In De Banks Haycocks v ADP RPO UK Ltd, the Employment Appeal Tribunal (EAT) emphasised the importance of workforce consultation, even in relatively small redundancies exercises. In this case, it found that the lack of general workforce consultation at a formative stage in a small-scale redundancy exercise tainted the fairness of the process.
The Case’s Background
The employer – a UK subsidiary of a US company – needed to make redundancies among a group of sixteen employees who worked for a single client, Goldman Sachs, following a reduction in the level of demand for their services. The workforce was not unionised and the separate collective consultation requirements under the trade union legislation were not triggered because the numbers involved were too small.
The UK manager was given a redundancy selection scoring matrix by the US parent company to apply to her team of sixteen. Each member of the team scored between 1 to 4 on each of the seventeen entirely subjective criteria, with the claimant coming last in the rankings. It was decided that the business would make two people redundant, one of whom was the claimant.
It was only after he had been provisionally selected for redundancy that the claimant was told that there was a requirement for redundancies. The other scores were not disclosed to him before his dismissal. While he was made aware of his score before his appeal against his selection for redundancy, he was not informed of his colleagues’ scores.
He brought a claim of unfair dismissal, arguing that the dismissal was procedurally unfair on the basis that the criteria used had been entirely subjective.
An employment tribunal found that the claimant had not been able to demonstrate that his score should have resulted in a higher ranking. It therefore concluded that the dismissal was fair. The claimant then appealed to the EAT, claiming that the employment tribunal did not address the lack of consultation when the redundancy proposals were still at a formative stage.
The EAT’s Decision
On appeal, the EAT overturned the tribunal’s decision and found that the dismissal had been unfair. In the EAT’s view, the case law on redundancy needed to be read in light of radical changes in employment trends since these cases were decided in the 1980s. These changes included the fall in union membership, especially in the private sector and the increase in overseas ownership of UK businesses.
In this case, these factors resulted in a US-style redundancy selection process being utilised in relation to a UK business without the shield of union representation. This gave rise to a clear omission of a vital ingredient of fair consultation, namely giving the people being consulted a genuine opportunity to influence the redundancy proposals. There was never any opportunity to input the employer’s proposals or discuss the prospects of a different approach to any aspect of the redundancy process chosen by ADP. In the EAT’s view, this all resulted in an unfair process, especially since there had been no good reason for this consultation not to take place.
The Takeaway
The EAT’s decision emphasises the importance of early consultation in any redundancy exercise. It suggests that even where the collective redundancy threshold required by statute is not met, an employer should still consult with a wider group of employers than merely those who have been or would be chosen for redundancy after scoring. At a practical level, employers will have to consider how such consultations can take place, especially where there are no existing recognised unions or employee representative bodies. This might, for example, include town hall meetings, at least with affected areas of the business.
If you are considering redundancies in your business and would like to discuss early redundancy consultation, please contact our expert employment team at info@witansolicitors.co.uk.
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