Court of Appeal rules on timing and nature of consultation required in small-scale redundancy exercises

The Claimant was employed by ADP RPO UK Limited (“ADP”), a recruitment process outsourcing business. As a result of a diminution in vacancies resulting from the Covid-19 pandemic, ADP decided to make redundancies in the team in which the Claimant worked. Following a consultation process, the Claimant was dismissed for redundancy.

The redundancy process

Following the decision that redundancies would be needed, the relevant team manager was asked to assess the employees in question in accordance with a chosen selection criteria matrix. The claimant scored the lowest. A consultation timetable was then set which involved all staff members being individually informed of the redundancy risk, followed by a 14-day consultation period. This comprised a meeting where the employee could ask questions and suggest alternative approaches, followed by a final meeting in which the employee was dismissed. The employee had an appeal hearing, however, his appeal was dismissed.

The employee commenced proceedings against ADP in the Employment Tribunal for unfair dismissal. His claim was dismissed and so he appealed the decision to the Employment Appeal Tribunal.

The appeal centred around the assertion that the redundancy process was flawed, particularly because the scoring was completed before the commencement of the consultation period.

The Employment Appeal Tribunal upheld the appeal, finding that the dismissal was unfair as there was a lack of meaningful consultation at a “formative stage”. They also held that “general workforce consultation” was good industrial practice in all redundancy processes, including smaller-scale, non-unionised ones. As no such consultation had taken place and there was no reason explaining such a departure, the dismissal was unfair.

The employer appealed this decision to the Court of Appeal.

The Court of Appeal overturned the Employment Appeal Tribunal’s decision and restored the decision of the Employment Tribunal. It held that, whilst it was bad practice to carry out the scoring exercise before the consultation started, there was no overall issue with the fairness of the consultation because: (a) it was not too late for the exercise to be re-done had an employee successfully challenged the scoring criteria; and (b) it is well established that procedural unfairness in a decision to dismiss can be cured by a fair internal process, which was given to the employee in the form of an appeal hearing.

The requirement for “general workforce consultation”

“General workforce consultation” was interpreted by the Court of Appeal to mean a requirement to undertake some form of group consultation, in a bid to replace the collective consultation which is required in other redundancy cases.

However, the Court of Appeal did not see a need to remove the “dichotomy” between smaller-scale non-unionised redundancies and other redundancies. It expressed that they are fundamentally different situations and a requirement for group consultation is not always appropriate in the former. When it comes to smaller-scale non-unionised redundancies, the adequacy and requirements of consultation should be considered on a case-by-case basis with no presumption that some form of group consultation is necessary.

Consultation at the formative stage

Fair consultation involves consultations when the proposals are at a formative stage. In considering what this means, the Court accepted submissions that consultation should occur at a stage where it can make a difference to outcomes or still realistically influence the decision. Importantly though, this does not always equate to early consultation.

The Court of Appeal’s clarification that group consultation is not mandatory in smaller-scale redundancies will be welcomed by employers.

The case should serve as a reminder of the importance of meaningful consultation. Whilst the case outcome favoured the employer, the court labelled the practice of scoring employees before starting the consultation as “bad practice”. Employers should ensure they are operating genuine and meaningful consultation processes at a formative stage which allow employees at risk of redundancy to engage with the process, ask any questions or make suggestions. Consultation should not merely become a tick-box exercise which follows a decision that has already been made.

Employers should consider the importance of offering a clearly defined appeal system. Whilst this is not lawfully required, it provides the opportunity to remedy any procedural unfairness which has occurred during the consultation process and thereby possibly preventing a later finding that a redundancy was unfair.