The Employment Tribunal’s reserved judgment in Crawford-Thomas v Collinson (Central Services) Limited offers a useful reminder that a genuine business case for redundancy is not, on its own, sufficient. Where the consultation process is inadequate, a finding of unfair dismissal will follow.

What happened in this case?

The Claimant, Mr Crawford-Thomas, was employed as Financial Crime Manager by Collinson, a global travel benefits company, from February 2009 until his dismissal on 14 March 2024. He had approximately 40 years’ employment history in financial crime and fraud work.

In October 2023, Ms Smith joined as Vice-President of Risk and Compliance and became the Claimant’s new line manager. She was tasked with evaluating the company’s safeguarding strategy to protect against cyber-crime and emerging artificial intelligence (AI) risks (including anticipated compliance obligations under the EU’s AI Act) and she conducted a “gap analysis” of her team’s competencies.

As part of that exercise, she asked the Claimant to set out what elements of his role he currently performed. She concluded that of his 11 listed activities, seven could be handled by the company’s existing Refinitiv automated system, two could be absorbed into her own role, and two were already performed by other colleagues.  She determined that a new higher-grade role of ‘Head of Risk and Assurance Manager’ was required to address future AI and cyber risk and ensure compliance with the EU AI Act.  She formed an early view that the Claimant was not qualified for this role.

The Claimant was placed at risk of redundancy on 31 January 2024.  

The first consultation meeting was held on 7 February 2024.  The Claimant said he did not understand how his role was at risk of redundancy.  Ms Smith referred him to selected slides from a business-facing slide deck.  She also said he would be sent the job description for the new Head of Risk role and that he could apply for any suitable roles on the company’s website.  The Head of Risk role was then advertised externally before the Claimant had fully considered whether to apply, and he discovered that Ms Smith had also invited a former colleague to apply for it.  This discovery made the Claimant suspicious about the authenticity of the process.

The second consultation meeting was held on 26February 2024.  At the meeting, the Claimant said he was still unsure why there was a need to make him redundant and little was said or done to address that concern.  He also said he was interested in the Head of Risk role and asked whether he could have a trial period.  Ms Smith did not agree to this (without explaining why) but said that he was at liberty to apply for the role.

The third and final consultation meeting was held on 7 March 2024.  The Claimant said he was still struggling to understand why his role was at risk of redundancy and why aspects of it were no longer required.  Ms Smith attempted to clarify the position, but the Claimant disagreed with her rationale,  He asked further questions about the restructure but did not understand the answers given.  Ms Smith referred him back to the slides he had previously been given.  He asked to see the gap analysis, but Ms Smith refused and said the rationale had already been explained.  He also asked whether he could be “mapped” into the new role with additional training and support.  This was also refused.

The Claimant was dismissed on 14 March 2024, and his appeal was rejected.  He brought claims for unfair dismissal and direct age discrimination.

What did the Employment Tribunal decide?

Unfair dismissal

The Tribunal had little difficulty finding that a genuine redundancy situation existed. The Claimant’s core functions had been substantially automated by the Refinitiv system, remaining tasks had been redistributed, and there was a credible business need for a differently skilled role. The requirements of the business for work of the Claimant’s particular kind had diminished within the meaning of s.139 Employment Rights Act 1996.

The Tribunal found that the Respondent had attempted a genuine redundancy consultation process: three meetings were held, HR was present throughout, and the Claimant was offered access to job search support. However, the Tribunal identified two areas where the process fell critically short.

First, Ms Smith had formed an early view, following her very first one-to-one with the Claimant, that he lacked the skills and qualifications needed for the new Head of Risk role.  Given that she was new to the company, she had little independent knowledge of his broader career or competencies.  Although she reviewed his Linked In profile, the Tribunal notes that this was “not a satisfactory way to obtain a full picture of the abilities of an employee within her own team.”  The Tribunal found that once that view was formed, subsequent meetings became meaningless in respect of alternative employment.  Ms Smith was holding out the Head or Risk role as a potential alternative while having already concluded that the Claimant was unsuitable for it. 

However, the Tribunal accepted that the Respondent reasonably believed the new role required urgent filling by a suitably qualified candidate, and that an upskilling period was not a viable option. That was a reasonable business position. The problem was not the decision itself, it was that the consultation presented a false choice.

Second, Ms Smith’s only method of explaining the restructure was to refer the Claimant back to slides that he had already said he did not understand. This was not adequate or meaningful.  She made no attempt to find an alternative explanation when it became clear the slides were not adequate. She concluded that the Claimant was merely trying to elongate the process, and she effectively disengaged.  As a consequence, the Claimant did not fully understand the process he was going through and this detrimentally impacted his ability to suggest ways to mitigate the risk of his role being made redundant.

Despite upholding the unfair dismissal complaint, the Tribunal accepted the Respondent’s submission that a fair process would ultimately have resulted in redundancy.  A Polkey reduction to compensation will, therefore, be made, though remedy has not yet been determined.

Age discrimination

The Tribunal held there was no evidence suggestive of the Claimant’s age being the reason for the difference in treatment compared to a hypothetical comparator.  Therefore, the burden of proof did not pass to the employer.  If wrong about that, the Respondent had provided reasonable and adequate explanations for its treatment of the Claimant and none of them indicated discriminatory conduct on grounds of age.

What does this mean for employers?

This decision makes it clear that managers must not approach consultation processes with a fixed mindset, particularly in respect of alternative roles.  Redeployment searches based solely on a self-reported job description and a quick look at the employee’s LinkedIn profile are unlikely to be sufficient, particularly for a long-serving employee. 

In this case, a trial period with support and training was not viable due to the urgency involved, but in a non-urgent case then a reasonable approach may be to allow a trial period plus training.  Alternatively, where there are reasonable grounds to consider that an alternative vacancy would not be suitable for an employee, then it should not be put forward as an option during consultation.

HR and managers must also take care to ensure employees understand the process.  Where an employee repeatedly says they do not understand the rationale for their redundancy, the answer is not to keep referring them back to the same document. Employers must find alternative ways to explain the position (even if where they are cynical about the employee’s motives for pleading ignorance).

Crawford-Thomas v Collinson (Central Services) Limited

BDBF is a leading employment law firm based at Bank in the City of London. If you would like to discuss any issues relating to the content of this article, please contact Amanda Steadman (AmandaSteadman@bdbf.co.uk), Rose Lim (RoseLim@bdbf.co.uk) or your usual BDBF contact.

Earlier this month, the Government published its response to the consultation on strengthening remedies for breaches of the collective redundancy consultation rules.  Alongside that, it published various amendments to the Employment Rights Bill, including some important amendments to the collective consultation proposals.  In this briefing, we bring you up to speed on the latest developments and what they mean for employers.

What’s the background?

Currently, collective redundancy consultation is triggered where there is a proposal to dismiss as redundant 20 or more employees assigned to one “establishment” within a 90-day period.  In this context, “establishment” has been held by the courts to mean the local unit where the employee works, not the business as a whole.  A failure by an employer to comply with these obligations may lead to a protective award of a sum not exceeding 90 days’ gross pay per employee. This award is intended to penalise the employer for breaching the statutory requirements and deter others from doing so. The amount of the award is determined by the Employment Tribunal according to what is just and equitable but, usually, the more serious the breach, the higher the protective award.

Initially, the Bill proposed to change the law to trigger collective consultation where there are 20 or more proposed redundancies within 90 days across an entire business rather than in just one establishment. This would mean that collective consultation would be triggered more frequently.  This raised the question of whether the consultation would need to be conducted with all the employee representatives at the same time even where the redundancies were in different locations and unrelated.  You can read more about the initial proposals in our briefing here.

