This is an extract of our Economic Restructuring document, which we sell as part of our Labour Law Notes collection written by the top tier of Oxford students.
The following is a more accessble plain text extract of the PDF sample above, taken from our Labour Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
LABOUR: ECONOMIC RESTRUCTURING1. REDUNDANCY
? A. Context and OverviewThe law must find a way to address the tension between necessary business restructuring and the adverse individual and social costs of job loss and plant closure. The law's compromise is to provide for:1. Redundancy payment2. Fair redundancy selection3. Consultation
? Recognises the interest the employee had in that job, regardless of the fact that he may not have a job lined up. The level of that payment will be set at a level that is fair to the employer so he can restructure the business economically.The relationship between redundancy and unfair dismissal can be thought of along a spectrum between flexibility and job security:At one end, the Court might find that the business is under a need to restructure the business and therefore the dismissal will be fair. However, more recently the court has moved to the moderate middle ground. Court finds that there is a redundancy situation, and therefore they are entitled to a redundancy payment, but because it is a redundancy they cannot bring an unfair dismissal to access the higher compensatory award.Employee may argue that he has been dismissed for a non-redundancy reason. Tricky argument as the reason for dismissal still may fall within the very broad SOSR and as he has removed himself from the redundancy ground he won't be entitled to a redundancy payment. Alternatively, an employee might argue that, even if this is a redundancy situation, he was unfairly selected/the criteria used for selection was unfair/there was no consultation. These procedural defects give access to higher unfair dismissal compensation.
? B. The 7 Redundancy CriteriaAccording to statute:s.135(1) ERA 1996: An employer shall pay a redundancy payment to any employee of his if the employee:
? (a) is dismissed by the employer by reason of redundancy, or
? (b) is eligible for a redundancy payment by reason of being laid-off or kept on short time (ss.147-8).Our focus is on the former rather than the latter.An employee is dismissed as redundant provided the following criteria are satisfied:1. Employee2. Satisfying the qualifying period (s.155): 2 years3. Dismissed (s.136):
? Redundancy is presumed to be the reason unless the contrary is proved by the employer (s.163(2)):
? Wilcox v. Hastings  IRLR 298: An example of s.163(2) in action. Mr W and Mr L were originally employed by Mr W's father. The only other employee was a part-timer. The business was sold to Mr H and Mrs H, who planned to work in it and therefore to run the business with the same number of workers they needed only two employees, one full-time and one part-time. Both Mr L and Mr W were dismissed as Mr H intended to employ his son as a full time employee. They applied to the tribunal for redundancy payments. EAT Held: As the need for one full-time employee and the fact that the proprietor wished to employ his son were equal reasons appertaining to both applicants dismissals, there was no dismissal wholly or mainly by reason of redundancy. CA Held: This was the incorrect approach; the EAT had ignored [s163(2)] which stated that it is presumed that the employees had been dismissed by reason of redundancy and it was for the employer to prove a contrary reason.
? Birch v. Liverpool University  ICR 470: Voluntary redundancy / early retirement falls outside statutory concept of dismissal so employees have no claim for statutory redundancy pay. Employer, forced by economic circumstances to make a substantial reduction in its staff, issued a series of circular letters inviting its employees to take advantage of an early retirement scheme. Under the scheme, which was advertised as not a redundancy scheme, any application for early retirement was subject to final approval by the employer. Two employees applied and the employer formally requested their retirement on a particular date. The employees subsequently claimed redundancy payments. EAT Held: The employment contract had been terminated by mutual consent and there had been no dismissal. CA Held: Agreed: There would be a dismissal where there was a unilateral termination of the contract of employment, with or without the consent of the employee. However, the court should look at the substance rather than the form of the transactions between the parties.
? Pfaffinger v. City of Liverpool Community College  IRLR 508: Fixed term contracts. EAT Held: An employee who was employed on a succession of FTCs, was dismissed for redundancy on the expiry of each of those contracts - That is the combined effect of the unfair dismissal rules and redundancy.4. For reasons wholly or mainly attributable (s.139(1)):
? Therefore must be a causal link between the dismissal and the redundancy situation:
? Baxter v. Limb Group of Companies  IRLR 572: No dismissal on ground pf redundancy where dock workers had been dismissed as a result of industrial action - Rather than replacing those workers, their work had been given to other companies in the same group.
