Several recent decisions from the Employment Appeal Tribunal (EAT) have provided helpful and pragmatic guidance for employers on the extent of their redundancy consultation obligations. This article examines the approach that tribunals are taking in determining what action is deemed reasonable and appropriate in a redundancy consultation exercise, and looks at how the EAT views that approach on appeal.
What is a fair redundancy procedure?
Employers are well versed in the principles of reasonable consultation, as laid down by Polkey v AE Dayton Services Ltd [1987]. In Polkey, the claimant was dismissed for redundancy without their employer having made any attempts to consult with them. The Employment Tribunal (the Tribunal) found that the dismissal was procedurally flawed but that there had been no unfair dismissal because the claimant would have been dismissed even if the employer had consulted with them. The House of Lords overturned the decision and ruled that the claimant had been unfairly dismissed. It set out the importance of a fair and proper process in a redundancy consultation by confirming that:
'In the case of redundancy… the employer will normally not act reasonably unless he warns and consults any employees affected or their representative, adopts a fair basis on which to select for redundancy and takes such steps as may be reasonable to avoid or minimise redundancy by redeployment within its own organisation.'
The question for the Tribunal is therefore whether an employer has acted reasonably, not whether the claimant would have been dismissed even if consultation had taken place. It is only where a proper procedure would be utterly futile, a rare occurence, that a dismissal may still be fair in the absence of such procedure.
relationship between individual and collective consultation
In the vast majority of cases, consultation with the individual at risk of redundancy will be key to ensuring a fair dismissal. However, what are the employer's obligations towards the individual in a collective consultation? The recent EAT decision in Dabson v David Cover & Sons Ltd [2011] looks at the degree of individual consultation required in a redundancy exercise where there has also been a collective consultation process.
In Dabson, the respondent entered into collective consultation with employees at risk of redundancy. The respondent did not have a recognised trade union and was therefore required, under the Trade Union and Labour Relations (Consolidation) Act 1992 (the 1992 Act), to elect employee representatives for collective consultation purposes. Only one employee was put forward and they were appointed by the respondent as an employee representative (without a proper election). The claimant was selected for redundancy from a pool of three (which included the employee representative). Although a provisional decision was taken that the claimant would be made redundant, two consultation meetings were held with the claimant before the final decision was made.
The claimant brought a claim for unfair dismissal. First, the claimant argued that, as there had not been a valid election under s188 of the 1992 Act, the respondent was required to consult individually with each affected employee and it had failed to properly do so. Secondly, the claimant argued that there were inconsistencies and inaccuracies in the scoring (namely, that the claimant had been awarded different scores for two apparently very similar criteria and that the person who moderated the scores had subsequently indicated that the scores may not have been correct). Despite these points, the Tribunal found that the dismissal was fair and the EAT upheld its decision.
In relation to the consultation, the EAT agreed with the Tribunal that the overall process was fair and that there was no need to consult individually with the claimant about the matters set out in s188 (such as the reasons for the redundancies, ways of avoiding them and the method for selection) as the employer had already consulted with the representative.
Although the EAT accepted that the respondent had not carried out a proper election, it was held that this was irrelevant since the claim was not brought under the 1992 Act. The question for the Tribunal was therefore whether the process looked at as a whole was reasonable. The EAT held that the Tribunal was entitled to find that the process was adequate, based on the fact that preliminary consultation issues had been dealt with in negotiations with the employee representative and there had then been two subsequent consultation meetings with the employee (albeit that a provisional decision to dismiss the employee had been made prior to those meetings).
In relation to the claimant's arguments about his scores, the EAT held, referring to previous case law, that close scrutiny by the Tribunal of scores is normally inappropriate. The EAT stated that what is in issue is the question of fairness of the selection procedure overall and that marking should only be investigated where there are exceptional circumstances, such as bias or obvious mistake.
Dabson is helpful to employers and appears to set quite a low level for what constitutes fair consultation. Dabson confirms that the content of matters discussed during a collective consultation will go some way towards meeting the employer's obligations for individual consultation, albeit that a reasonable individual consultation should still take place in relation to the individual scores. The EAT also took a pragmatic approach when determining that:
- a provisional decision to dismiss can be taken before the end of a consultation process; and
- scores should only be scrutinised by a tribunal in exceptional circumstances.
Employees must be given opportunity to challenge scores
The EAT appears to have taken a stricter approach to scoring in another recent case, Pinewood Repro Ltd (t/a County Print) v Page [2010], in which it highlighted the importance of giving employees adequate information to provide them with the opportunity to challenge their selection for redundancy.
The claimant, Mr G Page, who had worked for the respondent for 23 years, was put at risk of redundancy, scored using a redundancy matrix agreed by a union (of which he was not a member) and then invited to a consultation meeting. Prior to the meeting, Page asked why he had been chosen from the pool and asked to see the scores. He was given a copy of the scores at the meeting but did not have much time to consider it. At a second consultation meeting, Page gave the respondent a list of queries about the scores, and the respondent provided him with written answers to the queries at a third consultation meeting. In relation to Page's questions about ability, skill and experience, and flexibility, he was told that the scores were 'reasonable and appropriate' but the respondent did not explain how the scores had been arrived at. Page was made redundant and appealed the decision. In the internal appeal, he complained that he had not been consulted about the selection criteria and that the criteria were not applied in a fair and non-discriminatory manner. Page's appeal was rejected and he was told that the scoring was 'factual and correct'.