Shortly after the Bill was published, the Government published a consultation looking at options for strengthening the remedies available for a breach of the collective consultation rules.  The options under consideration were:

• Raising the protective award to 180 days’ gross pay or removing the cap altogether. In either case, the Tribunal would retain discretion as to the amount of the protective award, based on what it determines to be just and equitable in light of the severity of the employer’s breach.

• Extending the remedy of interim relief to affected workers. Where interim relief is granted by a Tribunal it will order the employer to reinstate the claimant to their previous role or re-engage them in a different role pending the determination of the unfair dismissal claim at the final hearing.  Where the employer is not willing to do this, the Tribunal will make a “continuation order”, meaning the employer is ordered to pay the claimant as if their employment contract was still continuing, until the final hearing. Sums paid under a continuation order are irrecoverable regardless of the outcome of the final hearing. This makes interim relief a potentially very valuable remedy for claimants, and a burdensome one for employers.

You can read more about the consultation in our briefing here. 

What’s the latest?

The Government has put forward a number of key amendments to the Bill in this area.

1. Collective consultation will be triggered where there is a proposal to dismiss as redundant within a 90-day period either 20 or more employees assigned to one establishment (i.e. the current position), or a “threshold number of employees” across the wider workforce. This threshold number will be defined in regulations but may be either a specified number of redundancies or an overall percentage of the workforce. For example, if the threshold were to be set at 10% of the workforce, and the employer employed 500 employees across different sites, then a proposal of 50 or more redundancies across the whole business within a 90-day period would trigger collective consultation even where fewer than 20 redundancies were proposed at any one site.
2. Employers will be required to notify employee representatives in writing of the total number of proposed redundancies across the business and at which establishments.   However, employers will not be required to consult all such representatives together, nor undertake consultation with a view to reaching the same agreement with all of them.  These changes mean that all employee representatives will be entitled to information about the proposed redundancies across the entire business, but employers will have flexibility about how the consultation process is conducted.
3. The trigger for providing the Secretary of State with advance notice of proposed collective redundancies via the HR1 form will be aligned with the new collective consultation thresholds in the Bill. 
4. In terms of remedies, the maximum protective award will rise from 90 to 180 days’ gross pay per employee.  However, interim relief will not be extended to protective award claims.

In due course, the Government will also publish new guidance for employers on collective consultation which will reflect these changes.  It also plans to consult on additional ways to strengthen employee rights in collective redundancy situations.

What does this mean for employers?

These changes represent good and bad news for employers.  The retention of the words “at one establishment” is a concession to business and means collective consultation will not be triggered where a multi-site employer proposes small pockets of redundancies at different sites provided that the total numbers do not exceed the new threshold.  Clearly, the level at which the new threshold is set will be important – the lower it is, the more likely that collective consultation will be required.   

Further, the fact that consultation will not have to be conducted with all the employee representatives at the same time, nor with a view to reaching the same agreement, means that even where collective consultation is triggered by multiple pockets of smaller redundancies across different sites, there is flexibility in how that process operates.  The new guidance will be an important reference document for employers in this situation.

The doubling of the maximum protective award to 180 days’ pay significantly increases the risk to employers of failing to comply with the statutory requirements for collective consultation.  However, the Employment Tribunal will retain discretion to set the award at a figure which reflects the severity of the breach, which means minor breaches should not incur an award at the upper end of the scale.  “Buying out” protective award claims will now be more costly and therefore less attractive for employers, meaning they may choose to comply with the statutory requirements and conduct a collective consultation process.

Government Response to Consultation on strengthening remedies against abuse of rules on collective redundancy and fire and rehire, 4 March 2025

Employment Rights Bill: Amendment Paper, 4 March 2025

BDBF is a leading employment law firm based at Bank in the City of London. If you would like to discuss any issues relating to the content of this article, please contact Amanda Steadman (AmandaSteadman@bdbf.co.uk) or your usual BDBF contact.

The Court of Appeal has held that a fair redundancy process requires individual consultation to take place at a point when the employee still has a chance to influence the outcome.  However, consultation with the wider workforce is not usually required in small-scale redundancy exercises.

What happened in this case?

The Claimant worked for ADP as a recruitment consultant in a team made up of 16 people serving a single client.  When the client’s recruitment needs declined due to the Covid pandemic, ADP decided to make redundancies.  A manager scored each member of the recruitment team according to 17 selection criteria.  The Claimant received the lowest score and was one of two selected for redundancy.

After this exercise had taken place, ADP began a two-week individual consultation period with the Claimant and the other lowest scoring employee, which culminated in the Claimant being told that he was to be made redundant.  At this point, the Claimant had not had sight of his own scores against the selection criteria.  

The Claimant appealed the decision and was given his own scoring sheet (but not the scores of the others in the team).  At the appeal hearing, he argued that his scores were too low, and he challenged the criteria used and lack of consultation about the scoring process.  His representations were considered but, ultimately, rejected.  He went on to bring an unfair dismissal claim, arguing that his selection for redundancy was unfair.

The decisions of the Employment Tribunal and EAT

The Employment Tribunal found that ADP had failed to provide the Claimant with information about the selection criteria or his scores until the appeal stage.  However, once he had raised concerns about his scores, ADP gave due consideration to those concerns, but were unpersuaded that he had been scored too low.  Overall, the Tribunal considered the Claimant had failed to show that the process was unfair, and the claim was dismissed.

The Claimant appealed to the EAT arguing that the process was unfair because no meaningful consultation was possible by the time ADP had started speaking to him – the decision had already been taken to make him redundant.  The EAT upheld the appeal on the basis that there had been a lack of “general workforce consultation” at the formative stage of the process.  This was said to be a requirement of good industrial relations practice, regardless of the numbers being made redundant.  ADP had failed to do this, and the steps taken following the appeal were not capable of remedying that failure.

ADP appealed to the Court of Appeal, arguing the EAT was wrong to say they had been required to consult generally with the workforce.

What did the Court of Appeal decide?

The Court of Appeal upheld the appeal.  It disagreed with the EAT that “general workforce consultation” with the wider workforce is required in small scale redundancies (i.e. those where collective consultation obligations do not apply).  Ultimately, the question will be fact specific.  Such consultation may be appropriate in a unionised workforce, however, it is not typical in non-unionised workforces.

Nevertheless, individual consultation with affected employees at a formative stage is still needed in small scale redundancies.  This means that consultation should take place at a stage where the employee can influence the overall decision.  Although there is no specific point in time that this must occur, the later in the process, the less likely it is that the employee will be able to exert influence over the employer.

Starting consultation after the scoring exercise was complete was said to be “bad practice” but this did not necessarily mean that the process was unfair.   Here, the employer had provided the scoring sheet to the Claimant and afforded him the chance to challenge his scores at the appeal stage.  This meant that he did have the opportunity to influence the outcome and, as such, the consultation was conducted at a formative stage. 

What does this mean for employers?

This decision will reassure employers that consultation with the wider workforce is not necessary in small scale redundancy situations falling outside the collective consultation rules (or where the workforce is not unionised).  Had the Court of Appeal agreed with the EAT, this would have resulted in an additional burden on employers. 

Crucially, the consultation process must still be meaningful and afford the employee the chance to change the outcome.  Here, the employer had selected the two employees for redundancy before any consultation had started, which, on its face, suggests there was little scope for the Claimant to change the outcome.  However, the appeal process came to the employer’s rescue in this case.

The Court of Appeal refers to this as “bad practice”.  To minimise the risk of claims arising from failure to consult, employers should aim to consult with at risk employees on both the appropriate pool for selection and the proposed selection criteria before making the selection. Once chosen, the selection criteria should be applied fairly.  At the very least, employees should be given the opportunity to make representations on their own scores before any final decision is made.  Although this may mean the process is slightly more burdensome, it will help employees have confidence in the process and limit the risk of challenges and claims.