? Fish v. Glen Golf Club  UKEAT 0057_11_2310 (23 October 2012): Redundancy can be a reason for dismissal even where there were other reasons for the dismissal, such as capability or conduct. Financial constraints forced the employer to do away with the employee's position. Employee argued redundancy was a pretence for terminating his employment and alleged the real reason was that his employer disliked him, and doubted his abilities. EAT Held: The court had to decide what the 'principal reason' was for dismissal. On the facts it was for redundancy, even though ancillary reasons existed.
? Hindle v. Percival Boats Ltd  1 WLR 174: Lord Denning partial dissent.5. To redundancy (see below) (s.139(1)(a)-(b)):
? (a) cessation of business; or (b) diminishing requirements;6. No offer of suitable alternative employment is made (s.138);7. The employee is not excluded (ss.140-143).NB: these requirements serve two functions:(a) they are gateways to redundancy compensation; and(b) they are gateways to a potentially fair dismissal (on the grounds of redundancy, albeit that the applicant can claim unfairness in selection, making the dismissal potentially unfair, giving access to higher compensation).
? C. The Definition of Redundancy1. Introduction
? s.139(1) ERA: For the purposes of this Act an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to(a) the fact that his employer has ceased or intends to cease(i) to carry on the business for the purposes of which the employee was employed by him, or (ii) to carry on that business in the place where the employee was so employed, or (b) the fact that requirements of that business(i) for employees to carry out work of a particular kind,
(ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer has ceased or diminished or are expected to cease or diminishThis embraces three ideas:
? 1. the business disappears permanently or temporarily (s.139(1)(a)(i));
? 2. the employee's workplace disappears (s.139(1)(a)(ii)); and
? 3. the job disappears (s.139(1)(b)) - either generally or just in the place where the applicant was employed.Note the definition of redundancy for the purposes of redundancy consultation:
? s.195 TULR(C)A 1992: In this chapter, references to dismissal as redundant are references to a dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related
? GMB v. Man Truck & Bus UK  IRLR 636: Illustration of the breadth of this definition in s.195: It does not merely apply when jobs or workers are lost, but also where on the facts of this case an employer sought to harmonise the terms and conditions of employment of two groups of employees by terminating the employees' contracts of employment and offering fresh employment on new terms following a merger.
2. Criteria for redundancy payment
? For the purposes of a redundancy payment the criteria are:
????????2.1 Total cessation of the employer's business (disappearing business)
? s.139(1)(a) the fact that his employer has ceased or intends to cease?
(i) to carry on the business for the purposes of which the employee was employed by him, (...)
??????Business includes any trade or profession or activity carried on by a body of persons. It is not necessary to show that the employer owns the business in question to succeed in claiming a payment on its closure.
????????2.2 Cessation of business at place of employment (disappearing workplace)
? s.139(1)(a) the fact that his employer has ceased or intends to cease - [...](ii) to carry on that business in the place where the employee was so employed.
??????Merely requires the place of work for the employee to close down. Does not mean that the employer must stop trading altogether.
??????Meaning of the place: geographic test (physical place of work) v. contractual test (any place where the employee could be required to work under the contract) - Consequence of the latter test was that if the employee could be regarded as being required to work in different places at his employers instruction, if he didn't he could be sacked for misconduct as opposed to redundancy:
? UK Atomic Energy Authority v. Claydon  IRLR 6: Employees terms and conditions required him to work at any other establishment. He refused to move to new location and was dismissed. Held: Accepter employer's argument that the need for employees had not ceased in the placed where he was employed because he was obliged to work anywhere under the terms of the contract. Found that the employee's refusal to work in another office amounted to disobedience; employee was therefore fairly dismissed for misconduct and was not entitled to compensation.
