comes to small-scale redundancies, which do not meet the statutory collective consultation requirements, there can be inconsistencies in terms of the fairness and reasonableness of the employer’s decision to dismiss as redundant as well as the consultation process followed. An employer’s individual consultation process was recently assessed by the Court of Appeal in the case of ADP RPO UK Ltd v Haycocks. Let’s consider the case and the implications for employers.

Collective -v- Individual Consultation

When it comes to large scale redundancies – where the employer is proposing to dismiss as redundant 20 or more employees within a period of 90 days at one establishment – employers must follow the steps for collective consultation as set out in the Trade Union and Labour Relations (Consolidation) Act 1992 or TULR(C)A. This includes employers having clear timetables, ensuring those affected are told at a “formative stage” that redundancies might be likely, ensuring there are fair elections of staff representatives and ensuring that there is both collective and individual consultation for the required statutory days prior to dismissals taking effect (this is just a brief overview get in touch for specific help and guidance).

Regardless of the size of the redundancy, employers must not make decisions based on discriminatory criteria and also there are special rules when it comes to those who are on certain family leave or who are pregnant. 

However, when it comes to small-scale redundancies, there is no “set” statutory procedure. For those who (currently) have 2-years’ continuous service they may bring ordinary unfair dismissal claims arguing that the employer had neither a fair reason to dismiss them (redundancy being a potentially fair reason to dismiss under the Employment Rights Act 1996) and that the employer did not follow a fair process prior to making them redundant (assessed in all the relevant circumstances). In most individual cases (and again as a general overview), employees are scored, placed at risk of redundancy, consulted with, attempts are made to find suitable alternative employment for them and if there are no alternatives a role is made redundant. The employee is also given the chance to appeal.

ADP RPO UK Limited v Haycocks

In June 2020, 16 individuals within the employer’s recruitment team were scored as part of a redundancy selection exercise. This happened around about the beginning of June 2020. Around the 19^th June 2020, the employer put together a timetable for the planned redundancy process; however, it was not until the 30^th June until employees were told about the proposed redundancy exercise and whether they were “at risk” of redundancy. The claimant scored the lowest and was told on the 30^th June that he was at risk and would be consulted with for the next 14 days. The employer and claimant had 2 further consultation meetings on 8^th and 14^th July, which was the final meeting. The claimant was able to ask questions and suggest alternatives at these meetings. The claimant appealed the decision to dismiss him. He argued, amongst other things, that the scoring was unfair and also that there had been no “group consultation”. In advance of the appeal meeting, the claimant was shown his scores and was given a chance to question them, which he did. The claimant’s appeal was unsuccessful, and he was confirmed as redundant.

The arguments before the Court of Appeal

“Group Consultation” in smaller-scale redundancies?

The claimant argued that the group of 16 recruiters had not been told in advance of the scoring exercise that redundancies could be a possibility. The first they knew about redundancies was at the individual meetings held on 30^th June. He said this was unfair and that there should have been “group consultation” prior to employees being scored and being told they were at risk. The Court of Appeal said, no. Where there are smaller-scale redundancies, there is only a requirement to individually consult. Whilst it is good practice to inform affected employees in advance of likely plans, which might affect them and give them a chance to ask questions about possible redundancies, not doing so does not render the dismissals in themselves unfair, it would depend on the circumstances.

When should consultation begin?

We know that consultation should begin “in good time” and there has been much case law in the context of collective consultation as to what constitutes “in good time”. Whilst this is case and fact specific, in essence consultation should begin at a formative stage to allow for it to be “meaningful”, remembering that the aim of any consultation process is to avoid compulsory redundancies.

When we think about consultation happening at a “formative” stage, the Court of Appeal reminded employers that it should happen when the employer still has an open mind as to what may or may not happen, allowing the employee to be able to possibly influence any decisions the employer might make. We often say that the decision to make redundant should not be a “fait accompli”. 

Seeing individual scores?

Employees asking to see scores is again another issue many employers are asked about. Whilst it is good practice to allow employees to see their scores, again the Court of Appeal said that not allowing at risk employees to see their scores is not of itself unfair, again it would depend on the case overall. In this case, the claimant saw his scores and was able to comment and challenge them. In turn, the Court was satisfied that the employer had taken steps to investigate the scores and the claimant’s concerns and had therefore discharged its duty in this regard. 

I would also remind employers that if you do show employees who they scored against others within the “pool” to ensure scores are anonymised.

What the future might bring?

We know that there are plans in the proposed Employment Rights Bill which would remove the definition of “establishment” within the context of the collective consultation rules. This will mean that more redundancies are caught under TULR(C)A so employers should be aware of this. 

As for individual consultation per se, there are no changes proposed in the legislation with regards to individual consultation processes. However, we know that Labour plans to make unfair dismissal a day-one right for all employees. There is a proposed loosening of this during an “initial period” (maybe 9 months) but only in relation to certain prescribed reasons for dismissing and subject to (we think) some sort of “light touch” process (a meeting + companion). There is no carve-out when it comes to dismissing for redundancy under the draft Employment Bill. This would mean that if a possible redundancy situation arose, employers would need to include any new starter in their individual consultation plans and have both a fair reason and a fair process (including any collective consultation rights as well if caught) or face an unfair dismissal claim. This means that individual consultation and getting the process right becomes more important for employers.

For help and support with redundancies, please contact our Employment Team.