The decision of the Employment Appeal Tribunal (EAT) in De Bank Haycocks v ADP RPO UK Ltd [2023] EAT 129 is a good reminder of the need for meaningful consultation if a redundancy dismissal is to be fair.
Mr Haycocks was an employee of the UK subsidiary of a US recruitment company. During the Covid-19 pandemic, he worked on a team whose client needs halved, and therefore, in May 2020, his employer decided to reduce the size of the workforce. The US parent company provided a process to score and select employees for retention, through which Mr Haycocks was ranked last. During consultation, which began at the end of June 2020, the employer explained the necessity of the redundancies, failing to mention Mr Haycocks’ ranking. Two weeks later he was dismissed. He claimed that the dismissal was procedurally unfair due to a lack of any meaningful consultation and a subjective scoring process that had inaccurately ranked him too low, which he was not given the opportunity to challenge.
The Employment Tribunal (ET) concluded that he had failed to demonstrate that he should have been ranked higher, and that, overall, the employer’s procedure had been fair and reasonable. Mr Haycocks appealed to the EAT.
The EAT decided that the ET had erred in concluding that the redundancy process was procedurally fair and reasonable for the purpose of section 98(4) Employment Rights Act 1996. Contrary to the usual standards of good industrial relations, there had been a clear absence of meaningful consultation with the employee at the formative stage of the process. Although a tribunal might still be entitled to conclude that an employer’s decision was reasonable despite the lack of consultation, it should explain why it was departing from the general principles established in R v British Coal Corporation Secretary of State for Industry ex parte Price [1993] on the meaning of a fair consultation. In this case, the ET had failed to do so.
Implications
The EAT was adamant that when conducting redundancies, reasonableness reflects what is considered to be good industrial relations practice. Although good industrial relations practice can vary, employers should engage in consultation with employees at the early stages of a redundancy process, with employees given sufficient information and the opportunity to propose alternatives to redundancy and adequate time to respond. Except in circumstances where consultation would be futile, employers would not be acting reasonably in the absence of a consultation period. As the EAT pointed out, the purpose of consultation (whether collective or individual) is “to avoid dismissal or ameliorate the impact” of redundancies. This suggests that employers must consult employees at the early stage of proposed redundancies whether or not collective consultation is required.
In summary, the guiding principles that employers should refer to are:
- Warn and consult employees/their representatives that redundancies are being considered.
- Consultation is fair when, at the formative stage, employees have adequate information, time and the opportunity to respond.
- The purpose of consultation is to avoid or reduce the impact of redundancies.
- Specific aspects of consultation, such as scoring as was done in this case, are not essential to a fair process, nor does scoring automatically make a process fair.
- The redundancy process must be viewed as a whole. Appeals may correct earlier failings, but a tribunal will consider the entire process when determining whether dismissal was reasonable.
The EAT’s decision also provides particularly useful advice for multinational employers engaging in redundancies. Compared to the 1980s, when the main authorities in this area were decided, there has been a growth of international involvement in present employment relations. Good industrial relations practices differ between jurisdictions, but when operating in the UK employers must ensure that their policies and procedures reflect good industrial practices in the UK.
If you are a Multinational Employer and have any questions, or would like to discuss any of the points raised in more detail, please contact Partner David Fisher who specialises in employment law issues for multinational employers, senior executives, partnerships, LLPs, partners and LLP members.