? Bass Leisure Ltd v. Thomas  IRLR 104: Departure from contractual and return to geographical. Thomas was based at the Coventry depot. Her job was to travel round the area and collect money from fruit machines. The employer wanted to close the depot but wanted Thomas to move to the North East Birmingham depot: Her clause contained a contractual mobility clause. She tried to work from the requested location, but it took too long to commute. She resigned and claimed constructive dismissal. EAT Held: She had been constructively dismissed by reason of redundancy. Her place of employed had closed. The offer of work at the alternative depot was not suitable alternative employment. Said the place of employment is:"to be established by a factual enquiry, taking into account the employee's fixed or changing place or places of work and any contractual terms which go to evidence or define the place of employment and its extent, but not those (if any) which make provision for the employee to be transferred to another".
? High Table v Horst  IRLR 513: The place where employee employed is to be determined by "a consideration of the factual circumstances which obtained until the dismissal". Approved the Bass Leisure Test. Silver-service waitresses' terms of employment contained mobility clauses, but in practice the applicants had worked for one particular client, Hill Samuel, from 10am to 4pm on weekdays for a number of years. In 1993, cuts in Hill Samuel's budget necessitated a re-organisation which resulted in the need for fewer waitresses working longer hours, and the applicants were dismissed. CA Held: The applicants were redundant. Rejected the argument that 'the place where the employer was so employed' extended to every place where the employee could be required to work. Peter Gibson LJ: The question of where the employee was employed was a question "to be answered primarily by a consideration of the factual circumstances which obtained until dismissal." And "If an employee had worked in only one location under his contract of employment for the purposes of the employer's business, it defies common sense to widen the extent of the place where he was so employed, merely because of the existence of a mobility clause." Further "It would be unfortunate if the law were to encourage the inclusion of mobility clauses in contracts of employment to defeat genuine redundancy claims"
????????2.3 Diminution of the requirements of the business for the employees to carry out work of a particular kind (disappearing job)
? s.139(1)(b) the fact that requirements of that business?
(i) for employees to carry out work of a particular kind,(ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer has ceased or diminished or are expected to cease or diminish.
??????This is the most difficult category to define and courts often say that it is a question of fact or degree to be determined by the ET:
? Murphy v. Epsom College  IRLR 271:
??????Various tests have been developed to try to establish the meaning of the term:
? Employment security: Compensation awarded only if the employee has been dismissed and not when terms and conditions of employment have been varied:
? Job security: More far reaching; envisages compensation being available whenever the employee's particular job, on those particular terms, is no longer required. Even though the employee may have been offered alternative employment.
? Approaches (a) and (b) (function test and contract test) focus on diminution of work; approaches (c) and (d) (Safeway /
Murray) focus on diminution of the need for the employee.
??????(a) The Function Test
? This focuses on the need of the employers for the particular work: an employee is not redundant if the essential tasks remain the same, even though other terms and conditions may change.Vaux and Associated Breweries v. Ward (1968) 3 ITR 385: Bunny girls case;Chapman v. Goonvean and Rostowrack China Clay Ltd  1 WLR 678: Employer provided seven employees with a bus that was used to take them to work. This became too expensive and the bus service was cut and local workers employed instead. Employees sought to argue that they had been constructively dismissed for redundancy. CA Held: There had been no diminution in the employers requirements for employees doing work of that particular kind. All that had changed was one of the benefits that had previously given to the employees. Lord Denning MR: "it is very desirable, in the interests of efficiency, that employers should be able to propose changes in the terms of a man's employment for such reasons as these: so as to get rid of restrictive practices: or to induce higher output by piece of work or to cease to provide free transport at
an excessive cost" Buckley LJ: while "the employer must... justify his expectation by reference to objective circumstances relating to the commercial situation of his business and those commercial and economic conditions which exist generally, at the relevant time or which could then reasonable be anticipated in the future," there was "nothing in the language of the section to suggest that the employer should be treated as bound or likely to carry on his business in all, or indeed in any, respects in precisely the same way in which he was carrying it on at the time when the facts have to be considered."North Riding Garages v. Butterwick  2 QB 56: Manager of a garage dismissed following the introduction by new owners of different methods of working, which involved more paperwork and less engineering than previously. He claimed redundancy compensation. Held: The work remained essentially the same, since the vehicle workshop remained, as did the requirement for a workshop manager. Widgery J: For these purposes, "an employee who remains in the same kind of work is expected to adapt himself to new methods and techniques and cannot complain if his employer insists on higher standards of efficiency than those previously required". But if the new methods alter the nature of the work required to be done it may follow that no requirement remains for employees to do the work of the particular kind which had been superseded and that they are truly redundant.Hindle v. Percival Boats Ltd  1 WLR 17:Lesney Products Ltd v. Nolan  ICR 235: "[N]othing should be done to impair to ability of employers to reorganise their workforce and their terms and conditions of work so as to improve efficiency."