De Bank Haycocks v ADP RPO UK Ltd

BDBF is a law firm based at Bank in the City of London specialising in employment law.  If you would like to discuss any issues relating to the content of this article, please contact Principal Knowledge Lawyer Amanda Steadman (amandasteadman@bdbf.co.uk) or your usual BDBF contact.

On 10 October 2024, the Government published the Employment Rights Bill, which will take forward many of its proposals for workplace reform.  In the second article in our series analysing the Bill, we consider the proposals for dismissal-related reform. 

Running to more than 150 pages, the Employment Rights Bill (the Bill) puts forward a vast array of reforms affecting the workplace, including family-friendly rights, dismissals, equality law, contracts and pay, trade unions and industrial action and labour market enforcement. In the second in our series of articles explaining the Bill, we consider all the proposals in the dismissal sphere.

Unfair dismissal

Abolition of the two-year qualifying service requirement

Currently, an employee must have two years’ continuous service with their employer in order to bring a claim of ordinary unfair dismissal in an Employment Tribunal.  There is a limited exception to this rule, where it is shown that the dismissal was for an “automatically unfair” reason, such as for having made a protected disclosure.  In such cases, the employee is able to claim automatic unfair dismissal from Day 1 of their employment.  However, where there are no such aggravating factors, an employer is able to dismiss an employee with under two years’ service relatively easily.  There is no need to identify a fair reason for the dismissal and nor does the employer need to show it acted reasonably.

The Bill proposes to remove the two-year qualifying period for ordinary unfair dismissal claims, converting it to a Day 1 employment right.  To complement the abolition of the qualifying period, a new provision will be introduced preventing employees who have not yet started work from claiming unfair dismissal.  However, if the reason for dismissal is automatically unfair, relates to the employee’s political opinions or affiliations, or is connected to their membership of a reserve force, then an employee who has not even started work will be able to claim unfair dismissal.

Special rules for new employees

There has been much speculation in the press about whether the Bill will make it simpler to dismiss employees during a probationary period.  Importantly, the Bill provides that regulations may be introduced which will “modify” the standard of reasonableness that must be met to dismiss fairly during the “initial period of employment”.  The initial period of employment is not specified in the Bill (this will be dealt with in the regulations) however, the Government has signalled its preference for this period to be set at nine months.   In practice, this will be longer than most contractual probationary periods operated by employers, which generally sit at between three to six months. 

Exactly how the test will be modified remains to be seen.  Currently, employers must show that they have acted reasonably in treating the reason as sufficient to dismiss, viewed in light of the size and resources of the employer.  In many cases, this requires the employer to comply with the steps set out in the statutory Acas Code of Practice on Disciplinary and Grievance procedures.  In the separately-published Next Steps to Make Work Pay it is suggested that, at the very least, the modified test will require employers to meet with employees to discuss proposed dismissals during an initial period of employment. 

All of which will provide some reassurance for employers, however, there are some important limitations to note.

First, the modified test will only apply where the reason for dismissal is capability, conduct, illegality or some other substantial reason (SOSR) “relating to the employee”.  It will not apply to redundancy dismissals during the probationary period, and nor does it seem to apply to SOSR dismissals which do not relate the employee.  Where the dismissal is by reason of redundancy (or SOSR which does not relate to the employee), the existing reasonableness test will apply i.e. that the employer has acted reasonably in treating the reason as sufficient to dismiss, viewed in light of the size and resources of the employer.  

Second, the modified test will only apply where the dismissal takes effect on or before the last day of the initial period of employment, or where the employer gives notice to terminate before the end of the initial period of employment and the dismissal takes effect within three months of the end of that period. 

What will these changes mean for employers in practice? 

• The abolition of the qualifying period is certain to generate more grievances and Employment Tribunal claims, some of which will be justified and some not.  But all of them will take time and money to deal with.  Certainly, employers will wish to be more cautious when it comes to recruitment so as to limit the risk of a bad hire.  And after recruitment, line managers will need to actively manage probationary periods to ensure that any performance or conduct issues are identified and dealt with at an early stage.

• Making it simpler to dismiss new employees takes some of the sting out of this reform for employers.  However, care must be taken to diarise the relevant dates and ensure that notice to terminate is given before the end of the initial period of employment (which is expected to be nine months).  And in cases where the employee has a notice period in excess of three months, that notice must be given earlier so as to ensure that the termination date falls within three months of the end of the initial period.  A failure to do so may mean that the employer inadvertently falls outside the modified test, making a finding of unfair dismissal more likely. 

• It is also important to remember that it is not the case that new employees can never bring an unfair dismissal claim.  Although the modified test will make it easier to dismiss them, employers will still be required to do something.  Short circuiting those modified requirements could open the door to an unfair dismissal claim.  When it comes to redundancy dismissals, employers must remember that the current test of reasonableness will apply.  This means that in all redundancy dismissals employers will need to warn and consult with employees, adopt a fair basis on which to select employees for redundancy and consider suitable alternative vacancies (and, if applicable, collectively consult).  Further, the reforms do not affect an employee’s right to claim automatic unfair dismissal from Day 1 of their employment.

• The interplay between an employer’s probationary period and the initial period of employment will need to be considered.  Employers do not necessarily need to increase their contractual probationary periods in line with the initial period.  On the face of it, there is nothing to prevent an employer dismissing an employee who has already passed their probationary period during the initial period of employment and relying on the modified test.  For example, an employee could pass a probationary period of three months, after which time their conduct or performance declined, or a one-off serious act of misconduct or negligence occurred.  In those circumstances, the fact that the employee has passed their probationary period should not make any difference.  That said, some employers may wish to consider aligning probationary periods with the initial period of employment.

• Is there any upside for employers in making ordinary unfair dismissal a Day 1 employment right?  Conceivably, it could lead to some reduction in claims for automatic unfair dismissal (such as whistleblowing claims) and discriminatory dismissal claims, which are currently the only statutory claims that employees with under two years’ service can bring about their dismissal.  A decline in those types of claims could be a good thing for employers, not least from a reputational perspective and because the cost and complexity of defending those types of claims is higher.  However, compensation is uncapped for certain automatic unfair dismissal claims and for discriminatory dismissal claims, meaning there is still an incentive for claimants to bring such claims.  Therefore, in terms of impact on claims, the most likely outcome is that claimants with automatic unfair dismissal or discriminatory dismissal claims (especially if higher paid) will continue to bring those claims but will plead ordinary unfair dismissal as an alternative claim.

Dismissal during pregnancy and following a period of statutory family leave

The Bill provides that regulations may be introduced which will provide enhanced protection from dismissal during pregnancy and following return from maternity leave, adoption leave or shared parental leave (it will also apply to return from certain other forms of leave which are not yet in force and so are not discussed in this briefing).  It is not known how long the protection will apply following the return from family leave, however, the Government has previously suggested it will be six months. No further details of this proposal are given in the Bill or the Explanatory Notes to the Bill. 

What will these changes mean for employers in practice? 

• We must await the publication of the related regulations to understand the full extent of this proposal.  However, it seems likely that the intention is to restrict the circumstances in which an employer may dismiss a pregnant employee or family leave returner fairly. 

• It is already unlawful to dismiss an employee because of her pregnancy or maternity leave (or for a reason related to it), by reason of redundancy during pregnancy or following the return from maternity leave, adoption leave or shared parental leave where there was a suitable alternative vacancy available.  Therefore, this proposal appears to go further and suggests that even if there is a non-discriminatory and fair reason for dismissal, the dismissal would be unlawful, subject to some exceptions.  Common sense would suggest that the exceptions must, at least, permit dismissal for gross misconduct, gross negligence or illegality or also where there is a large-scale redundancy such as where the whole business is closing down.  

Dismissal for failing to agree a variation to a contract

“Fire and rehire” is a shorthand used to describe the practice of dismissing an employee then offering to re-engage them on inferior terms and conditions.   Before the election, the Labour Party had talked about wanting to end fire and rehire practices altogether.  This was slightly watered down during the General Election, with a promise to end the practice, save in exceptional circumstances.

