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REDUNDANCY
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Is he an employee?
Has he been made redundant?
Has he been unfairly dismissed?

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1 of 5 potentially fair reasons for dismissal
Redundancy must be ‘true’ and fall within statutory definition
Section 163(2) ERA 1996: Where there is a dismissal it is presumed to be by reason
of redundancy unless the contrary is proved

Section 139(1) ERA 1996 – Definition & circumstances
Employee dismissed shall be taken as dismissed by reason of redundancy if attributable to:
‘True’ Redundancy Situation
 Business disappears
o Gemmell v Darngavil Brickworks
 Temporary closures is sufficient
 “includes any trade, profession or activity”
 Place of work disappears
- Consider where exactly the person’s place of work is?
- Even if employer carries on work elsewhere
- If the employer has inserted a mobility clause the claimant may rely on the clause
as reason not to be made redundant on this basis
o Bass Leisure v Thomas
 However, presence of mobility clause alone is not enough to protect from
redundancy
o High Table v Horst
 Contractual Test or Factual Test to determine place of work
 Handbook said: “sometimes necessary to transfer staff to another location”
however, in reality claimant never moved location so cannot rely on clause
to avoid redundancy = Factual Test
 Job disappears or is reduced
- Has “kind of work” disappeared? (difficult task for ETs)
o Vaux and Associated Breweries v Waugh
 Bunny waitresses – was not different type of work
- Businesses entitled to reorganise their business to improve efficiency without
automatically give rise to redundancy pay
o Lesney Products v Nolan
- Employers don’t have to show their requirements for employees to carry out work
of a particular kind have diminished in relation to work that employees could have
been asked to do
...
Instead consider whether there is a diminution in employers
requirements for employee to carry out work of a particular kind
o Safeway Stores v Burrell (Confirmed in Murray v Foyle Meats)

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Redundancy Procedure – (has the employer followed correct procedure?)
o Guidelines from Williams v Compare Maxim
1
...
Identify group to be affected
- If anticipate 20+ redundancies within specified period, must go through ‘collective
redundancy’ rules under s188-192 TULR(C)A (implemented as result of Council
Directive 98/59/EC (The Collective Redundancies Directive)
o University of Stirling v UCU
 Fixed-term employees weren’t dismissed as redundant but for individual
reasons
...
Establish selection criteria (chosen people)
o Used to be last in first out policy (LIFO)
o Selecting employees on part-time/fixed-term contracts may be discriminatory
 Whiffen v Milham Ford Girls School
 Employees not on permanent contracts first selected for redundancy
...
e
...
Consultation
o Failure to consult may give rise to a claim
o Genuine & done at early stage to reduce effect of redundancy
o Consultation must be ‘fair & proper’
 King v Eaton Ltd established that there must be:
 Consultation where proposals are at a formative stage
 Adequate information & time to respond
 Conscientious consideration of response to consultation
o May be with employee directly or representative (i
...
trade union)
o Size of undertaking may affect nature or formality of consultation but cannot
excuse lack of any consultation
 Mugford v Midland Bank Plc
 Employer only consulted with trade union & not employee – not unfair
redundancy
...


2

o But, if employer could reasonably conclude that, in light of circumstances
known at time, consultation or warning would be ‘utterly useless’, then may
have acted reasonably
o Warning & Consultation are part of same process of consultation, which should
commence with a warning that employee is at risk
 Elkouil v Coney Island Ltd
5
...
e
...

