Fair procedures must be followed in redundancy exercises to avoid unfair
dismissal claims, but employers must take care not to neglect individual
consultation
It was reported last week that 61 managers at Sainsbury’s were successful in
employment tribunal claims for unfair dismissal. Although details are not yet
available, the claims appear to have sprung from a redundancy exercise carried
out in January 2002. Reports indicate the compensation for the managers could
run into millions.
Sainsbury’s claimed the tribunal accepted the business need for change, and
was prepared to accept that the dismissals were redundancies – one of the
potentially fair reasons for dismissal. But the tribunal still decided the
dismissals were unfair "due to a technicality of selection
procedure". This case reaffirms the importance of implementing a fair
procedure for redundancies.
Alstom Traction Limited v Birkenhead & Ors (EAT/1131/00 10 October 2002)
was another timely reminder of the need for individual consultation when making
redundancy dismissals.
Where an employer is planning a large-scale redundancy programme, it is
tempting to focus on the requirements for collective consultation. Alstom
emphasised that dismissal can still be unfair even if these requirements are
faithfully adhered to.
In this case, the employer carried out "extremely detailed"
collective consultation with the unions involved. However, all six applicants
were successful in claiming unfair dismissal, because the individual
consultation was flawed. The relevant law is contained in the Employment Rights
Act 1996, section 98(4) – that any dismissal should be fair in the
circumstances and the employer must have acted reasonably in treating the
reason as sufficient for dismissal.
What is striking in the Alstom case is the lengths the employer went to,
only to come unstuck in the end. Staff were provided with regular information
on the redundancy exercise and attended consultation meetings explaining the
selection method and assessment process. The assessment process was, on the
face of it, well planned and thorough. A manager carried out the first
evaluation, which was then moderated by a more senior manager. Once completed,
there was a further validation stage designed to detect any unusual scoring.
The staff ‘at risk’ had a consultation meeting with a manager where they
were given information about the criteria, their score and the cut-off score,
how to appeal and other details of outplacement support. There was then a
further meeting where the dismissal was confirmed and staff were given a
breakdown of their scores and the assessor’s notes.
Despite all the employer’s efforts, the dismissals were still found to be
unfair. The EAT agreed there was no meaningful consultation with the staff as
they had no real opportunity to contest the reason for the dismissal, or the
assessment scores. The EAT was not convinced by the employers’ argument that
the procedural defects identified were remedied on appeal.
The two cases are factually different, but highlight the same pitfall. It
appears the tribunals accepted that there was a redundancy situation, and that
the employers had put considerable resources into planning them. Perhaps, in
concentrating on the collective requirements, the employers did not follow a
fair individual consultation process.
By Tim Woodward, Associate, Bevan Ashford
Key points
– Ensure collective consultation is carried out where required
– Do not forget the requirement for individual consultation
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– Provide the chance for staff to contest the reason for
dismissal
– Ensure workers can challenge the assessment scores before
dismissal (if possible, before the appeal stage)