The Bill delivers on that promise and proposes that it will be automatically unfair to dismiss an employee:

• for failing to agree to a change to their terms and conditions of employment; or  
• in order to re-engage them (or someone else) under varied terms and conditions of employment, but where the role is otherwise substantially the same.

The sole exception will be where the reason for the variation was to eliminate, prevent or significantly reduce or mitigate the effect of any financial difficulties which, at the time of the dismissal, were affecting, or were likely in the immediate future to affect, the employer’s ability to carry on its business, and there was no way the need to make the variation could reasonably have been avoided. 

However, even where the exception does apply, the dismissal could still be ordinarily unfair, even if not automatically unfair.  The Bill provides that in such cases various matters must be taken into account by an Employment Tribunal when determining whether the dismissal is fair or not, including any consultation with the employee and any trade union or employee representatives about the proposed variation and anything offered to the employee in exchange for agreeing to the variation.

What will these changes mean for employers in practice? 

• It will be much riskier for employers to impose contract variations on employees by way of fire and rehire practices.  Nor can employers escape the risk of automatic unfair dismissal by simply “firing” in these circumstances and not offering to rehire.  This is not to say that it will never be right to deploy fire and rehire practices – the practice may still be used but it carries a high risk of Tribunal claims.  However, it is possible that the employee may relent and agree to be rehired on the varied terms.  If the employee does not go on to bring a claim in time, the employer will have achieved its aim.

• Once this change comes into force, the current statutory Code of Practice on dismissal and re-engagement (which came into force on 18 July 2024) will need to be replaced.  As it stands, that Code prescribes the process to be followed by employers before dismissing and offering to re-engage in any circumstances.  A breach of that process does not give rise to a legal claim in itself but may lead to an uplift of 25% to any compensation awarded in related claims.  

Collective redundancies

Currently, collective redundancy consultation is triggered where there is a proposal to dismiss as redundant 20 or more employees assigned to one “establishment” within a 90-day period.  The question of what an “establishment” has been ventilated in litigation – with employees arguing it should mean the business as a whole rather than the local place of work.  This would mean that collective consultation would be triggered more frequently as redundancy numbers would have to be counted across the whole business.  After some to-ing and fro-ing the senior courts concluded that “establishment” meant the local unit where the employee works, not the business as a whole.

The Bill proposes to reverse this, so that collective consultation is triggered where there are 20 proposed redundancies within 90 days across the business rather than in just one workplace. 

What will this change mean for employers in practice? 

• Collective consultation will be triggered more frequently and multi-site employers will need to have a system in place to ensure that they keep track of proposed redundancies across the whole business. 

• The process will be administratively more burdensome as employers will need to have appropriate representatives in place for all affected employees no matter where they are based.

• The consultation itself will potentially be cumbersome and disjointed as employers may be consulting about several small pockets of unrelated redundancies.

• Getting it wrong will be costly: employees may claim a “protective award” capped at 90 days’ gross actual pay.  The Government has also committed to consult on lifting this cap.

What are the next steps?

The Bill has just started its passage through Parliament, which will take time.  Even when passed, the various dismissal provisions will not come in straight away.  Indeed, in the context of dismissals alone, the Government has said it will consult on:

• the length of the initial period of employment for the purposes of unfair dismissal;
• how the initial period of employment interacts with the Acas Code of Practice on Disciplinary and Grievance procedures;
• the appropriate compensation regime for dismissal during the initial period of employment;
• lifting the cap on protective awards where an employer is found to not have properly followed a collective redundancy process; and
• what role interim relief could play in protecting workers in fire and rehire situations.

Regulations will also be needed in relation to the modified unfair dismissal test and the restriction of dismissals during pregnancy and following the return from family leave.

Next Steps to Make Work Pay states that the majority of the reforms will not come into force until 2026, with the unfair dismissal reforms taking effect “no sooner than Autumn 2026”.

Stay tuned for our third article in the series, where we will consider the provisions of the Bill affecting equality law.

BDBF is a law firm based at Bank in the City of London specialising in employment law.  If you would like to discuss any issues relating to the content of this article, please contact Principal Knowledge Lawyer Amanda Steadman (amandasteadman@bdbf.co.uk) or your usual BDBF contact.

In the recent case of Lovingangels Care Ltd v Mhindurwa, the EAT upheld a decision that a dismissal was unfair because the employer failed to give proper consideration to placing the employee on furlough as an alternative to redundancy.  

What happened in this case?

The Claimant, Ms Mhindurwa, worked as a live-in carer for one of the Respondent’s clients.  In the early stages of the Covid-19 pandemic, the person she cared for went into hospital and then went to live in a care home.  Ordinarily, the Claimant would have moved on to care for another client, however, this was not possible due to the pandemic restrictions. 

The Coronavirus Job Retention Scheme – also known as the “furlough scheme” – came into force on 23 March 2020.  This was a scheme whereby the Government paid a proportion of the wages of workers who could not work due to the pandemic restrictions.  The intention was to enable employers to continue employing such workers and to avoid mass redundancies.

In May 2020, the Claimant asked the Respondent to place her on furlough.  The Respondent refused on the basis that there was no job role for her.  After a brief redundancy consultation process, the Claimant was given notice of dismissal on 13 July 2020.  The Claimant appealed.  The appeal officer dismissed the appeal, having given no consideration to the possibility of furlough.  The Claimant brought a claim of unfair dismissal.

The Employment Tribunal held that the dismissal was unfair on the basis that Respondent had failed to consider alternatives to a redundancy dismissal, namely, the possibility of placing the Claimant on furlough.  The Tribunal said that in July 2020 a reasonable employer would have given consideration to whether the Claimant should be furloughed while it assessed whether the availability of work would change as the pandemic unfolded.  The Tribunal also held the dismissal was procedurally unfair as the appeal was a “rubberstamp” exercise and not a proper appeal.

The Respondent appealed to the EAT.

What was decided?

The Respondent argued that the Claimant had not met the eligibility requirements of the first iteration of the furlough scheme, namely, she was not someone who had been instructed to cease work by them by reason of the circumstances arising as a result of Covid-19.   The Respondent said the Claimant had not been instructed not to work, rather it was the case that there was no work available for her.   

However, the EAT said it was “strongly arguable” that a proper consideration of the purpose of the scheme would have led to the conclusion that it applied to the claimant.   In any event, the Tribunal had not said that the dismissal was unfair because the Respondent should have furloughed her.  Rather, the Respondent had acted unreasonably by not giving proper consideration to the possibility of furloughing her.  The Tribunal Judge had been “…entitled to apply the same approach to furlough as he would to any possible alternative to dismissal that an employer might…be expected the consider if acting reasonably”. 

The Respondent also appealed on the ground that the Tribunal had been wrong to say that it had not considered the possibility of furlough.  However, the EAT held that the finding was that only cursory consideration had been given to the issue.  A reasonable employer would have given proper consideration of the possibility of furloughing the Claimant to allow some time for the situation in respect of the live-in carers to improve, and to obtain new clients.

The appeal was dismissed.

What does this mean for employers?

Although the furlough scheme is long gone, this case reminds employers of the need to give careful consideration to alternatives to redundancy before proceeding to dismiss.  A failure to do so may mean the decision falls outside the range of reasonable responses, with the result that the dismissal is unfair.  

It is well known that employers have a duty to consider whether there are any suitable alternative roles available for a potentially redundant employee.  However, there are other alternatives to redundancy that should be considered including the following:

 

• Reducing employee headcount: there are various options for reducing employee costs including freezing recruitment, withdrawing job offers, deferring start dates, reducing agency or temporary staff, seconding staff to other organisations, redeployment into alternative roles or offering early retirement.

• Temporary stoppage of work: this could include things like offering sabbaticals or unpaid leave, requiring staff to take holiday or temporarily laying off staff on reduced pay.