? Note the definition of redundancy for the purposes of redundancy consultation:s.195 TULR(C)A 1992: In this chapter references to dismissal as redundant are references to a dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related.
? The function test reinforces managerial prerogative: it enables the employer to reorganise his business without that falling within the definition of redundancy. If the job is not less (i.e. the quantum of work) but the method of doing is different or the terms are different this is not a redundancy situation.
? Further, as we have already seen work reorganisation would in principle fall within the heading of SOSR and therefore be a potentially fair dismissal. As a result there is no redundancy situation so the employee gets no redundancy pay or unfair dismissal compensation:Johnson v. Notts Combined Police Authority  IRLR 20: No redundancy since clerical work had not ceased or diminished even though there was no need for Cs to work their original hours.
??????(b) The Contract Test
? This focuses more strictly on the wording of individual contracts of employmentHadden v. Cowan  IRLR 314: Contract of employment contained a broad flexibility clause, under which the employer could reasonably call on the employee to perform any duties falling under his abilities. Employee argued under an unfair dismissal claim that he had not been made redundant due to the breadth of his duties: he could have been reemployed under a new contract of employment (this would entitle him to a higher award under unfair dismissal) CA: Appeared to adopt the "contract test": focusing on the work the employee could be required to do by contract. Only if all that worked diminished was there a redundancy.
? The effect of this decision was mitigated through flexible interpretation:Johnson v. Peabody Trust  IRLR 387: Johnson was a roofer. Contract of employment contained a clause that, where possible, he would carry out multi-trade work. The availability of roofing work declined and he was dismissed on the ground of redundancy. Question whether he truly was redundant in light of the multi-trade clause. Held: Notwithstanding Hadden, J was redundant. In reality he was employed as a roofer and there was undeniably a diminution of roofing work. The contract test does not mean that all, or any, of the work under the employees contract must vanish. Merely the work for which he was employed is sufficient.
??????(c) The Safeway v. Burrell Approach: the "kind of employee" test
? An EAT decision suggested that a rethink was necessary:Safeway v. Burrell  IRLR 200: Burrell was a manager at a petrol station. Employer reorganised and his post disappeared, and was replaced with a lower ranked, lower paid position. B did not want this post and was dismissed. Tribunal lay members applied the function test; found that there was no redundancy. Chairman applied the contract test, and found that there was a redundancy. EAT Held: Both approaches were flawed. The function test focused on a diminution of the work to be done rather than on a diminution in the requirements for employees to do that work. The contract test was wholly wrong since the terms of the employee's contract were wholly irrelevant. The correct question was whether the business needed fewer employees to do work of a particular kind and the correct approach was to ask whether the employer's requirements for employees to do work of a particular kind had ceased or diminished within a three stage enquiry:
????????1. Was the employee dismissed?
????????2. If so, had the requirements of the employer's business for employees to carry out work of a particular kind ceased or diminished or were they expected to cease or diminish?
????????3. If so, was the dismissal of the employee caused wholly or mainly by the state of affairs indicated at stage 2?
B was thus found to be redundant. This test suggests that had the contract of employment's terms had been merely varied, this would not have been a redundancy. This is subject to the exception where the terms are varied to such an extent that the role changes substantially.
