Getting consultation right in small-scale redundancies

Redundancy is a challenge faced by many employers, but the management of such situations may prove to be the greater challenge.

This is the case even where the number of redundancies is considered ‘small-scale.’

Fortunately, new case law has been published to assist employers striving to manage the process as fairly as possible. In turn, this can help employers to avoid claims arising from mismanagement.

Small-scale redundancies

A small-scale redundancy refers to the situation in which an employer intends to dismiss fewer than 20 employees within a 90-day period.

Importantly, there are clear distinctions between the appropriate process when dealing with small-scale redundancies and larger-scale redundancies.

Collective consultation

ACAS defines collective consultation as follows: ‘where you must consult on your redundancy proposals with any recognised trade union, or if there is not one, employee representatives’.

Although the redundancy process must always be both fair and include the consultation of staff, there is no requirement for collective consultation in ‘small-scale’ situations. This is, of course, unless there is an employer-specific workplace policy or agreement in place to the contrary.

It was therefore surprising to read the decision of the Employment Appeal Tribunal (EAT) in Haycocks v ADP.

Here, the EAT judged that an employer had fallen foul of their responsibility to carry out a fair redundancy process when they failed to engage in a ‘general workforce consultation’.

In this case, the redundancy selection pool totalled sixteen and the total number of redundancies totalled two.

It is a relief for employers that the above decision of the EAT has since been corrected by the Court of Appeal (CoA) and that new guidance has been provided which confirms the extent of an employer’s legal obligations.

Haycocks v ADP: The EAT

Turning to the brief facts of this case, ADP RPO UK Ltd (“ADP”) commenced a redundancy process to reduce its number of staff. In connection with this, Mr Haycocks subsequently attended two consultation meetings.  Following these he was informed of his dismissal.

Prior to these consultations with Mr Haycocks, ADP had carried out a “redundancy selection criteria matrix” in which Mr Haycocks scored the lowest. Importantly, Mr Haycocks was not informed about the aforementioned scoring exercise during the consultation process and was not provided with his scores until after he was dismissed.

The EAT determined that individual consultation ‘would usually be expected to occur in addition to the collective stage’ despite the size of the workforce concerned. As a result, Mr Haycocks was found to have been unfairly dismissed.

Haycocks v ADP: The Appeal

Vitally for employers, this case was progressed to the CoA.

Here, the CoA overturned the decision of the EAT and confirmed that there is no ‘usual standard’ which states that collective consultation must be carried out in the context of a small-scale redundancy. Consequently, it was inappropriate for the EAT to state that this is a universal requirement for a fair redundancy process.

In short, the process remains unchanged.

Notably, however, the CoA did emphasise the following as concerns consultation:

• It is important to consult with employees during the redundancy process at a stage where these consultations could influence the outcome of the redundancy exercise
• This includes allowing employees the opportunity to provide their view on the scoring matrix which, in line with best practice, should not be completed before the consultation has commenced
• In line with ACAS’s guidance, it may still be beneficial to carry out a collective consultation or group meetings depending on the specific circumstances.

Key considerations for employers and small scale redundancies

In addition to this, it is crucial that employers ensure that they conduct a fair redundancy process, no matter the intended scale.

We recommend that employers map out a clear plan from the start and seek guidance where necessary. In particular, employers are reminded of the following considerations to bear in mind throughout the process:

1. Are there any viable alternatives to redundancy?
2. Do you have a clear plan for the redundancy process and are all involved managers appraised of the correct procedure?
3. Do not carry out the scoring of at risk employees until they have been consulted on the pooling and proposed scoring criteria
4. Have staff been consulted meaningfully?
5. Have the staff chosen for redundancy been selected carefully?

Of note, this includes identifying and selecting a pool of staff in an appropriate and non-discriminatory way.

Have you ensured that redundancy pay and notice entitlements are calculated and provided correctly?

Careful consideration of the above places employers in the best position to meet the legal standard for a fair process.

If you have any questions about redundancy and, in particular, how to carry out a fair redundancy process or any other employment law issue, please do contact a member of our Employment team.

A link to the full judgment can be located here.