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Redundancy where an employee is pregnant or on maternity leave

In the case of Ballerino v Racecourse Association Ltd, the EAT has considered how an employment tribunal should have approached claims of pregnancy and maternity discrimination and automatic unfair dismissal in the context of a redundancy dismissal

Under section 139 of the Employment Rights Act 1996 (“ERA 1996”), an employee is dismissed by reason of redundancy if, in broad terms, the dismissal is wholly or mainly attributable to the closure of the employer’s business, the closure of the employee’s place of work, or a reduced need for employees to carry out work of a particular kind.

Pregnancy and maternity is one of the nine protected characteristics under the Equality Act 2010. A woman is directly discriminated against if she is treated less favourably because of her pregnancy or a pregnancy-related illness, because she is on compulsory maternity leave, or because she has exercised or sought to exercise her right to maternity leave.

Under Regulations 10 and 20 of the Maternity and Parental Leave etc. Regulations 1999, an employee on maternity leave whose role is redundant must be offered any suitable available vacancy within the employer’s business, otherwise the dismissal will be automatically unfair under section 99 of the ERA 1996.

In Ballerino v Racecourse Association Ltd, the Claimant worked 40 days a year as a financial accountant for a trade association. Four months after starting in the role, she went on maternity leave. Whilst she was on maternity leave, her employer created the new role of Finance Manager and Business Analyst. This was a full-time role, which combined the Claimant’s responsibilities with other more strategic duties. The Claimant was invited to apply for the role but simultaneously offered a settlement agreement. The employment relationship broke down and she was dismissed, purportedly by reason of redundancy.

The Claimant brought claims against her employer including for pregnancy and maternity discrimination and automatic unfair dismissal. The Claimant argued that the redundancy was a sham (because the trade association still had the same requirement for an employee to carry out the same financial accounting work). She also argued that, if there was a genuine redundancy situation, her dismissal was automatically unfair, given that the trade association had not offered her the new role as a suitable alternative.

The employment tribunal found that the dismissal was not discriminatory as the trade association had provided an acceptable explanation for reorganising the business. The tribunal also rejected the Claimant’s argument that the new role was a suitable alternative as it predominantly involved business analysis, rather than financial accounting. Additionally, it was a full-time, office-based role whereas the Claimant’s role had been 40 days a year from home. The Claimant appealed to the EAT.

The EAT upheld the appeal. The EAT decided that, on the facts of this case, the tribunal had erred by moving straight to consideration of whether the new role was a suitable alternative without first determining whether there was a genuine redundancy situation at all. This question could not simply be answered as a matter of impression, particularly where the Claimant had only been in her role for a short time. The fact that there had been some form of re-organisation and/or an additional requirement for different skills did not necessarily mean that the statutory test for a redundancy dismissal was satisfied.

The failure to establish this point was relevant to both the automatic unfair dismissal and discrimination claims. The EAT held that, as the tribunal had found the burden of proof had shifted to the trade association to show a non-discriminatory explanation for the Claimant’s dismissal, the tribunal should have considered whether there was a genuine redundancy capable of discharging that burden. The EAT remitted the case to the same tribunal for reconsideration.

The EAT’s decision clarifies how an employment tribunal should be expected to address pregnancy and maternity discrimination claims and automatic unfair dismissal claims in the context of a redundancy scenario.

Employers looking to make redundancies must be able to demonstrate that there is a genuine redundancy situation in accordance with the statutory definition of redundancy and that this is the reason (or the main reason) for the redundancy, as opposed to any protected characteristic the employee may have. Where the redundant employee is pregnant or on maternity leave, she must be offered any suitable available vacancy, otherwise the employer will be at risk of an automatic unfair dismissal claim. An available vacancy will be suitable where the work to be done is suitable to the particular employee, appropriate in the circumstances, and the contractual terms are not substantially less favourable to the employee than her previous role.

If you are an employee and you would like advice in relation to a redundancy situation or discrimination, or you are an employer and you would like advice on conducting a fair redundancy process and ensuring it is non-discriminatory, please get in touch at [email protected].