? This still leaves the question open: what work? The statute says "work of a particular kind":Safeway v. Burrell  IRLR 200: Seems to suggest the emphasis is on job security as opposed to employment security. This suggests that where employees are replaced by others with different skills this is a redundancy situation.Murphy v. Epsom College  IRLR 271: Example of situation described in Safeway. Plumber was tasked to maintain heating installations, which were replaced, meaning he was not qualified to maintain them. Employer employed a new resident heating engineer and dismissed M. CA Held: Dismissal was due to redundancy; employment of resident engineer for particular type of work reduced the demand for plumbing work which M was able to do
??????(d) The Murray v. Foyle Meats Approach
? "Bumping" describes where a positions disappears and that employee is transferred to another position which 'bumps' another out of a job. Question whether the bumped employee can claim a redundancy payment. Murray approach makes it easier for the bumped employee to claim a redundancy payment.Murray v. Foyle Meats  IRLR 562: Meat operatives at a slaughter house could be required contractually to work elsewhere in the factory. Decline in business resulted in need to reduce the number of skilled slaughterers. Applicants claimed they had been unfairly dismissed. Employers argued the dismissals were wholly attributable to the fact that the requirements of the business for employees to work on the slaughtering line had diminished (and thus fell within para (b)). Applicants argued for the contractual approach: because all employees were engaged on similar terms no distinction could be made between those who worked in the slaughter hall and those who worked elsewhere in the factory. HL Held: The correct approach is to ask what the workers actually did, not what they were contracted to do. The key word in the statute was "attributable". Both the contract test and the function test miss that point. The dismissal of an applicant who could perfectly well have been redeployed or was doing work unaffected by the fall in demand may require some explanation to establish the necessary causal connection, but there is no reason in law why that dismissal should not be attributable to the
diminution of needs. Lord Irvine: "para. (b) is in my view simplicity itself. It asks two questions of fact. The first is whether one or other of various states of economic affairs exists. In this case, the relevant one is whether the requirements of the business for employees to carry out work of a particular kind have diminished. The second question is whether the dismissal is attributable wholly or mainly, to that state of affairs. This is a question of causation.".
? Thus, the question is whether there is a reduced need for employees generally. This approach is rather easy to satisfy (therefore limiting access to higher damages for unfair dismissal), but seems to negate the importance of the inclusion of 'work of a particular kind' in the statute.Packman t/a Packman Lucas Associates v. Fauchon UKEAT/0017/12: Employer suffered downturn and bought software which reduced the number of hours his bookkeeper needed to work. Employer sought to persuade the C to reduce her contracted hours significantly but C refused and she was given notice of dismissal. ET Held: The reason for the dismissal was redundancy, rejecting the assertion following Aylward that because there had been no reduction in the number of employees required (C still being required, just on shorter hours), there could be no redundancy situation. EAT Held: Aylward could not be followed as it was inconsistent with the CA and was based on a misunderstanding of Peter Clarke J in Safeway v Burrell:"... essentially, there may be situations, as Denning MR recognised in Johnson, in which the needs of the employer's business are for fewer employees to do the same amount of work. If employees are dismissed for that reason, they are dismissed by reason of redundancy. But if the amount of work available for the same number of employees is reduced, then, again, as it seems to us, a dismissal of an employee caused wholly or mainly for that reason is also a redundancy. If there is, as in Johnson and Lesney, just as much work for just as many employees, then a dismissal arising out of the situation said to give rise to that would not be for redundancy, because there would be no reduction in the requirements of the business for employees to carry out work of a particular kind. The change to a workforce that may produce a situation such as we have described may arise out of increased efficiency, or decreased production for whatever reason, or a combination of the two; mechanisation, new systems of work, reorganisation, or increased productivity per head may create a need to reduce the workforce. A change to the amount of work because of a shortfall in orders, for instance, might lead to a change in the need for employees to carry out work of that particular kind.
????????... The cases of Johnson and Lesney are decided as they were because the hours and the employees were both no different; this situation is one in which on the facts the hours that the business required to be worked were fewer, and therefore this case sits within the definition of redundancy just as those cases did not."Gimber and Sons v. Spurrelt (1967) 2 ITR 308:Church v. West Lancashire NHS Trust  IRLR 4: Pre-dates Murray. Concerns bumping. Mr Justice Morrison took a stricter view than in Safeway. Held: Work of a particular kind is 'work of a particular kind which the employee was employed to do'. If we apply this test, given that there is no reduction in the amount of work the bumped employee is required to do, therefore he should not be entitled to a redundancy payment.
? How do these case square with Murray v. Foyle Meats  IRLR 562?
