Morgan Russell Solicitors

Redundancy

Redundancy

Message in a bottle

You might think that Contract Bottling Ltd v Cave is just an example of the phenomenon of “bumping”, and is based on somewhat unusual facts which are unlikely to be replicated, but we think it is worth a read by way of illustration of how not to go about selecting employees for redundancy. When a new owner rescued Contract Bottling from financial dire straits, he set about reducing excessive costs. He hired an outside consultant to do this. It was clear that the office was overstaffed. The decision was made to put all ten office based employees into the same pool for selection from accounts manager to stock controllers via the sales team. The thinking was that they would all be selected according to the same matrix, and if those that remained after that had the wrong skills, well, then they would be retrained. As odd as it was, there was nothing wrong with this decision. However, the tribunal had a lot of compelling criticisms of how the process was approached:

  • A redundancy selection matrix already in place and in the staff handbook was abandoned;
  • The criteria used were, without exception, subjective;
  • The assessment was carried out by someone who knew nothing of the employees;
  • The company either could not, or would not, explain how the scoring had been done;
  • No meaningful consultation took place; and
  • The same person did the initial scoring and dealt with appeals against selection.

This, to us, suggests that an assumption had been that process is all. But to think that is to lose sight of the underlying goal of making sure that it is reasonable, in the circumstances, to dismiss. A sound process is just a helpful framework, not an end in itself.

Collective consultation - one establishment or many?

When USDAW originally took the liquidators of Woolworths to Court over the failure to consult employees before shutting down all its shops in 2008, workers in smaller branches were excluded from the award of 60 days’ pay for each employee. The reasoning behind this was that the obligation to consult on a collective basis only applies where more than 20 employees are to be made redundant at “one establishment”. The conventional interpretation of those words has been that individual sites, like factories, schools, or shops, which are managed locally, are distinct establishments, but it seems that the EAT took a purposive approach and held that restricting the obligation to redundancies at a single establishment did not reflect the underlying EU directive, which refers to dismissal of 20 employees over a 90 day period “whatever the number of workers normally employed in the establishments in question.” - note the use of the plural.

So far we only have the Union’s press release of the EAT decision: when the full written judgment becomes available,in a week or two's time, it will be scrutinised carefully to see if it really is the significant departure it appears to be. If so, perhaps BIS, who took no part in the earlier proceedings, may take a more active interest in the case, given that the government will, ultimately be picking up the bill.

To consult or not to consult...

It has been a busy month in terms of collective consultation disputes, only serving to underline how tricky these obligations can sometimes be. First up is the reminder, in Shields Automotive Ltd v (1) Langdon (2) Brolly and AEI Cables Ltd v (1) GMB (2) Unite (3) Individual Claimants, that awards for breaches of the collective consultation obligations are intended to be punitive and not to compensate the employee for any loss or damage suffered. However, in AEI Cables the EAT noted that failure to consult was because the company would have otherwise unlawfully traded while insolvent yet only reduced the protective award from 90 days to 60 days.

Continue reading To consult or not to consult...

Decisions, decisions

Redundancy selection can be a tricky business; faced with having to choose between a number of employees how do you make sure you do so fairly? Well, the standard advice is to establish a set of objective criteria and apply those. And very good advice it is too, but Mental Health Care (UK) Ltd v Biluan & Anor shows that it is possible to go too far in the quest for objectivity.

Continue reading Decisions, decisions

Better redundancy deals for older workers?

In Lockwood Department of Work and Pensions, the EAT has endorsed the legitimacy of a voluntary redundancy scheme which provided enhanced benefits for older employees.

The claimant applied for redundancy at the age of 26, having worked at the DWP since she was 18: she was entitled to a redundancy payment under the Civil Service Compensation Scheme of nearly £11,000. However, if she had been over 35, she would have been entitled to over £17,000 more. She made a claim of direct age discrimination, but failed in the Employment Tribunal.

The EAT upheld the decision. There were material differences between the two groups – older workers would find it more difficult to find new employment and would have heavier family financial commitments than younger workers. The EAT also agreed that the different payments were justified, in that the different levels of payment were a proportionate means of achieving the legitimate aim of providing workers with a financial cushion to tide them over until they find another job – which would be harder for older workers.

New tribunal limits - for now

Here is a list of the main new Employment Tribunal compensation maximum limits where the "appropriate date" (for example date of dismissal) is on or after 1st February 2013 (but note that the overall limit for compensatory awards in unfair dismissals may be changed soon) :-

Continue reading New tribunal limits - for now

Legal advice privilege only covers advice from legally qualified advisers

Another new Supreme Court decision (Prudential plc & Anor, R (on the application of) v Special Commissioner of Income Tax & Anor) looks at the extent of legal advice privilege, and in particular whether parties to disputes can be ordered to disclose legal advice from advisers such as accountants.

Continue reading Legal advice privilege only covers advice from legally qualified advisers

No guarantee payments for employees who agree a shorter week (extract from the November 2012 edition of Employment Law News)

In the continuing harsh economic climate, it is not uncommon for employers and employers to strike a deal whereby employees agree to work shorter hours, or take lower wages, to avoid being made redundant. Abercrombie & v AGA Rangemaster Ltd deals with just such a situation, and in it the EAT considers the relationship between such agreements and the right to a guarantee payment under Employment Rights Act 1996 (ERA) s28 if work is not provided for them on a day when they would normally work.

Continue reading No guarantee payments for employees who agree a shorter week (extract from the November 2012 edition of Employment Law News)

Complex redundancy selection criteria not always necessary (extract from the July 2012 edition of Employment Law News)

When advising on redundancy procedures, employment lawyers tend to emphasise that employers should take care to ensure that they use objective criteria when selecting from a pool of employees.  And very good advice it is too.  Mitchells v Tattersall, however, shows that this does not inevitable mean a box ticking exercise is required.

Continue reading Complex redundancy selection criteria not always necessary (extract from the July 2012 edition of Employment Law News)

'South of the river? You must be joking, guv' (extract from April 2012 edition of Employment Law News)

In Abellio London Ltd (Formerly Travel London Ltd) v Musse & Ors the EAT gives us a useful reminder that the right of employees to resign in response to a detrimental change of terms on a transfer of an undertaking is not restricted to changes in to their contractual terms. When a transfer takes place, and employees are not happy with it, they have two options.  They can inform either the transferring employer, or the transferee employer, that they object to becoming employed by the transferee, in which case, their employment ends without any dismissal – or any right to make any claim.  If, however, the transfer involves a substantial change to their working conditions which is to their detriment, they can resign, and will be treated as dismissed.

Continue reading 'South of the river? You must be joking, guv' (extract from April 2012 edition of Employment Law News)
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