• Reducing working hours: the reduction of working hours will, in turn, reduce employee costs.  This could include things like short-time working, offering part-time working or banning overtime.

• Reducing remuneration: this could include things like introducing salary sacrifice arrangements (which may save the cost of employer National Insurance contributions), freezing pay, reducing pay and/or benefits, reducing or temporarily ceasing employer pension contributions, withdrawing discretionary bonus schemes or tightening up on expenses (e.g. introducing a maximum spending limit).

 

Not all of these options will be appropriate for all organisations, but employers should be able to demonstrate that they have, at least, given reasonable consideration to whether such options would be achievable and help avoid the need to make redundancies.  In this context, consulting with staff about the alternatives will go some way to help demonstrate this (and, indeed, may be required depending on the option under consideration).

Lovingangels Care Ltd v Mhindurwa

BDBF is a leading employment law firm based at Bank in the City of London. If you would like to discuss any issues relating to the content of this article, please contact Amanda Steadman (AmandaSteadman@bdbf.co.uk) or your usual BDBF contact.

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The Government has backed a Private Members’ Bill which plans to expand special protection in redundancy situations to pregnant employees and those returning from maternity, adoption and shared parental leave. 

What is the background to these proposals?

Currently, employees absent on either maternity, adoption or shared parental leave are afforded special protection in redundancy situations.  The law provides that before making a woman who is on maternity leave (or an employee on adoption or shared parental leave) redundant, an employer must offer the employee a suitable alternative vacancy, where one is available.  In other words, the employee moves to the front of the queue for such roles, ahead of other colleagues.  If an employer fails to comply with its obligations in this respect, the employee may be able to bring an automatic unfair dismissal claim.

In 2019, the Government consulted on extending this protection to pregnant employees and those who had recently returned to work following a period of maternity, adoption or shared parental leave.  The Queen’s Speech delivered at the end of 2019 outlined plans for a new Employment Bill which would introduce these new rights.

Perhaps unsurprisingly, the Employment Bill fell off the Government’s agenda as a result of the pandemic.   However, in 2021, the Government published its response to the Women and Equalities Committee’s report on the gendered economic impact of Covid-19, stating that it remained committed to bringing forward the Employment Bill and, specifically, that it would extend redundancy protection as planned.

However, the Employment Bill did not materialise.  Three years and two Prime Ministers later, the proposals are back in the spotlight again.  This time, by way of a Private Members’ Bill – the Protection from Redundancy (Pregnancy and Family Leave) Bill – sponsored by the Labour MP, Dan Jarvis.  The Government is backing the new Bill, meaning it has a good chance of getting onto the statute books even though it is a Private Members’ Bill.

What changes would the Bill make to redundancy law?

The Bill itself does not make any changes to redundancy law.  Instead, it would amend the Employment Rights Act 1996 to allow regulations to be made which would expand the protection to cover both pregnant employees and those who have recently returned to work after a period of either maternity, adoption or shared parental leave.

The intention is that a woman would acquire protection from the point at which she notified her employer that she was pregnant.  Typically, a woman will notify her employer of her pregnancy after she has had her three-month scan (although this may be done earlier, for example, if the woman has suffered a history of pregnancy loss or the pregnancy is otherwise regarded as high risk).  Therefore, in most cases, this would translate to protection during pregnancy lasting around six months, at which point the maternity leave period would commence.

The intention is that the protection would also apply for six months after the return to work.  For example, a woman who notified her employer of her pregnancy at the three-month stage and then took 12 months’ maternity leave would be protected for a total period of 24 months (i.e. six months’ protection during pregnancy, 12 months’ protection during maternity leave and six months’ protection upon the return to work).  At present, such a woman would be protected for the 12-month maternity leave period only.

The precise scope and mechanics of these new protections will be set out in the regulations themselves.

What will the changes mean for employers?

With the Government’s support, the Bill passed its second reading in the House of Commons on 21 October 2022.  It will now progress to the Committee stage, which will allow detailed scrutiny of the Bill.  After that, it would move to the Report stage and third reading and then to the House of Lords to start the process all over again.  Even if the Bill passes, the new protections will not be introduced straight away.   Regulations will need to be drafted and laid before Parliament.

Therefore, there are no immediate changes for employers to make in light of the Bill.  However, it would be sensible to work on the assumption that the Bill will pass given the Government’s longstanding commitment to introduce these changes.

Assuming that the Bill passes, and regulations are introduced, employers will need to consider the following points:

• Be mindful that the protection may apply where a woman was pregnant but suffers the loss of the child (for example a miscarriage or a still birth).
• Update any relevant staff-facing procedures and internal guidelines on how to manage a redundancy process.
• Train members of HR, and line managers who will have responsibility for redundancy processes, to ensure that they understand the new rules, know how to apply them and understand the consequences of non-compliance.

We will keep you updated on the progress of the Bill.

Protection from Redundancy (Pregnancy and Family Leave) Bill 2022 – 23

Brahams Dutt Badrick French LLP are a leading specialist employment law firm based at Bank in the City. If you would like to discuss any issues relating to the content of this article, please contact Amanda Steadman (AmandaSteadman@bdbf.co.uk) or your usual BDBF contact.

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Redundancies have always been a way of life in the City, but in the current economic climate, the spectre of redundancy can be especially worrying. In recent months, there have been reports that major employers such as Credit Suisse, Goldman Sachs, Blackrock and Deutsche Bank are restructuring. In this article we set out how to put your best foot forward in this worrying situation.

Follow our guidance for dealing with a potential redundancy to ensure you have the best chance of keeping your role, and the best compensation if you do not.

How to prepare yourself for a potential redundancy situation

1. Do your homework

Check what your employment contract, company policies, and any relevant collective agreement says about redundancy. They might refer to a right to enhanced redundancy pay (over and above the statutory entitlement) or fixed consultation procedures. If so, make sure that your employer is doing what they are supposed to do. Enhanced redundancy terms for City employees are common and range from a multiple of two weeks per complete year of service upwards. Law firms tend to have less generous enhanced terms whereas the traditional banks with unionised workforces tend to be more generous. Also, check bonus, LTIP and share schemes – they might incorporate “good leaver” terms if you are made redundant.

2. Phone a friend

Most employers allow employees to be accompanied at redundancy “at risk” or consultation meetings by a colleague or trade union representative. Although there is no legal obligation to do so, it is good practice. If your employer does not say that you can be accompanied at an “at risk” meeting, then ask. If your employer’s notes are inconsistent with your own (or your companion’s), ask your employer to put a copy of your notes on file.

3. Question time

In order to fairly dismiss for redundancy, your employer should consult with you individually about the redundancy situation, consider alternative ways of saving the role and avoiding the redundancy, give you time to respond, and enable you to apply for different roles within the business. If you have any questions during the consultation process, ask them.
Some key issues to look for (but there are more):

• Why now? When was the decision made to make redundancies?
• Have you been told why your role is at risk? Does it make sense?
• Have you been told who else is at risk? Has one of your colleagues been “missed out”?
• Do you think that other people should have been included in the ‘at risk’ pool?
• Do you think that your employer should have considered “bumping” (i.e. removing others from their roles so that you can fill their vacancy)?
• If you are going through a competitive application process for roles, do you know the selection criteria and what other factors (such as past appraisals) are being taken into consideration?
• Do any selection criteria disadvantage you due to your particular circumstances e.g. disability or pregnancy/maternity leave?
• Have you been told about all existing vacancies (including roles that are junior/senior to yours)? Have you been given a fair opportunity to apply for those roles?
• Have you seen the selection criteria for alternative roles? Do you think they are fair?
• Is there a job vacancy that you haven’t been told about?

4. What are the possible alternatives to redundancy?

We are in exceptional times. Many businesses are faced with a situation that they have not planned for and are reluctantly having to face – the loss of valued, skilled, hard-working employees.