????????2.4 Diminution of the requirements of the business for the employees to carry out work of a particular kind in the place where the employee was so employed by the employer
??????s.139(1)(b)(ii): See case law on s.139(1)(a)(ii):
? Bass Leisure Ltd v. Thomas  IRLR 104: Said principles must be the same. See section 2.2 above. D. Offer of New Employment1. The Rules
??????? s.138(1): the employee will not be regarded as dismissed where the employee's:
?????? contract of employment is renewed; or
?????? he is re-engaged under a new contract of employment; and
?????? offer is made before the end of his employment under the old contract; and
?????? the renewal or re-engagement takes effect immediately or within 4 weeks of the end of the old contract.
??????? s.139(4): The definition of dismissal is given a special extension, for the purposes of redundancy compensation only, to cover cases of 'implied or constructive termination of contract.' This means there is a dismissal, where:
?????? (a) an act on the part of an employer, or
?????? (b) any event affecting an employer (including, in the case of an individual, his death) operates to terminate the contract of employment.
? This dismissal will be deemed to be for redundancy of the employee is not then reemployed for a reason which falls under s139(1).
??????? s.146(1) references to renewal or re-engagement apply to re-engagement by an employer or associated employer
?????? If the employee accepts the new job offered he retains continuity of service, even if the terms and conditions are changed, provided that the offer was made before the end of the previous employment.2. Trial Period
?????? s.138(2): If the provisions of the renewed contract or the new contract differ (wholly or in part) from the corresponding provisions of the old contract as to
? (1) the capacity in which the employee is employed; or
? (2) the place in which the employee is employed; or
? (3) other terms and conditions
?????? then the employee has a trial period of four weeks (or longer if agreed) to test the new terms
??????? During the trial period the employee can decide whether he or she likes the new job. If, during that 4 week period, the employee terminates the renewed or the new contract for whatever reason the employee is treated as being dismissed for reasons of redundancy (s.138(2)(b)(i)).
??????? Alternatively, the employer can terminate the renewed or new contract if he can show a reason connected with the change of terms and the employee is then treated as dismissed for reasons of redundancy (s.138(2)(b)(ii)).
??????? However, the employee will not be entitled to a redundancy payment where, during the trial period of a contract on different terms, he unreasonably terminates the contract and the employment is suitable for him.3. Refusal of the Job Offer
?????? In this situation it is necessary to look to see if the terms differed from the old contract.
????????3.1 Terms do not differ from the old contract
??????In this case the tribunal must decide whether his refusal was unreasonable (s.141(3)(a)).
??????The employee is not entitled to a redundancy payment where he unreasonably refuses the offer (s.141(2)).
????????3.2 Terms do differ from the old contract
??????In this case the employer must show that the offer was one of suitable alternative employment and that the employee and that the employee was unreasonable in refusing it. (s.141(3)(b)).
??????In other words it is a two stage test. In this case the employee is not entitled to a redundancy payment where he unreasonably refuses the offer (s.141(2)).
??????As far as suitability is concerned, suitability is a question of fact in every case and the appeal courts are reluctant to interfere with the trial judge's assessment except in exceptional cases.
? Carron v. Robertson (1967) 2 ITR 484: Court gave some guidance as to what constitutes suitability: account must be taken of the nature of the work, hours and pay and the employee's strength, training, ability, experience and status in the premises of the employer.
? Taylor v. Kent County Council  2 QB 560: Demonstrates the importance of status: not suitable alternative employment to offer a headmaster a post in pool of mobile staff even on same rate of pay.
??????As far as reasonableness is concerned, the employer must show that the employee's rejection of a suitable offer was unreasonable.
? James and Jones v. NCB (1969) 4 ITR 70: Tribunals can take into account the existence of other employment but not the fact that the job might not always be there because the industry is declining.
