Case law | Redundancy: a cautionary tale | Moorepay
May 16, 2024

Case law | Redundancy: a cautionary tale

The age-old questions; when you should start consultations, what information should you disclose, and when should employees be involved have been dealt with considerably in the case of De Bank Haycocks v ADP RPO UK Ltd.

The purpose of redundancy consultations is to avoid making any redundancies in the first place. 

As such, employees must be engaged from an early or formative stage, to ensure that they have a meaningful opportunity to influence the process and any decisions made. 

A cautionary note from this case, if an employer does not seek early engagement from employees, irrespective of a perfect process, any dismissals could be deemed to be unfair. 

Although in practice employers typically tend to wait until redundancies are inevitable before speaking to their workforce, the Employment Appeal Tribunal (EAT) has reinforced the risks of this approach. 

Background 

Mr De Bank Haycocks (DBH) was employed as a recruitment consultant by ADP. After a gradual reduction in work following the pandemic, his employer decided to reduce the number of consultants. 

Prior to the consultation process with employees, ADP’s US parent company advised on the subjective selection criteria to use, in which DBH scored the lowest. A timetable for the consultation process was then devised. Initial consultation commenced on 30 June 2020, over a 14-day period, with decisions being made on 14 July 2020.

Once the process started, DBH was told that he could ask questions or suggest alternatives, however he was never provided with a copy of his scores for discussion or informed of how his colleagues fared. After being notified of his dismissal, he appealed the decision, and it was only at this stage that his selection scores were provided to him. Upon losing his appeal, he commenced a claim in the Employment Tribunal.

It was found that the dismissal was fair. Although there was a procedural flaw in not providing him with his selection scores, this error had been rectified at the appeal stage.

DBH appealed to the EAT arguing that the employment tribunal had failed to consider the issue of consultation adequately.

Judgement

The Employment Appeal Tribunal (EAT) upheld DBH’s appeal and substituted a finding of unfair dismissal. It found:

  • There had been a clear absence of meaningful consultation at the formative stage of the redundancy process.
     
  • The absence of consultation, at a stage when employees could have proposed a different approach to any aspect of the proposed process, could have had the potential to influence the employer’s decision and was indicative of an unfair process.
     
  • In this case, whilst the appeal had been carried out conscientiously (and had remedied the procedural failing that DBH had not been provided with his scores prior to dismissal) it could not rectify or repair the fact that there had been no consultation with employees during the formative stage of the redundancy process.
     

Checklist for a fair redundancy consultation

The judgment from the EAT set out the following guiding principles for a fair redundancy consultation:

  • The employer will normally warn and consult either the employees affected or their representative when redundancies are on the horizon.
     
  • A fair consultation occurs when proposals are at a formative stage, and where the employee is given adequate information and adequate time to respond (along with conscientious consideration being given to that response).
     
  • In consultation, the purpose is to avoid dismissal or reduce the impact of redundancies.
     
  • A redundancy process must be viewed as a whole, and an appeal may correct an earlier failing (in this case it corrected the procedural failing on provision of scores but it did not correct the fundamental failing of a lack of consultation at a formative stage).
     
  • It is a question of fact and degree as to whether consultation is adequate and it’s not automatically unfair that there is a lack of consultation in a particular respect.
     
  • Any particular aspect of consultation, such as the provision of scoring, is not necessarily essential to a fair process.
     
  • The use of a scoring system does not make a process fair automatically.
     
  • Whether it is reasonable to show an employee the scores of others in a pool will be case-specific.

Conclusion

The purpose of meaningful consultation is to try and minimise the devastating impact that redundancies can have on employees and an organisation. 

By allowing your employees a chance to be part of the formative stages, to offer suggestions which can be considered, or to propose alternatives, is to truly engage with a fair process. 

In recent years, early consultation has saved organisations and made a difference. Employees have agreed to shorter hours or reduced pay during the pandemic to keep companies operating, resulting in an eventual return to normal hours in a surviving company. 

Put simply: talk to your employees, ask for their viewpoints, and together, solutions can be found. 

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Afsha Sindhu
About the author

Afsha Sindu

Afsha is Moorepay's Employment Law Solicitor in the Compliance area of the business. With many years working in this industry, she has an acute knowledge of the ins and outs of Employment Law and HR Legislation, specialising in GDPR compliance. This means she's able to inform our clients of the most practical solutions to their HR issues and queries.

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