Court of Appeal re-visits guidance on managing small scale redundancies

The Court of Appeal has restored an employment tribunal ruling that failure to consult on the selection criteria before a redundancy dismissal did not make the dismissal unfair, since this defect was cured on appeal.  A decision of the Employment Appeal Tribunal which had overturned the tribunal’s ruling has been reversed.

The employer – a UK subsidiary of a US company – needed to make redundancies among a group of 16 employees who worked for a single client, following a reduction in the level of demand for their services. The workforce was not unionised and the separate collective consultation requirements under trade union legislation were not triggered because the numbers involved were too small.

The UK manager was asked to score her term of 16 based on a redundancy selection matrix provided by the US parent company but which reflected British legal requirements. Once all the team had been scored, the decision was made to make two people redundant, one of whom was the claimant Joseph Haycocks, who had the lowest overall score. It was only once he had been provisionally selected for redundancy that he was consulted. He did not know anything about the scores before the decision was reached to dismiss him. He was able to challenge his individual score on appeal, though that did not change the decision to make him redundant.

On any view it was bad practice to fail to consult on the scoring system during the two consultation meetings with the claimant.  However, the Court of Appeal disagreed with the EAT that the only fair way of proceeding would have been to consult in advance with all those at risk. It points out that in the absence of a recognised trade union or works council it is not possible to consult on a representative basis. In that situation there is not always much to choose between consulting with all the workers at risk about the selection criteria and raising it at each individual consultation meeting – there are pros and cons to both options.

In the Court of Appeal’s view what ultimately mattered was the employment tribunal’s finding that Mr Haycocks was given a genuine opportunity to challenge his score on appeal. Had his employer needed to change the scoring at that late stage it would clearly have been inconvenient, but there was no evidence that the appeal panel had approached their task with a closed mind.

The law has now been restored to how it stood before it was disturbed by the EAT’s ruling (see here for more information on that earlier decision).  The Court of Appeal thought the EAT was trying to fill “what it perceived as an undesirable gap created by the fact that the statutory requirements do not apply to smaller-scale redundancies”. It added: “If such a gap does exist, it is more properly addressed by legislation or, perhaps, by ACAS guidance.”

For now, employers are left with the familiar message: there are no cast-iron rules about how to manage small-scale redundancies fairly. It all boils down to whether the employer has adopted a reasonable overall process to reach a decision to dismiss. What this means in practice is that employers will have to look carefully at the relationship between consulting with individuals and communicating with all the employees at risk to make sure nothing falls down the cracks.  In this case failure to share the scoring system with the claimant at an earlier stage was clearly unintentional, which is probably why Mr Haycocks’ employer was given the benefit of the doubt when assessing the genuineness of the appeal process. 

Our content explained