There may well be a genuine downturn in the requirement for you to continue to do your role, such as investment banking, but that downturn may be short-lived. You may wish to explore other ways of saving your role such as unpaid leave, parental leave, or taking an unpaid sabbatical. This may be a time for quid pro quo whereby an employer wishing to retain an employee but cannot afford to do so offers a retention payment as a sweetener, payable when revenues return to reasonable levels. This would require both parties having confidence that the employer can weather the storm so that the retention payment is not a promise in the wind.

5. It’s a numbers game

If your employer is proposing to make 20 or more employees redundant in a period of 90 days, they have additional collective consultation obligations. If they fail to comply with these obligations, you may have an additional claim for up to 90 days’ pay.

6. Is there another reason?

Employers often view redundancy as the easiest way to eject an employee and retain the employees they really want. For that reason, a redundancy process can be used to cloak an unlawful act (such as discrimination or the repercussions of whistleblowing). If this is the case, you may have additional, more valuable claims against your employer beyond a claim of unfair dismissal. If you suspect discrimination or other unlawful acts, or you think that redundancy is being used to “mask” another reason for your exit, make a careful note of anything that is said or done which supports your allegation. This can be used as evidence further down the line.

7. Appeal

As part of the redundancy process, as a matter of fairness, you should be given a right of appeal. Exercise your right to do so. Make sure your appeal is submitted in time and identifies the specific issues you have with the redundancy process and the decision.

8. Protected conversations and settlement agreements

In the City, a common scenario is for the employer to circumvent the above procedures and offer a severance package or termination payment under a settlement agreement. Such an offer will be made on a confidential basis and independent legal advice would be needed on the settlement agreement. The written agreement will set out terms that will seek to buy you out of any contractual, statutory and other claims you may have (such as unfair dismissal), by offering you compensation. The settlement agreement will ask you to waive any claims that you have in return for signing the agreement. A standard contribution to legal fees for you to obtain advice on the terms and effect of the agreement is usual, but often negotiable if the advice you need is more involved. Any negotiations on the terms of the agreement will be confidential and are unlikely to be admissible in any proceedings unless your employer behaves in a particularly improper manner towards you during the protected discussions.

Brahams Dutt Badrick French LLP are a leading specialist employment law firm based at Bank in the City. We are experienced in advising on severance packages arising from redundancy processes and getting clients the best deals whilst protecting their reputations. If you would like any further advice on redundancy and the topics discussed in this article, please contact Paula Chan (paulachan@bdbf.co.uk), Amanda Steadman (amandasteadman@bdbf.co.uk) or your usual BDBF contact. You can also reach us on 020 3828 0350 or at info@bdbf.co.uk.

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In Mogane v Bradford Teaching Hospitals NHS Foundation Trust and anor the EAT held that redundancy consultation must commence at the formative stage of the process in order to be meaningful.  Using an arbitrary selection criterion to place an employee into a redundancy pool of one was unfair and also meant that consultation about the dismissal was futile.  

What happened in this case?

The Claimant was one of two “Band 6” nurses.  Both nurses were employed on fixed-term contracts.   The Claimant had been employed for several years on a series of one-year fixed-term contracts.  The second nurse was near to the beginning of a two-year fixed term contract, having recently joined and completed her probationary period. Out of the two nurses, the Claimant’s fixed-term contract was due to expire first.

Financial pressures meant that the employer needed to reduce the number of Band 6 nurses.  Instead of placing both Band 6 nurses into a redundancy pool and using criteria to select one of them for redundancy, the employer decided that the person whose contract was due to expire first would be selected for redundancy – this was the Claimant.  The employer made this decision sometime between 21 March 2019 and 8 May 2019.

A consultation meeting was held on 12 June 2019, by which stage the decision had already been taken that the Claimant would be made redundant.  The only outstanding issue was whether suitable alternative employment could be found for her.  The remainder of the consultation process was focused on that issue. No alternative role was found, and the Claimant was dismissed as redundant on 31 December 2019.

An Employment Tribunal rejected the Claimant’s claim that she had been unfairly dismissed. She appealed to the EAT. She argued that her dismissal was unfair because the employer:

• failed to consult with her about the proposal to place in her in a pool of one;
• gave no consideration to whether the second nurse should have been included in the pool as well;
• used a criterion to select her for redundancy which was arbitrary and unfair (i.e. which fixed term contract was due to expire first).  She argued that it amounted to “a game of musical chairs” which the employer could exploit by deciding when to turn off the music; and
• used a single criterion to select her for redundancy and this was outside of the band of reasonable responses.

She also argued that the Tribunal had failed to provide any reasons for its conclusion that the employer’s pooling decision was reasonable

What was decided?

Importantly, the EAT said that the employer started the consultation process too late.  Consultation should take place at the formative stage of a redundancy process.  This permits meaningful consultation, since the employee can make representations which have the potential to affect the outcome.  This is the approach taken in collective redundancy consultations and the EAT said that “with appropriate adaptations” this should be applied to individual consultations.

When it came to the pooling decision, the EAT noted that a Tribunal should not easily interfere with an employer’s choice of pool.  However, it must consider whether there is a rational explanation for the pool.   The EAT pointed out that the duty of trust and confidence means that employers must not act arbitrarily between employees.  This impacts on decisions concerning redundancy pooling.

Once the employer decided that the expiry of the fixed-term contract was to be the only criterion, it was a foregone conclusion that the Claimant would be dismissed, meaning that consultation on the dismissal was futile.

The EAT also agreed that the Tribunal’s judgment did not explain why it was reasonable to have used this sole section criterion without prior consultation. The EAT allowed the appeal and held that the dismissal was unfair. 

What are the learning points for employers?

The key takeaway from this case is that employers should ensure that individual as well as collective consultation about proposed redundancies begins early enough in the process to allow meaningful consultation.  In this case, once the selection criterion had been decided upon, it was inevitable that the Claimant would be dismissed (unless an alternative role were found).  Therefore, consultation about the redundancy was meaningless. Had the employer begun the consultation before the pooling decision had been made, the Claimant could have made the case for using additional criteria, which may have led to a pool of two.

Employers must also take care with the criteria used for selecting candidates for redundancy, ensuring that they do not result in arbitrary outcomes.  Obtaining agreement on the proposed criteria during the early stages of the consultation is a sensible step to take and should help to avoid attempts to unpick the redundancy pooling decision later on in the process.  Further, where there are two or more employees in comparable roles, placing only one of them into a redundancy pool will not usually be fair without prior consultation.

Mogane v Bradford Teaching Hospitals NHS Foundation Trust and anor

Brahams Dutt Badrick French LLP are a leading specialist employment law firm based at Bank in the City. If you would like to discuss any issues relating to the content of this article, please contact Amanda Steadman (AmandaSteadman@bdbf.co.uk) or your usual BDBF contact.

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In the recent case of Coulson v Rentplus Ltd, the Employment Appeal Tribunal upheld a decision that the Acas Code of Practice on Disciplinary and Grievance Procedures applied to a sham redundancy dismissal that was tainted by discrimination.  The Code had been completely disregarded, meaning that a maximum 25% uplift to the compensation was justified.

What happened in this case?

Ms Coulson was employed by Rentplus from 2015 as its Director of Partnerships.  In Spring 2017, Mr Collins was appointed as a consultant, with a view to him taking over as CEO later in the year.  Around this time, a decision was taken to dismiss Ms Coulson, albeit not immediately.  Mr Collins duly took over as CEO in the Autumn and, from that point onwards, Ms Coulson said she felt that she was being “frozen out”.

