Employers warned ‘unreasonable’ redundancy consultation procedures could be grounds for unfair dismissal
Guest blog by Louise Lawrence, senior associate, Winckworth Sherwood
Although the prospect of unemployment can seem inevitable after the words ‘at risk’ are mentioned, the law provides protection to ensure employees with at least two years’ service are not dismissed unfairly. An employer must show that redundancy was the real reason for the dismissal and, in reaching that conclusion, it followed a procedure which was reasonable. A ‘reasonable’ procedure involves the employer conducting meaningful consultation with the employee at an early stage, providing adequate information to them, giving them time to respond and then genuinely considering their response.
In the case of Thomas v BNP Paribas, the Employment Tribunal concluded that the employer’s consultation process had been ‘insensitive and perfunctory’ but nonetheless, concluded that the process was reasonable and that the dismissal was fair. On appeal, the Employment Appeal Tribunal (“EAT”) took a different view.
The employee had worked for the employer for 40 years and held a senior managerial position. The employer conducted a strategic review of its business and invited the employee to a short meeting where he was informed that his job was ‘at risk’. Immediately following the meeting the employee was put on paid leave and told not to contact colleagues or clients and that his access to the employer’s IT system would be stopped. The Tribunal noted that throughout the consultation the employer made several insensitive administrative errors in correspondence, mistakenly addressing a letter to the employee as ‘Paul’ when his name was Peter and providing inaccurate critical dates.
The employee brought claims for unfair dismissal and age discrimination. The Employment Tribunal considered that there was a genuine redundancy situation and that, although the consultation was handled ‘insensitively and in a perfunctory manner’, this did not mean it was not conducted reasonably.
On appeal, the EAT highlighted the disconnect between the Tribunal’s finding of reasonableness and its conclusion that the consultation had been conducted in an insensitive and perfunctory manner by putting the employee on garden leave and prohibiting any contact with colleagues or clients immediately after the first meeting, as well as the careless clerical errors. Although these facts would not inevitably mean the consultation had been conducted unfairly, given the acknowledgement from the Tribunal that it considered the process had been handled in an ‘insensitive and perfunctory’ manner, the EAT found it ‘troubling’ that the Tribunal did not justify why it then concluded nonetheless that the process was reasonable. Consequently, the EAT quashed the decision, remitting the claim to a different Employment Tribunal the question of reasonableness.
A number of employers, particularly in the financial sector, as a matter of course, place employees on paid leave at the same time they are first told they are ‘at risk’ of redundancy. While this may be industry standard practice, this case highlights the risk that the Tribunal may find that a reasonable process has not been followed and the dismissal therefore unfair if this action is taken.
Ideally, we would therefore recommend that employers do not risk placing employees on garden leave during the redundancy consultation process, shutting off their IT access and contact with colleagues, as this could result in arguments that the decision to dismiss was pre-determined and the process a sham. If an employer still wishes to place potentially redundant employees on garden leave, notwithstanding the risk, it should be prepared to justify this action for genuine business reasons and ensure additional efforts are made to deal fairly and sensitively with the employee throughout the consultation process.
If an employee asks to be placed on paid leave during the consultation process, an employer can, of course, agree to this, but should record the employee’s request in writing, making it clear their normal duties will resume in the event they are not made redundant at the end of the consultation process.
It is also important that employers take care to avoid simple mistakes in the redundancy process and careless errors in documentation. A carefully drafted and clear policy can serve as a useful reminder of the correct process to be followed and this should be applied by the employer fairly and consistently. Those conducting the consultation process should also understand precisely what is required of them and they should keep careful written records throughout.
Additionally, any correspondence in connection with the redundancy process should be drafted to ensure that nothing could be construed as suggesting that the decision to make the employee redundant has already been made. This not only applies to correspondence with the employee who is “at risk” of redundancy but it also, importantly, to any internal correspondence (including text messages and e-mails), since such correspondence would be disclosable in Tribunal proceedings.
Compensation is likely to be limited where there are procedural flaws but the Tribunal finds that the employee would have been dismissed fairly in any event. However, following best practice will help employers reduce the risk of claims and the burden and cost of proving this in the Tribunal.