Held “personal whim or fad” cannot constitute reasonable refusal
o Burden is on employer to prove alternative is suitable & employee’s refusal was
unreasonable
o Reasonableness of employee’s refusal can be determined subjectively
 (e
...
subjective loss of status)
o In theory, questions of suitability & reasonableness are distinct, but in practice
are often considered together
6
...
Redundancy pay
o Statutory Redundancy Pay – calculated according to:
 Length of service (must have minimum of 2 years continuous employment)
 Age
 Gross Pay (ss220-229 ERA 1996) – maximum as of 6 April 2014 was £464
o Contractual Redudnacy Pay
 Often more generous
Note: Duty to act reasonably in all circumstances obliges employers to consider alternatives
to compulsory redundancy
ACAS Advisory Handbook on Redundancy 2009 states measures for minimising or avoiding
compulsory redundancy include:
o Natural wastage
o Restrictions on recruitment
o Reduction or elimination of overtime
o Introduction of short-time working or temporary lay-off
o Retraining/redevelopment of other parts of organisation
o Termination of employment of temporary or contracted staff
o Seeking applicants for early retirement/voluntary redundancy

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Unfair Redundancy
-

Possible for person to claim both redundancy payment & unfair dismissal, although
s122(4) ERA prevents double compensation
...

But tribunals will not investigate background that led to redundancy or require
employer to justify redundancies in economic terms
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Failure to comply with procedural requirement to consult trade unions & consider
volunteers will not be automatically unfair
...

But 'establishment' limitation is only framed this way in TULRCA & not contained in EU
Directive
...
Term applied to unit to which workers
made redundant are assigned to carry out their duties
o Usdaw Ltd & Others v Ethel Austin Ltd
 Recently & controversially EAT overturned ET decision & held ‘at one
establishment’ are incompatible with EU Directive & duty to consult doesn’t
require 20 or more redundancies in more than one location
...
Significant decision extends
scope of employers' collective consultation obligations
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- May be represented by trade union
...
Held proposal to dismiss was at time manager made report
...
Notice cannot be given at same time consultation process is started
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- Necessary for employer to consult on each of these three aspects
...

o Middlesbrough Council v TGWU
No obligation for employer to undertake consultation with a view of reaching agreement with
appropriate reps
...
Reasons for proposals
2
...
No
...
Proposed method of selection
5
...
Number of agency workers working temporarily under direction of employer
Whether sufficient information has been given is question of fact for tribunal to decide
...
Special circumstances where not ‘reasonably practicable’ for employer to comply with
consultation & information requirements
...

2
...
Were there special circumstances?
o Something out of the ordinary or uncommon
...
Did they render compliance with statute not reasonably practicable?
3
...

o This period is up to 90 days & begins on date which first dismissals took place
or date of award, whichever earlier
...

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During protective period, employees covered will recieve a week’s pay, subject to
statutory maximum, for each week they would have been paid by employer
...

Where claim is made by an individual, tribunal cannot make award that benefits other
employees
o Independent Insurance Ltd v Aspinall
Purpose of award
o Ensure consultation takes place by providing sanction against employers who
fail to do so properly
...

o s12 ETA 1996 allows ETs to impose financial penalty on employers where
there’s been a breach of employment rights & ET thinks ‘breach has one of
more aggravating features’
...


Calculating Redundancy Payment
Statutory Redundancy Pay – calculated according to:

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o Length of service (must have a minimum of 2 years continuous employment)
o Age
o Gross Pay (ss220-229 ERA 1996) – max as of 6 April 2014 was £464
S162 ERA – redundancy payments calculated according to following formula, with max of 20
years’ service being taken into account
...
5 weeks’ pay allowed for each year of employment where individual was 41 & over;
o 1 week’s pay for each year of employment where individual was between ages of 2240;
o 0
...

- Max statutory redundancy payment in 2014 was £13,920 (i
...
30 x £464)
- Employer must give employee written statement indicating how amount was
calculated
...

ET must have regard of employee’s reasons for failing to take the steps listed above

Critcism:
Recently been substantial changes to redundancy law with threshold employers are required
to meet being lowered further and further
...
There is no “one size fits all” approach to
redundancy selection
...

Redundancy Selection – A Free Rein for Employers? By Debbie Grennan
Understandable appeal courts give employers leeway to make decisions which enable them
to retain employees who can most effectively contribute to future success of business

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