In early 2018, Rentplus embarked on what they badged as a redundancy exercise, despite the fact that the number of job roles were due to increase.  Ms Coulson attended redundancy consultation meetings in April and May 2018.  She also submitted a grievance alleging that she had been marginalised by Mr Collins, and that her role was not genuinely redundant.  Her grievance (and subsequent appeal) was rejected, and Ms Coulson was eventually dismissed by reason of redundancy.

She brought claims for unfair dismissal and direct sex discrimination.  The Employment Tribunal decided that the dismissal was unfair on the basis that the decision to dismiss had been taken in Spring 2017, meaning the redundancy consultation process was a “total sham”.  The Tribunal also said the dismissal was tainted by sex discrimination.  Separately, the Tribunal found the grievance process to be just as much of a sham as the redundancy process.

When awarding compensation for the unfair dismissal, the Tribunal awarded an uplift of 25% due to the company’s “egregious failures” to comply with the Acas Code of Practice on Disciplinary and Grievance Procedures (the Code).  However, this issue was only dealt with very briefly in the judgment.

Rentplus appealed, arguing that the Tribunal had been wrong to say the Code applied where the reason for dismissal was either redundancy or sex discrimination.  Further, even if the Code did apply, the Tribunal had not identified the failings for which the uplift was being made and did not explain the basis on which it had determined the amount of the uplift.

What did the EAT decide?

The EAT noted that the Tribunal’s decision on the uplift would have benefited from a more detailed approach. However, the EAT was prepared to look at the judgment overall and consider whether, on a fair reading, the Tribunal judge had considered the four key issues.

Is the claim one which raises a matter to which the Code applies?

The EAT noted the Code applies to “disciplinary situations”.  This means that there is an issue of potential misconduct or poor performance to be addressed, regardless of how it is badged by the employer. The EAT highlighted that employers cannot sidestep the Code by dressing up a dismissal that flows from one of these things by pretending it is something else, for example, a redundancy. It was also noted that a finding of discrimination does not preclude the application of the Code.  For example, if an employer dismisses for perceived poor performance, which is partly a result of discriminatory assumptions, there will still be a disciplinary situation and the Code will apply.

In Ms Coulson’s case, redundancy had been rejected as the true reason for dismissal.  She had been dismissed because there was a belief that there were problems with her capability and/or conduct and that belief was tainted by sex discrimination.  As such, this was a disciplinary situation to which the Code applied.

If yes, has there been a failure to comply with the Code in relation to that matter?

The EAT drew a distinction between employers who attempt to comply with the Code but fall short, and those who act in bad faith and pretend to apply the letter of the Code but have already made their decision.  In the former scenario, it may not be appropriate to award an uplift, whereas it may be appropriate to do so in the latter.  In Ms Coulson’s case, it was clear that the Tribunal had concluded that the dismissal process was a sham, the dismissal was pre-determined and there had been a total failure to comply with the Code.

If yes, was the failure to comply with the Code unreasonable?

The EAT noted that in order for an uplift to apply, it is not enough that there has been a failure to comply with the Code, the failure must also be unreasonable.  In Ms Coulson’s case the Tribunal had said the breaches were “egregious”.   Therefore, it was clear that the failures in this case went beyond being merely unreasonable.

If yes, is it just and equitable to award an uplift because of the failure to comply with the Code and, if so, by what percentage?

The EAT noted that Tribunals must apply the four-stage test set out in the case of Slade v Briggs to decide whether it is right to award an uplift and, if so, by how much.  Generally, Tribunals should identify the failings for which the uplift is being made by reference to the relevant parts of the Code.  However, in Ms Coulson’s case, the Tribunal had said the dismissal process was a “complete sham” and Rentplus had acted in bad faith such that there was a total failure to apply the Code.  Therefore, they had been entitled to award a 25% uplift.

What does this mean for employers?

This decision reminds us that the question of whether the Code applies is one of substance and not form.  The key question you should ask is: do we consider the employee to be culpable for something that we wish to address in a formal process?  If yes, the chances are that the Code will apply.  Given the risk of an uplift, the safest course of action will be to observe the principles set out in the Code.

The decision also tells us that even if discrimination is present, there may still be a “disciplinary situation” meaning the Code applies.  This is important because where action is tainted by discrimination, the usual cap on compensation is lifted.  This means that the uplift for breaching the Code may be applied to a higher sum than would have otherwise been the case.  Indeed, in one recent discrimination case, a 20% uplift of over £317,000 was awarded, because the overall compensation was so high.

Rentplus UK Ltd v Coulson

BDBF is a law firm based at Bank in the City of London specialising in employment law.  If you would like to discuss any issues relating to the content of this article, please contact Principal Knowledge Lawyer Amanda Steadman (amandasteadman@bdbf.co.uk) or your usual BDBF contact.

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The decision to make employees redundant is never easy and care needs to be taken to follow a lawful process in order to avoid the risks and costs of potential claims, particularly unfair dismissal. Offering voluntary redundancy can be a useful tool for employers, however, as a recent case highlights, it will not necessarily avoid the risk of an unfair dismissal claim.

What happened in this case?

In this case, Ms White was a part-time receptionist.  Ms White was also covering administrative work for her Deputy Manager (who had been on long term sick), but for no extra pay. Ms White submitted a grievance about the failure to pay her an “acting up” allowance.

A few months later, the employer announced that it was going to reduce the number of employees carrying out administrative and reception work. Ms White was provisionally selected for redundancy.  However, at around the same time, a full-time receptionist was recruited, whose role included the administrative tasks that Ms White had been temporarily covering, but for which the new full-time receptionist was being paid to fulfil.

Against this backdrop, Ms White requested, and was given, voluntary redundancy.  After the termination of her employment, Ms White submitted a claim for unfair dismissal in the Employment Tribunal.  She argued that the redundancy process had been a sham (in light of the fact that the company still had a need for someone to perform reception and administrative tasks).  She claimed she had been targeted for redundancy because she had raised a grievance and also because the company preferred full-time to part-time staff.

What was decided?

This claim was initially rejected and struck out by the Employment Tribunal on the basis that Ms White had requested voluntary redundancy, meaning, in the Tribunal’s view, that her claim had no prospects of success.

On appeal, the Employment Appeal Tribunal reached a different conclusion. Given the background, which had led to Ms White’s request for voluntary redundancy (i.e. she believed the entire redundancy process was pre-determined and a sham), the EAT said it should not be assumed that the mere fact that she had requested voluntary redundancy meant that the redundancy was lawful.  As such, the case has been remitted to a new Employment Tribunal to decide whether or not Ms White was fairly dismissed.

What does this mean for employers?

This case is a useful reminder that an employee’s request for voluntary redundancy does not necessarily insulate an employer from Tribunal claims.  Indeed, even where an employee volunteers for redundancy, an employer may want to consider whether offering enhanced terms under a settlement agreement is worth exploring, to limit its legal exposure and to give certainty that a claim will not be brought following termination of employment.

White v H-C One Oval Ltd

BDBF is a law firm based at Bank in the City of London specialising in employment law. If you would like to discuss rights arising in a redundancy situation, or any issues relating to the content of this article, please contact employment lawyer Emily Plosker (emilyplosker@bdbf.co.uk) or your usual BDBF contact.

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In the recent case of Shipp v City Sprint UK Limited an Employment Tribunal unanimously held that a senior employee was unfairly dismissed, harassed and discriminated against on the grounds of maternity/pregnancy and sex.  City Sprint’s argument that Mrs Shipp’s role was redundant following an internal business reorganisation was held to be nothing more than a sham.

What happened in this case?

Mrs Shipp had been employed by City Sprint Limited for 10 years at the date of her dismissal. She began a period of maternity leave on 10 June 2019 and was due to return to work in March 2020. At the time she went on maternity leave, she was City Sprint’s Group Marketing Director and sat on both the City Sprint Executive Board and the Group Executive Board.

