Fair dismissal for redundancy requires proper consideration of alternative employment

In Hendy Group Ltd v Kennedy, the Employment Appeal Tribunal (EAT) confirmed that a dismissal for redundancy was unfair because the employer had failed to properly consider alternative employment for the employee.

This article considers what an employer needs to do to comply with its duty to consider alternative employment before confirming any redundances.

Mr Kennedy was employed as a sales trainer at car dealership Hendy Group’s Training Academy.

Before holding this position, he had over 10 years’ experience as a car salesperson and had 35 years’ experience in total in motor sales. The training role was placed at risk of redundancy due to the COVID 19 Pandemic, the associated business shutdowns and economic downturn.

It was accepted that the redundancy situation was genuine and that Mr Kennedy’s selection was fair. However, Mr Kennedy claimed unfair dismissal, arguing that his employer had failed in its duty to help him find another job within the business.

Employers need to support or identify alternative employment in redundancy

The EAT agreed with Mr Kennedy and found the dismissal unfair. The employer had not made a reasonable effort to identify or support alternative employment. Its approach was one which no reasonable employer – considering the employer’s size and relatively extensive resources – would have adopted.

During his notice period, Mr Kennedy could only see job vacancies in the same way as external applicants and he was given little assistance by the employer’s HR team or his line manager in helping him apply for internal roles.

The Employment Tribunal had found that Mr Kennedy would have been an ideal candidate for a salesperson role at one of the employer’s car dealerships and for which the employer had a number of vacancies. The HR team did not communicate internally to hiring managers that Mr Kennedy was at risk of redundancy to alert them  to a potential internal candidate for vacancies.

Mr Kennedy was interviewed for a sales manager position at a Bournemouth dealership, but when he was found not suitable for the management role, it appeared to influence the employer in regard to putting him forward for other suitable roles. In fact, after his applications for several sales roles were rejected, the employer told him any further applications for sales roles would be unsuccessful and questioned his motive in applying for them.

The EAT considered that the employer appeared to be actively blocking Mr Kennedy from finding another internal role.

To make matters worse, and apparently due to a breakdown in internal processes, the HR team communicated with Mr Kennedy via a company email address which he did not have access to anymore, having been required to return his work laptop.

Mr Kennedy was awarded full loss of earnings at a result of the unfair redundancy. The employer sought a reduction to the compensation awarded on the basis that the failure was a mere technicality.  This was rejected and it was determined that Mr Kennedy would have been likely to secure a sales role within the company had the employer not been so unhelpful.

Employer ramifications for not considering suitable alternative employment

Considering suitable alternative employment is fundamental to the fairness of any dismissal for redundancy.

A dismissal will be unfair if the employer gave no consideration to whether alternative roles were available within the company. This case makes clear that the employer must actively help the employee seek and apply for alternative roles, it is not enough to simply make them aware of vacancies.

Here are some of the things employers should be doing to assist potentially redundant employees:

1. Employers must actively assist potentially redundant employees, such as suggesting suitable internal vacancies the employee might want to apply for. This includes ensuring communications make reference to available help with finding alternative roles, and how that assistance can be accessed.
2. Consider roles for the employee which might appear a step down, too junior or require some retraining. They should keep an open mind about what roles the potentially redundant employee might be open to applying for – some people would rather be flexible, than redundant. Employers need to consider the employee for every role they might be suitable for.
3. Ensure there is a clear line of responsibility to help potentially redundant employees seek alternative employment with a named person having responsibility to help the employee.
4. Do not remove potentially redundant employees’ ability access to internal job boards and provide ways for them to communicate with their internal contact if they no longer have access to other internal systems.
5. Ensure the potentially redundant employee is not in the same position as external applicants having to search public job boards and as far as possible are at the front of the queue for internal vacancies.
6. Respond to all internal applications the potentially redundant employee makes with clear feedback if they are not successful, and a failure to obtain roles applied for should not preclude applications for other internal vacancies.

Lastly, employers should note that the duty to consider alternative employment continues during the employees’ notice period. If vacancies arise during this time, the same considerations apply.

Our expert employment team has extensive experience in advising organisations on how to handle potential redundancies.