Important Lessons When Making Redundancies

Many employers have found themselves in the unfortunate position of needing to make redundancies since the pandemic started and sadly, some may find themselves needing to do so in the future. Taking the decision to propose redundancies is never an easy one for any employer and it can be a  worrying and difficult time, particularly if carrying out redundancies is something the organisation has never had to do before.

The case of Laybourn v The Cambridge Printing Company Ltd highlights some lessons employers can learn when it comes to making redundancies in their organisation.

The Facts of the Case

The employee was employed as a van driver and the employer proposed to make his position redundant. The employer considered that the employee was the only one who should be put at risk of redundancy (he was in a ‘pool of one’) and he was invited to attend a redundancy consultation meeting by letter which he received on 26^th March 2018.

The redundancy consultation meeting took place on 28^th March with the employer explaining that due to the business needs in difficult market trading conditions the company had to look at costs in all areas and as a result of this it had to make the employee’s position redundant. It was mentioned that when the employee had taken 38 days off sick costs had increased as external drivers were needed as cover and the van remained parked outside the employee’s house. Alternative employment was discussed at a different location, but the employee was unable to relocate due to personal reasons. The employer confirmed by letter on 28^th March that the employee was redundant. No mention was made of a right to appeal.

The employee wrote to the employer on 28^th March querying his notice pay and mentioning that there may have been errors in the employer’s redundancy procedure. On 4^th April he wrote to the employer and asked that his March letter be taken as an appeal regarding his redundancy. The employer responded saying that the employee’s March letter made no mention of appealing and gave no grounds for appeal and concluded ‘…therefore I have to inform you that you are out of statutory time to raise an appeal’. The employee again wrote asking to appeal, no response was made by the employer and there was no appeal hearing.

The employee complained to the employment tribunal that he had been unfairly dismissed and the Judge agreed finding that it was not a genuine redundancy. Whilst the Judge didn’t need to go any further, he also made comments on other aspects of the case that will be helpful for employers to bear in mind.

What did the Judge say and what lessons can employers learn from this case?

1. The reason for dismissal

The Judge found on the facts that the employee wasn’t made redundant because of a genuine redundancy situation but because one of the directors ‘wanted to get rid of him and saw him as unreliable’. The Judge came to this conclusion after the employer was unable provide contemporaneous evidence about the need to make the redundancy and the response of the dismissing manager during cross examination.

When asked by the employee why a director of the Company had not known of his redundancy, the dismissing manager had replied he ‘sent me the email. In it he says get rid of him’. The Manager had tried to persuade the Judge that the company took no notice of things the director said but there was no evidence around that. The Judge felt that it was more likely that the manager ‘had inadvertently disclosed the truth of the situation and that the [employee] was dismissed because [a director] wanted to get rid of him’. As the employer couldn’t show that the employee’s dismissal was because of redundancy, the dismissal was unfair.

Learning point: Ensure there is a genuine redundancy situation and this can be evidenced.  A genuine redundancy situation could for example be the closure of all or part of a business or a reduced need for employees to do work of a particular kind such as needing fewer shop assistants due to a significant reduction in the number of customers. It’s important to be able to evidence the situation in case it is ever called into question.

2. Timing of Consultation

The Judge found that the employee was given very little warning of the proposed redundancy and that the consultation period was so short that it was unreasonable. Furthermore, the consultation couldn’t have been fair because in the circumstances it couldn’t have been carried out with an open mind – especially considering the speed of the action and lack of appeal.

Learning point: Getting redundancy consultation right is really important. No matter what the size of the organisation, an employer must usually warn and consult employees who may be affected by proposed redundancies before any decision to dismiss is made. The purpose of meaningful consultation is to ascertain whether redundancies can be avoided altogether and to allow a fair and reasonable process to be undertaken. It’s important that the outcome of a redundancy process does not appear to be pre-determined.

Whilst in most cases there is no set minimum period for which an employer must consult before redundancies are made, the consultation period does need to be reasonable in the circumstances. How long is appropriate will often depend on factors such as how many redundancies are proposed, the number of employees at risk and whether selection will need to take place. Employers should always seek advice from Kingfisher Professional Services Ltd on the facts of their situation before commencing any redundancy process. If an employer is proposing to dismiss 20 or more employees as redundant at one establishment within a period of 90 days or less it’s important to be aware that there are additional rules that need to be followed and that in this situation there is a prescribed consultation period. Kingfisher Professional Services Ltd can provide you with more information regarding this where required.

3. Appeal

The Judge found that the lack of an appeal was also unfair and that it would have  been so even had the redundancy been genuine. The Judge commented that the employee in this case would not have known the time limit for any appeal.

Learning point: It’s important to inform an employee who has been selected for redundancy that they can appeal and the timescale for doing so. There is no ‘statutory timescale’, but any period should be reasonable. It’s usual practice for employers to allow seven days to appeal although some organisations may allow longer in their contracts or through custom and practice. If an organisation receives an appeal from an employee, even if it is ‘out of time’, it is important to seek advice on the facts of the particular case before taking any action.

If you are considering proposing redundancies in your organisation or you would like assistance with any other employment law matter, please do not hesitate to contact Kingfisher Professional Services Ltd as we are happy to help.