Employment Appeal Tribunal Clarifies Redundancy Consultation Obligations

Quick Hits

• A recent decision from the EAT, De Bank Haycocks v ADP RPO UK Ltd, underscores the importance of consultation in redundancy situations, irrespective of whether the collective redundancy rules are triggered.
• The EAT emphasised that a reasonable and fair process generally requires consultation on redundancy proposals at a formative stage of the restructuring process.

The EAT’s Decision

In De Bank Haycocks v ADP RPO UK Ltd, the EAT set out the following guiding principles for a fair redundancy consultation, based on the various principles established in case law:

• “The employer will normally warn and consult either the employees affected” or any union or employee representative.”
• “A fair consultation occurs when proposals are at a formative stage” and where the employee is given “adequate information and adequate time” to respond (“along with conscientious consideration being given to that response”).
• In consultation, “the purpose is to avoid dismissal” or reduce the impact of redundancies.
• “A redundancy process must be viewed as a whole and an appeal may correct an earlier failing.”
• “It is a question of fact and degree as to whether consultation is adequate and it is not automatically unfair that there is a lack of consultation in a particular respect.”
• “The use of a scoring system does not make a process fair automatically.”
• Whether it is reasonable to show an employee the selection scores of others in a pool will be case-specific.

Notably in this case, the claimant was not a member of a recognised trade union, and because fewer than twenty redundancies were proposed, the rules under the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A) requiring collective consultation were not triggered.

Despite this, the EAT observed that “good industrial relations in the modern employment environment” could in certain situations still require consultation on the restructuring decision at a formative stage (in other words, before a firm decision is taken to proceed with restructuring). However, cases are fact-specific and it is not clear from the decision that this will be required in all redundancy cases.

Key Takeaways

This case is an important reminder of an employer’s obligation to consult with individuals in redundancy situations. It highlights the point that irrespective of whether collective redundancy rules are triggered, a failure to consult at a “formative” stage of a redundancy process may expose employers to the risk of a finding of unfair dismissal. Employers may want to consider alternatives to redundancy prior to deciding that there is a need to reduce headcount and consider consulting with employees on what those alternatives could be.

Ogletree Deakins’ London office and Global Reorganizations Practice Group will continue to monitor developments in the law and will provide updates on the Cross-Border and Global Reorganizations blogs as additional information becomes available.

Emma Thomson is an associate in the London office of Ogletree Deakins.

Ellie Burston is a trainee solicitor in the London office of Ogletree Deakins.

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