The Employment Appeal Tribunal has confirmed that employers must consult in a redundancy situation, even when only one employee is at risk.
A chef was dismissed by reason of redundancy without any warning because of a very significant reduction in work due to the coronavirus pandemic. As he was the only chef, he was automatically selected for redundancy by his employer without following a consultation process.
The employee brought an unfair dismissal claim and won on the grounds that the dismissal was procedurally unfair. When considering how much compensation to award the employee, the employment tribunal based its decision on the principle of whether the employee would have been dismissed if a fair procedure had been followed and applied this in the following way:
- Would the employee have been dismissed on the same date if a fair process had been applied and would it be appropriate not to award any additional compensation for loss of income?
- Even if dismissal was still inevitable after a fair procedure, what would the employer have done if it had acted fairly and what compensation should be awarded to cover the period the consultation would have taken?
However, the Employment Appeal Tribunal (EAT) disagreed, providing useful guidance on how compensation should be assessed in these situations. The EAT decided that the possibility of a pool of one being fairly chosen did not mean that the dismissal was bound to have taken place when it did. When assessing what compensation to award, the obligation was to consider what this particular employer would have done, had it acted fairly, and needed to take into account:
- the general requirement for some warning and consultation with the employee even in the case of a small employer, and even where there was a pool of selection of one;
- even if the employment judge considered that dismissal would have been fair even without any consultation, some further explanation to demonstrate a proper application of the relevant law;
- that some warning and consultation:
- could have resulted in the selection of a pool of more than one; and
- might have affected the choice of any selection criteria; and
- even if dismissal would have been inevitable, it might well have been delayed, which would result in some additional compensation for the employee, unless there was some compelling reason why the dismissal would have been fair absent any consultation.
Overall, as a key guide to employers, the EAT said that when it came to ascertaining unfair dismissal or its resulting compensation, a selection pool of one should be examined ‘with worldly-wise care’, since it could be used as a pretext to get rid of an unwanted employee.
The EAT decided the employment tribunal judge was wrong in law to reduce the employee’s unfair dismissal compensatory award to zero. Instead, his case was sent back to the employment tribunal to determine compensation applying these statutory principles correctly.
If you are an employer seeking support when considering making redundancies, please contact Charlie Barnes.