? Thomas Wragg & Sons Ltd v Wood  ICR 313: EAT Held: They could take into account the fact that the offer was made late in the day; the employee had already accepted other work by that date; and the fact that the employee had a fear of continuing to work in a declining industry. E. Disqualification from a Redundancy PaymentThe following two disqualifications are of particular importance:(1) Employer could terminate employment for reason of misconduct (s.140(1) ERA)
??????? The misconduct must lead to dismissal without notice or with reduced notice. This is an odd provision because if the employee can be dismissed for misconduct then he is not dismissed for redundancy. But if the employee takes part in a strike during the period of notice and then the employer terminates the contract for that reason he is not disqualified from receiving a redundancy payment (s.140(2))(2) If the employee is under notice of redundancy and then gives noticeThe employee wishes to leave earlier because, for example, he or she has another job. The employee may give notice. If the employer contests this then he can request the employee to withdraw the notice and then warn him that he will contest the redundancy payment. However, the employee may still receive some payment if an employment tribunal concludes that 'having regard to - (a) the reasons for which the employee seeks to leave the employment, and (b) the reasons for which the employer requires him to continue in it" it is just and equitable that he or she should receive the whole or part of the redundancy payment to which he or she would otherwise be entitled, (s142). F. Calculation of a Redundancy PaymentRedundancy pay is calculated according to pay and length of service. Redundancy compensation is calculated according to a week's pay x multiplier. That multiplier is:
??????? 1.5 - every year the employee was 41 or over1 - every year during which the employee is 22-400.5 - every year the employee is between 18 and 21There is a statutory maximum on compensation of PS475 per week and a maximum of 20 years' employment can be taken into account. Consequently the maximum amount of statutory redundancy pay is currently PS14,250. G. Unfair Dismissal and Redundancy1. IntroductionAs we have already seen, s.98(2)(c) ERA 1996 provides that if dismissal is on the grounds of redundancy then the employee will, in principle, be entitled to a redundancy payment but no unfair dismissal compensation because redundancy is a potentially fair reason.However, an employee may claim unfair dismissal (nb. superior remedies) for one of two reasons:
? (1) Method of selection makes the dismissal automatically unfair (e.g. s.105 ERA 1996 pregnancy, health and safety, protected shop worker, trustee of occupational pension scheme, employee representatives, assertion of statutory right, trade union or non-union membership; or
? ????? (2) Dismissal was unreasonable within the meaning of s.98(4)-(6)We shall consider the second of these reasons, which may take one of two forms:
? (a) unfairness in the system of selection, including criteria and consultation; or
? (b) unfairness in the manner in which the system is applied.The fairness of the selection process was emphasised by the EAT:
? Williams v. Compair Maxim  IRLR 83: Employer cut stuff after a dramatic fall in orders. Asked managers to pick a viable team to continue. Managers did so on personal preference. Trade Unions were not consulted. Dismissed employees, who received quite generous redundancy payments, claimed unfair dismissal on the grounds of unfair selection. EAT laid down guidelines as to what constituted good practice in redundancy:
? (1) The employer will seek to give as much warning as possible of impending redundancies so as to enable the union and employees who may be affected to take early steps to inform themselves of the relevant facts, consider possible alternative solutions and, if necessary, find alternative employment ...;
? (2) The employer will consult with the union as to the best means by which the desired management result can be achieved fairly and with as little hardship to the employees as possible. In particular the employer will seek to agree with the union the criteria to be applied in selecting employees to be made redundant;
? (3) Whether or not an agreement as to the criteria to be adopted has been agreed with the union the employer will seek to establish the criteria for selection which so far as possible do not depend solely upon the opinion of the person making the selection but can be objectively checked against such things as attendance record, efficiency at the job, experience or length of service;
? (4) The employer will seek to ensure that the selection is made fairly in accordance with these criteria and will consider any representations the union may make as to such selection;
? (5) The employer will seek to see whether instead of dismissing an employee he could offer him alternative employment.2. Fairness of the System of Selection
??????? 2.1 Choice of Criteria
?????? The employer cannot select employees for redundancy unfairly but must rely on objective factors such as LIFO, efficiency or suitability:
? Williams v. Compair Maxim  IRLR 83.
??????? 2.2 Fairness in the Manner in which the Criteria are applied: Transparency
?????? For the correct operation of the selection criteria it is important for the employee to know of the points awarded or the assessment given to those who were not selected for redundancy.
