When should redundancy consultation start?
A recent EAT case has indicated that employers may need to consult with employees before determining selection criteria for redundancy.
Employees in redundancy situations are often entitled to a consultation with their employer, to discuss the reasons for the redundancy and any alternative options. If an employer does not hold a genuine and meaningful consultation before confirming redundancies, the affected employees with two or more years’ service can make a claim for unfair dismissal.
The recent case of Mrs S Mogane v Bradford Teaching Hospitals NHS Foundation Trust and Karen Regan stressed the importance of these consultations and highlighted that consultation may, in some circumstances, need to begin much earlier than employers assume. Often, consultation only starts once the criteria for redundancy have been set and the provisional scoring procedure has been completed. However, in this case, the failure to consult about the redundancy selection criterion meant that the employee was dismissed without a genuine prior consultation, and this was deemed to be unfair.
Mogane was employed by the Bradford Teaching Hospitals NHS Foundation Trust on a series of fixed-term contracts since 2016. The Trust’s sole criterion for her selection for redundancy, adopted without prior consultation, was that her fixed-term contract was due to be renewed before any of her colleagues’. Mogane was invited to a meeting, where she was told that the Trust faced financial difficulties and that she should be made redundant due to the renewal date of her contract. The Trust attempted to find alternative employment for Mogane but, after this failed, her contract was terminated in December 2019. Mogane claimed unfair dismissal, but this claim was rejected in the first instance, with the tribunal finding that she had been fairly selected for redundancy, as the chosen selection criterion, quite like ‘last in, first out’, is theoretically a lawful approach. Mogane appealed to the Employment Appeal Tribunal (EAT).
The EAT noted that a consultation is a fundamental aspect of a fair redundancy procedure and held that Mogane was not offered a genuine consultation prior to dismissal. A fair redundancy procedure requires that a consultation takes place at a stage in the process where the employee can still potentially influence the outcome. Where the selection criterion immediately identifies the employee to be made redundant, as in this case, the consultation should take place prior to deciding on the selection criterion.
Adopting one criterion which automatically decides the employee to be dismissed without a prior consultation was not within the band of reasonable responses available to the employer, and therefore Mogane was unfairly dismissed. This also amounted to a breach of the implied duty of trust and confidence, which requires employers to not act arbitrarily towards employees when selecting the pool for redundancy. While it was noted that a selection pool of one employee can be fair in appropriate circumstances, it should not be decided on without prior consultation.
This case highlights the importance of a genuine and fair redundancy consultation and suggests that there are circumstances in which this consultation must be held before the selection criteria for redundancy have been established. It should also act as a warning to employers intending to use the ‘last in, first out’ method when selecting for redundancy, as this criterion would also produce an automatic selection of employees – employers planning on using ‘first in, last out’ may therefore want to hold prior consultations with the relevant employees, in order to protect themselves from claims of unfair dismissal.
If you are in any doubt as to when to commence your redundancy consultation, then please do get in touch with a member of our team to help ensure you follow a compliance process.