Redundancy

An employee is dismissed by reason of redundancy if the dismissal is attributable wholly or mainly to:

• The fact that their employer has creased, or intends to cease:
  • To carry on the business for the purpose of which the employee was employed; or,
  • To carry on that business in the place where the employee was so employed.
• OR;
• The fact that the requirements of that business have ceased or diminished or expected to do so:
  • For employees to carry out work of a particular kind; or,
  • For employees to carry out work of a particular kind in the place where the employee was employed by the employer.

This applies where:

• The whole business closes down; and,
• Where the business carries on, but its requirements for people to perform certain services cease or diminish.

• "Business" is widely defined in S235 ERA 1996 as including a trade or profession or any activity carried on by a body of persons, whether corporate or unincorporated.
• If the business is a company that has other associated companies, and the economic factors in question affect that group as a whole or some other part of it, that too can be taken into account to satisfy the definition.
• It's not necessary to show that the employer was the legal owner of the "business" in question - only that the person was generally in control of it prior to its closure (Thomas v Jones, 1978).

• S139 ERA 1996 is designed to cover the case where the business remains, but the functions of particular employees disappear.
• This could occur when the function is automated, or if the work is given instead to independent contractors (Bromby and Hoare Ltd v Evans, 1972).
• This could even occure if work previously done by two employees is amalgamated and done by one instead (Sutton v Revlon Overseas Corpn, 1973).

• What matters is whether a redundancy situation has arisen and whether the claimant has lost employment because of it (Safeway Stores PLC v Burrell, 1997).
• According to Murray v Foyle Meats Ltd (1999), we need to consider:
  • Whether one or other various states of economic affairs exists, such as whether the requirements of the business for employees to carry out work of a particular kind have diminished; and,
  • Whether the dismissal is attrubutable, wholly or mainly, to that state of affairs. This is a question of causation.
• As such, "bumping" redundancy is covered in law, as there is clearly a diminution in such cases for the need for employees to carry out work of a particular kind, and so the consequent dismissal is causally linked ("attributable") to it.

• The law looks at the work function of the employee within the organisation.
• As such, the job itself may change over time, but as long as the function remains then an employee who is dismissed for refusing to accept the changes is not "redundant".
• For instance, a change in the attractiveness of the jobs for the time being, such as losing access to work transport, will not constitute a redundancy (Chapman v Goonvean and Rostowrack China Clay Co Ltd, 1973).
• An employer can take necessary steps to increase the efficiency of the business without being liable for redundancy payments, unless there is a genuine diminution in the work function in question (Johnson v Nottinghamshire Combined Police Authority, 1974).
• BUT...a significant reduction in hours, effectively turning a full-time employee into a part-time one because there is a diminished need for their work, will constitute a redundancy if they refuse to accept the change and are dismissed (Packman v Fauchon, 2012).

• If the change is great enough to turn it into work of a different kind, the employee who is unwilling or unable to perform the new function can claim that they are redundant since their old function has disappeared (Robinson v British Island Airways Ltd, 1978).
• BUT...even extensive changes to the terms and conditions of work will not amount to a redundancy if the underlying work remains the same (Martland and Others v Co-Operative Insurance Society Ltd, 2008).
• A bogus reorganisation is not to be used by an employer as a cover for dismissals which are in fact due to redundancy (Johnson v Nottinghamshire Combined Police Authority, 1974).
• It is possible for an employee dismissed because of changing work patterns to bring an action for unfair dismissal against the employer if they think they have been harshly treated over the change or reorganisation.

• The employment appeal tribunal has applied a geographical test, making it easier for an employer to make an employee redundant at one location even where there is a mobility clause in the contract (Bass Leisure Ltd v Thomas, 1994).
• This could be significant where an employer wants to close down a whole location, dispense with the workforce there, and build up production elsewhere by taking on new staff (High Table Ltd v Horst, 1998).
• If an employer tries to enforce a mobility clause and the employee refuses, this may constitute a fair dismissal through disobedience of a lawful order.
• BUT...if work dries up in one area and the employer simply dismisses those working there despite a mobility clause, the result may well be a simply redundancy.
• S141 ERA 1996 provides that a redundant employee may be under an obligation to accept suitable alternative work if it is offered by the employer. The suitability of this may depend on the distance.

• An employee may claim that their dismissal for redundancy was unfair generally, meaning under S98(4) ERA 1996 that the employer's conduct was unreasonable having regard to equity and the substantial merits of the case.
• This widening of the law allows a tribunal some discretion to review the overall fairness of the dismissal and has led to the evolution of three general requirements upon an employer who is about to make an employee redundant:
  • The employee must not be selected unfairly.
  • The employer should make reasonable efforts where practicable to look for alternative employment within the firm, though tribunals should not expect unrealistic efforts to be made in what may be difficult circumstances (British United Shoe Machinery Co Ltd v Clarke, 1978).
  • The employer should consult affected employees and give them reasonable warning of the impending redundancy (Clarkson International Tools Ltd v Short, 1973).

• Where the employer recognises a union, the necessary consultations will normally be with that union:
  • If this is the case, the employer should give as much warning as possible of the impending redundancies and seek to agree criteria with the union.
  • The employer may be obliged to give a "double consultancy" to both the union and the individual employee, although this is uncertain for the employee (Walls Meat Co Ltd v Selby, 1989).
• When working out criteria for selection, the emphasis must be on criteria which leave as little as possible to subjective assessments by people making the selection, but rather are capable of being objectively applied on the basis of matters such as length of service, experience, and efficiency.

• "The employer who sets up a system of selection which can reasonably be described as fair and applies it without any overt sign of conduct which mars itself fairness will have done all that the law requires" (British Aerospace PLC v Green, 1995).
• "The question for the industrial tribunal...is whether the applicant was unfairly dismissed, not whether some other employee could have been fairly dismissed".
• Once the selection procedure has been shown to be reasonable on its face, evidence of the scores of other employees cannot be relied upon by a tribunal to critique the fairness of a specific dismissal (Nichols v Rockwell Automation Ltd, 2012).
• It was held in Clarke v Eley (IMI) Kynoch Ltd (1983) that a woman who is unjustifiably prejudiced on the grounds of sex by a selection procedure for redundancy may complain of indirect discrimination under the now Equality Act 2010.