She informed her colleagues about her pregnancy in February 2019 and was asked a number of highly inappropriate and intrusive questions from various senior executives.  Such questions concerned when she had stopped using contraception, if her pregnancy was planned, and if she had thought about how the pregnancy would affect her long-term career prospects.  In May 2019, shortly before she went on maternity leave, the Director of Operations said to her: “when you have to leave that little one in nursery, you won’t want to come back”. The CEO also purportedly remarked that they should put a wager on how much weight Mrs Shipp would put on during her pregnancy (however that comment was contested).

Mrs Shipp found these comments offensive and humiliating. She considered making a formal complaint but decided against it because she did not want her maternity leave to be marred by the issue. Furthermore, she was wary about making complaints against senior executives in circumstances where there had already been some allusion to the effects of her pregnancy on her career prospects. Instead, she raised her concerns informally with the Director of Customer Management and the Head of HR before going on maternity leave.

By the end of July 2019, all of the Group Executives (save for Mrs Shipp who was on maternity leave) had either been dismissed, resigned or made redundant. From 1 August 2019, City Sprint began to discuss reorganising the business. Even though Mrs Shipp was the sole remaining member of the Group Executive Board at that time, City Sprint failed to inform or consult with her about the proposed changes. Mrs Shipp first became aware of the proposed reorganisation on 6 September 2019 when she met with City Sprint’s former CEO.

On 20 September 2019, City Sprint sent Mrs Shipp a letter headed “Potential Redundancy – Consultation”. Later that same day, the proposed reorganisation was announced. When Mrs Shipp was shown the new structure charts, she recognised that her Group Marketing Director role had been replaced with a more junior Director of Marketing position, which it was proposed would neither report into the CEO nor have a seat on the reorganised Group Executive Board (now renamed the Operating Board).

This role was later offered to Mrs Shipp, however, it appeared that City Sprint had no genuine desire for her to return to work. Firstly, it was a demotion in seniority within the business structure; secondly, the salary was reduced by £20,000 without any apparent justification; thirdly, there was a new requirement that the role be performed from the London office four days per week, which was likely to be highly unattractive to Mrs Shipp as a new mother living in Wiltshire.

Other employees who had lost their Group Executive positions but had been retained in different roles, had not seen their salaries reduced and, in some cases, the individuals were given pay increases. Also, other senior executives whose teams were based in London were not required to work from the London office four days per week.

Consequently, on 3 December 2019 Mrs Shipp raised a grievance alleging that she had suffered discrimination relating to maternity/pregnancy and sex. On 16 December 2019, she contacted ACAS and commenced early conciliation. On 28 February 2020, she presented her first claim to the Employment Tribunal.  Finally, on 30 March 2020 City Sprint wrote to Mrs Shipp to inform her that her employment would be terminated as her role as Group Marketing Director was redundant and it gave her 6 months’ notice set to expire on 30 September 2020.

Mrs Shipp brought a s a variety of claims, however, in this article we look only at her claim of maternity/pregnancy discrimination.

What was decided?

First, The Employment Tribunal considered whether Mrs Shipp’s claims had been brought in time. It held that although the comments relating to Mrs Shipps’ pregnancy made between February and May 2019 were outside of the three-month time limit, it was just and equitable to extend time so that she could claim for those elements. In so doing, the Employment Tribunal provided useful support for pregnant women who are faced with potentially discriminatory treatment at the start of their maternity leave and who are concerned about the short timeframes within which to bring an Employment Tribunal claim. The Employment Tribunal also held that the discriminatory acts that related to the “sham” redundancy were part of a continued course of conduct and were, therefore, in time.

Having considered whether the claims were in time, the Employment Tribunal went on to find that the evidence demonstrated an intention to push Mrs Shipp out of the business and an awareness that her role was not truly redundant. In particular, an email from a director to the Head of HR stated that once Mrs Shipp had been removed from the company, her replacement could potentially be “promoted to the Board after say 6 months”.  The Tribunal held that the redundancy was a “sham” and the real reason for the unfavourable treatment of Mrs Shipp was because of pregnancy/maternity and/or sex.

What does this mean for employers?

Employers should be careful not to neglect employees on maternity leave during a business reorganisation where those employees would otherwise be entitled to be informed and consulted about any changes. However, the balance here is fine and an employer should be sensitive to each individual situation.  Whilst it is important to keep communication channels open and to provide information in a clear and timely fashion, an employer should also be mindful of the stresses that a new mother may be under and the fact that one of the purposes of maternity leave is to allow a woman to recover after childbirth.

Employers should be careful to avoid discriminating against female employees on the grounds of maternity/pregnancy whether or not a business reorganisation is in prospect. It should take steps to ensure that all staff members receive frequent training in relation to equal opportunities, discrimination and harassment at work.

If you would like to discuss any issues arising out of this decision please contact, James Hockley (jameshockley@bdbf.co.uk), Amanda Steadman (amandasteadman@bdbf.co.uk) or your usual BDBF contact.

Shipp v City Sprint UK Limited

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In the recent case of Gwynedd Council v Barratt the Court of Appeal confirmed that, on its own, the absence of a right to appeal against dismissal for redundancy does not make it unfair. However, it is one of the factors to be considered when determining the overall fairness of the dismissal.

What happened in this case?

The two Claimants were teachers employed by the Council to work at a secondary school (School 1).  The Council decided to close School 1 and replace it with a school for children aged between 3 to 18 years of age (School 2).  School 1 was to close at the end of the Summer term in 2017 and the School 2 was due to open in September 2017.

The Council did not consult with the Claimants (or their trade union) about the redundancy procedure at School 1 or the recruitment procedure at School 2. Instead, it invited the Claimants to apply for new roles within School 2.  However, the “new” roles were similar to their old roles at School 1. The Claimants were interviewed for the positions but unlike most of their colleagues, were unsuccessful. In May 2017, the Council gave them notice of dismissal by reason of redundancy, with a termination date of 31 August 2017.  The Claimants were not offered the opportunity to appeal against their dismissals.

The Claimants succeeded in their claims for unfair dismissal. The Employment Tribunal held that the Council’s procedure had been unfair for a number of reasons, including the lack of consultation and appeal.  The Council appealed arguing that the Tribunal had made an error by stating that only in “truly exceptional circumstances” was it acceptable to refuse an employee the right of appeal.

The Employment Appeal Tribunal (EAT) dismissed the appeal, confirming that the Tribunal had correctly applied a test of overall fairness. While the Tribunal had concluded that the lack of any appeal or review process was unfair, and no reasonable employer would have refused to consider an appeal in the circumstances, it had also been concerned by the lack of any opportunity for the employees to raise a grievance against the procedures adopted or be consulted about the dismissals.

The Council appealed again to the Court of Appeal

What was decided?

The Court of Appeal dismissed the Council’s appeal. Agreeing with the EAT’s reasoning, it stated that even though the test of “truly exceptional circumstances” that the ET had applied was incorrect in law, this did not invalidate the Tribunal’s conclusions on the overall fairness of the dismissals.  The Court confirmed that the lack of an appeal or review procedure does not of itself make a redundancy dismissal unfair. Nevertheless, it is one of the elements to be considered when determining the overall fairness of the dismissal.

The decision confirms that where the original selection for redundancy is in accordance with a fair procedure, the absence of an appeal is not fatal to the employer’s defence.  However, where it is questionable, an appeal may save the day for an employer.

What does this mean for employers?

While this decision offers some comfort to employers that a failure to allow an appeal will not mean that the dismissal is inevitably unfair, the safest approach will generally be to offer the employee the opportunity to appeal.

Where it is not practical or desirable to do so, employers need to be especially careful to engage in meaningful consultation and fair selection procedures to reduce the risk of being found to act unfairly.

Gwynedd Council v Barratt

If you would like to discuss any issues arising out of this decision please contact Theo Nicou (theonicou@bdbf.co.uk), Amanda Steadman (amandasteadman@bdbf.co.uk) or your usual BDBF contact.

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