A recent Employment Appeal Tribunal (EAT) judgment emphasises the importance of meaningful workforce consultation at the formative stage of the redundancy process as part of general fairness. This is an important case for employers to note, as the decision of the EAT would likely require a departure from the usual practice of employers who may not typically engage in consultation at workforce level when dealing with fewer than 20 individual redundancy consultations.
The facts
In De Bank Haycocks v ADP RPO UK Ltd, the Claimant worked as a recruitment consultant for the Respondent, in a team of 16 which was dedicated solely to recruitment for one client. During the COVID-19 pandemic, there was a reduced demand for new staff by the client and the Respondent decided to reduce its headcount.
The UK manager for the Respondent was given a standard matrix of selection criteria, which emanated from the Respondent’s US-based parent company, to assess the 16 employees in the Claimant’s team. Each employee was scored between 1 and 4 on subjective criteria, with the Claimant scoring lowest in his team. After the scoring was carried out, it was decided that the team would be reduced by two.
The Claimant was invited to a meeting where he was advised that there was a need for redundancies within the business and that he could ask questions or suggest alternative options for the business. The Claimant was then invited to two formal consultation meetings in the following weeks and was provided with a letter of dismissal by reason of redundancy at the final consultation meeting. At the time of his dismissal, the Claimant was not aware of what scores he had achieved or the scores of other members of his team.
The Claimant appealed against his dismissal and, by the time of his appeal, he had been told his score but not how it compared to those of his team. The Claimant’s appeal was ultimately unsuccessful and he raised a claim of unfair dismissal.
The Employment Tribunal rejected his claim. It accepted that the Claimant knew nothing about his scores until his dismissal, but concluded that the appeal process was carried out conscientiously. It also determined that the Claimant had not been able to demonstrate that his score was unfair or should have resulted in a higher ranking.
The Claimant appealed to the EAT on the grounds that the tribunal had overlooked the need for consultation in the redundancy process and that the lack of consultation at a formative stage rendered his dismissal unfair.
The EAT judgment
The EAT allowed his appeal, substituting a finding of unfair dismissal and remitting the claim to the Employment Tribunal to determine remedy.
A key finding of the EAT was that there had been a clear absence of meaningful consultation by the Respondent at workforce level during the formative stage of the redundancy process and there was nothing in the Employment Tribunal’s decision which demonstrated good reasons for this.
The EAT noted that the nature of employment has changed significantly in recent years, specifically observing that trade union membership outside the public sector has continued to decrease. This change means that more redundancy situations now surface in workplaces where there is no recognised representation for employees. In terms of large-scale redundancies, the collective consultation provisions of the Trade Union and Labour Relations (Consolidations) Act 1992 make it clear that representatives should be elected and consulted at the formative stage of any decision on redundancy. However, where the collective consultation obligations are not triggered, and particularly in an unrepresented workforce, the requirements to consult at a formative stage are less clear. The EAT concluded that this fails to recognise the reality of good industrial relations in the modern employment environment. Essentially, it decided that, even where there is no need for statutory collective consultation, a fair process will normally involve engaging with employees while redundancy proposals are at a formative stage.
The EAT also noted that it is increasingly common for there to be an international element to an employer’s corporate structure and that what constitutes good industrial relations will vary significantly between countries. In this case, the EAT noted that the list of subjective selection criteria, which came from the Respondent’s US parent company, did not reflect usual practice in the UK. Early workforce consultation would identify this type of difference in practice, although the EAT did not make any finding in this case on the fairness (or otherwise) of the criteria.
The key takeaways
This is an important case for employers to note, as they will now need to ensure they consider whether to consult the workforce more widely, even where collective consultation obligations have not been triggered. Understandably, employers are often keen to avoid causing widespread upset or unrest by making redundancy proposals more widely known. However, the EAT’s decision here suggests that, for a dismissal to be fair, employees should normally have the opportunity to discuss the prospects of a different approach to the redundancy process when plans are still at a formative stage. Affected employees might, for example, suggest they would be willing to take pay cuts to negate the need for reductions in head count. If employers do not carry out a general workforce consultation, this will not always render any subsequent dismissal unfair, but the employer will need to be able to justify why such consultation did not take place, such as by demonstrating that it considered such consultation to be futile.
The EAT also noted that, whilst appeal processes can correct missing aspects of individual consultation, it could not rectify the failure to consult at the formative stage.
For advice and assistance in conducting fair redundancies in your business, please contact a member of our Employment team who will be happy to assist.