Page brought an unfair dismissal claim in the Tribunal. The respondent argued that there was no obligation on an employer to justify its scoring and that the Tribunal should only be concerned with whether the employer's marking and the manner in which it was carried out fell within a band of reasonable responses. A failure to provide more detailed information as to how the employee was scored should not take the employer outside of that band of responses. Page argued that the employee should be able to understand the basis on which the decision is taken and, in particular, should be given sufficient information to be able to challenge the scores given to him.
The Tribunal agreed with Page and found that the dismissal was unfair, holding that an employer was required to provide an explanation for why an individual has received certain scores. Without giving Page some indication of how their scores had been arrived at, it was not possible for him to challenge those scores during either the consultation or internal appeal process. Further, in a situation where there were only three employees and the marking was close, it was open to the Tribunal to find that the consultation was not sufficient, having regard to the respondent's failure to answer Page's questions. The internal appeal process did nothing to correct the defect.
The EAT agreed with the Tribunal's decision and stressed that 'fair consultation involves the provision of adequate information on which an employee can respond or argue his case'. Page should have had the opportunity to challenge the scoring, particularly in relation to subjective areas such as flexibility. However, the EAT recognised that further explanation of scoring may not be necessary in every case, particularly where scores relate to more objective issues, such as attendance, timekeeping, conduct and productivity.
The EAT considered that it was for the Tribunal to decide whether an employee has been given a fair and proper opportunity to fully understand the matters about which they are being consulted, including whether they have been given sufficient information to be able to challenge the scores. It observed that, in the modern climate, 'much of this information would hopefully have been available to an employee via a previous appraisal process'.
Pinewood highlights the importance for employers of:
- fully consulting with employees about their selection and individual scores, particularly where the criteria are more subjective in nature;
- carrying out regular appraisals; and
- conducting a proper appeal.
Looking at the whole process, including the appeal
The importance of the appeal process was also considered in Peninsula Business Services Ltd v Rees & ors [2011], which was mainly concerned with the respondent's failure to comply with the now repealed statutory dismissal procedures. However, the EAT also provided useful comments on the overall fairness of redundancy procedures.
The respondent assessed its employees for redundancy and carried out consultation meetings. The claimants were selected for redundancy based on their scores but were not informed of what those scores were. Their internal appeals against their dismissals failed.
The Tribunal found several weaknesses in the respondent's process:
- the respondent had not followed their own guidelines either initially or on appeal;
- having stated that the redundancy exercise would result in four redundancies, the respondent changed its mind mid-process and decided to make eight redundancies instead;
- individual consultation was no more than a scoring meeting; and
- there was no real opportunity for the claimants to challenge the appropriateness or relevance of the selection criteria, or to suggest alternatives to redundancy.
The Tribunal concluded therefore that, while the respondent had not acted in bad faith, the process was 'somewhat secretive and certainly not fully transparent'. It stated:
'On balance, having regard to the lack of transparency… and lack of opportunity for the claimants meaningfully to challenge not just the overall criteria but particularly the individual application of those criteria in their own cases… the respondent did not act fairly in all the circumstances in treating redundancy as a sufficient reason to dismiss.'
The EAT agreed and went on to explain (referring to Taylor v OCS Group Ltd [2006]) that it is the whole of the procedure surrounding the dismissal, including the internal appeal, that must be taken into account in considering what is reasonable. This reflects the principle that a fair and independent appeal can cure any defects in the earlier procedure.
However, in Peninsula, the EAT upheld the Tribunal's finding that the standard of a reasonable employer had not been met, even when taking into account the appeal stage.
Conclusion
What these cases show is not just the importance of proper consultation with employees in a redundancy exercise (whether collective or individual) but the significance of transparency in the scoring process and, particularly when the criteria are subjective, the opportunity for employees to challenge their scores. Pinewood and Peninsula also serve as a valuable reminder of the critical role the internal appeal can play in curing any unfairness or unreasonableness in the procedure.
Following the repeal of the statutory dismissal procedures, there is no longer a statutory requirement that an employer give an employee the right to appeal a redundancy. The ACAS Code of Practice on Discipline and Grievance, which gives employees a right of appeal on dismissal, does not apply to redundancy dismissals.
However, regardless of this, employers are well advised to offer employees the opportunity to appeal a redundancy dismissal for two reasons:
- to flush out any issues at an early stage when there is still a chance to resolve them (rather than wait for the Tribunal claim); and
- in the event that there have been flaws in the earlier procedure (provided the appeal is fair and independent), to remedy any such flaws and provide the employer with a defence in the Tribunal.
By Åsa Waring, legal director, and Charlotte Davies, solicitor, Mishcon de Reya.
E-mail: asa.waring@mishcon.com; charlotte.davies@mishcon.com.
Peninsula Business Services Ltd v Rees & ors [2011] UKEAT 0407/10/2104
Pinewood Repro Ltd (t/a County Print) v Page [2010] UKEAT 0028/10/1310
