Case update

The importance of consultation to fair redundancy dismissals

A recent Employment Appeal Tribunal case (De Bank Haycocks v ADP RPO UK Ltd) has confirmed the need for meaningful workforce consultation at a time when redundancy proposals are at a formative stage.

What are redundancy consultation requirements?

To dismiss an employee by reason of redundancy, there must be: (i) a genuine redundancy situation (e.g., a workplace closure); and (ii) the employer must act reasonably in the circumstances.

Due to this obligation to ‘act reasonably’, employers must consult with affected employees (or, if applicable, their representatives) in a redundancy situation with a view to finding ways to avoid the need to make redundancies. But just how much consultation is required and when?

Facts of the case

The employee (DBH) worked as a recruitment consultant for ADP, in a team of 16 for one single client.

  • In May 2020, after a drop in demand from the client, ADP decided to make redundancies.
  • In early June, ADP scored the 16-person team against a subjective scoring criteria, with DBH scoring lowest.
  • On 18 June, ADP decided how many employees would be made redundant.
  • DBH was invited to a meeting on 30 June at which he was effectively placed ‘at risk’ of redundancy and he was able to ask questions and suggest ways of avoiding redundancies.
  • DBH was subsequently invited to a consultation meeting and then a final meeting at which he was dismissed.
  • DBH brought a claim for unfair dismissal.

Whilst his claim was rejected at the initial Employment Tribunal stage, his appeal to the Employment Appeal Tribunal was accepted on the basis that there was a lack of consultation at the formative stage of the redundancy process.

Comment

The decision is a reminder for employers to engage in meaningful consultation with employees early on to attempt to explore alternatives to redundancy. A simple ‘tick-boxing’ exercise may not suffice.

This applies to all redundancy processes, not just collective processes of more than 20 affected employees. Examples of alternatives to redundancy that an employer could consider are (i) pay cuts for the relevant team and/or (ii) the termination of contracts with consultants or agency staff.

"there was a clear absence of consultation at the formative stage. […] It means that there was never any opportunity to discuss the prospects of a different approach to any aspect of the redundancy process chosen by the employer. The absence of meaningful consultation at a stage when employees have the potential to impact on the decision is indicative of an unfair process. […] In our judgment, on the facts, there was no good reason for this consultation not to take place. We note, in particular, the fact that the numbers to be dismissed were not settled until a major part of the process of selection had been concluded. That shows that there was no pressure of time."

(para. 32 of the judgment)