A change in working terms arising from a business restructure does not
always lead to redundancy, as case law has ruled
What fun lawyers have had over the years with the definition of redundancy.
There is extensive conflicting case law on the issue of whether a
"dismissal is wholly or mainly attributable to the fact that the
requirements of that business for employees to carry out work of a particular
kind have ceased or diminished or are expected to cease or diminish"
(Section 139(1) Employment Rights Act 1996).
The emphasised wording has caused much confusion and uncertainty,
particularly in relation to business reorganisations.
In Shawkat v Nottingham City Hospital NHS Trust, 2001, EWCA Civ 954, the
Court of Appeal analysed this definition in the context of a hospital
reorganisation.
Dr Shawkat was appointed to a thoracic surgery post. The trust merged the
thoracic and cardiac departments, so that the thoracic surgeons took on cardiac
work in addition to their thoracic work.
Most of the thoracic surgeons were happy to do this, but not Dr Shawkat. He
did not wish to be involved in cardiac work. After a protracted period of
negotiations, Dr Shawkat was dismissed when he refused to accept his new terms.
He was replaced by a doctor who undertook a mixture of cardiac and thoracic
work.
Dr Shawkat’s claim for unfair dismissal succeeded, based on the fact that
the trust had sought to impose unreasonable terms and conditions upon him.
However, his claim for a redundancy payment was rejected by the employment
tribunal. He appealed to the EAT unsuccessfully and then to the Court of
Appeal.
In the Court of Appeal, Dr Shawkat argued that in considering whether there
was a diminution in the requirement for the trust to employ people doing work
of a particular kind, an employment tribunal must consider the work the
employee was doing at the time of the dismissal and the work which any
replacement employee undertook.
Dr Shawkat had undertaken only thoracic work: his replacement conducted a
mixture of thoracic and cardiac work. He argued that this could not amount to
the same "work of a particular kind". The thrust of his argument was
that, in any reorganisation which results in an employer requiring one or more
of his workforce to do a different job, there must be a redundancy situation.
The trust disagreed. It argued that, while relevant, the work done by the
replacement could not alone determine whether work was done differently before
and after a dismissal. The key issue was whether the trust’s requirements for
thoracic surgery had diminished. In this case they had not.
The Court of Appeal, finding for the trust, held that Dr Shawkat was not
redundant. It accepted the employment tribunal’s conclusion that, despite the
fact that a change did occur, the trust’s requirements for employees to carry
out thoracic surgery had not ceased or diminished. This conclusion was open to
the employment tribunal on the facts.
The Court of Appeal took the opportunity to reiterate that a re-organisation
does not necessarily exclude a redundancy situation: it all depends on whether
the requirements of the organisation for employees to undertake work of a
particular kind cease or diminish. If the work changes, it does not necessarily
mean it ceases. Leave to appeal to the House of Lords was refused.
Key points
– The fact that an employee is replaced by someone doing a slightly
different job does not necessarily mean they are redundant
– Redundancy only arises if the requirements of the business for employees
to carry out work of the kind done by the dismissed employee have diminished
– A reorganisation of a business does not necessarily amount to a redundancy
situation
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– Whether or not there is a redundancy situation will be determined by the
tribunal on its analysis of the evidence it hears. Its conclusion will not be
overturned on appeal if reasonable.
Nicholas Moore is national head of employment at law firm Osborne Clarke