? Eaton v King  IRLR 75: Held that it is not necessary for those awarding points to give evidence to support their marking;
? John Brown Engineering v. Brown  IRLR 90: Employees were selected for redundancy according to a point system based on criteria which had been discussed with their union representatives. After carrying out the assessments, the employers decided to not disclose the actual markets either to the individual employees or the union. Although there was an appeals procedure, employees thus had no material on which to challenge selection. ET Held: The appeals procedure was a sham, there had been no consultation with the individuals concerned and the dismissals were unfair. Employers argued they were not obliged to give the marks that had been used to select employees for redundancy since once a fair process for selection had been agreed or embarked upon without objection, the need
?for individual consultation as to how it was being put in place was dispelled. EAT Held: It might lead to individual unfairness if employees or their representatives cannot contest their selection:" What is important to recognise at once is... individual consultation is [not] essential ... in each case what is required is a fair process, where an opportunity to contest the selection of each individual is available to the individual employee, who can nevertheless achieve that opportunity through his trade union. Lack of consultation implies a loss of opportunity, not that the opportunity if given would have made necessarily any difference. Obviously individual consultation is the easiest way to assert even-handedness on the part of the employer, but we would not wish to suggest that it is necessarily required in every case. On the other hand, a policy decision to withhold all markings in a particular selection process may result in individual unfairness if no opportunity is thereafter given to the individual to know how he has been assessed. We recognise it may be invidious to publish the whole identified 'league tables', but in choosing not to do so the employer must run the risk that he is not acting fairly in respect of individual employees. It also has to be reasserted that it is no part of the industrial tribunal's role, in the context of redundancy, to examine the marking process as a matter of criteria under a microscope; nor to determine whether, intrinsically, it was properly operated. At the end of the day, the only issue is whether or not the employers treated their employees in a fair and even-handed manner
? British Aerospace v. Green  IRLR 433: The courts are reluctant to get involved in a detailed assessment of how the system is being applied.
3. Fairness of the System of Selection: Consultation
??????? The general principle is an employer will not normally act reasonably in a case of redundancy unless he warns or consults any employees affected or their representatives. The authorities were reviewed in:
?????? Mugford v. Midland Bank  IRLR 208: Manager of branch dismissed as part of substantial restructuring exercising resulting in 3,000 redundancies. There had been no consultation with the employee before the decision to identify him for redundancy had been finally taken. EAT Held: the dismissal was fair on the facts, since there had been consultation with the recognised union throughout and consultation was available to the employee following his selection and he had sought to avail himself of it. They took into account other factors which weighted in favour of finding a fair dismissal, namely that the selection criteria were reasonable and had been reasonably applied in the employee's case, and that the employers had taken reasonable steps to him alternative employment. Clark J:
? "(1) Where no consultation about redundancy has taken place with either the trade union or the employee the dismissal will normally be unfair, unless the tribunal finds that a reasonable employer would have concluded that consultation would be an utterly futile exercise in the particular circumstances of the case;
? (2) consultation with the trade union over selection criteria does not of itself release the employer from considering with the employee individually his being identified for redundancy;
? (3) it will be a question of fact and degree for the tribunal to consider whether consultation with the individual and/or his union was so inadequate as to render the dismissal unfair. A lack of consultation in any particular respect will not automatically lead to that result. The overall picture must be viewed by the tribunal up to the date of termination to ascertain whether the employer has or has not acted reasonably in dismissing the employee on grounds of redundancy".
?????? King v. Eaton  IRLR 199: Court of Session found that meetings with trade unions do not in themselves suffice to show that there has been fair consultation in advance of redundancies.
??????? The test to be applied is that laid down by:
?????? R v. British Coal Corporation, ex parte Price  IRLR 72: Glidewell LJ:
? consultation when the proposals are still at their formative stage
? adequate information on which to respond
? adequate time in which to respond
? conscientious consideration by an authority of a response to consultation.
??????? In addition, where 20 or more employees are dismissed the employer must consult with the recognised trade union or, in the absence of a recognised trade union with elected employee representatives (s.188 TULR(C)A)
?????? NB The definition of redundancy is that found in s.195 TULR(C)A 1995 (as discussed above).
??????? Note the impact of EU Law in this area:
?????? Directive 75/129 (now Directive 98/59) on Collective Redundancies: From 6 April 2013, when an employer proposes a collective redundancy, the 90-day minimum consultation period has been reduced to either 30 days for all collective redundancies or 45 days for planned redundancies of 100 or more employees.
??????? The provision used to read that the employer was obliged to consult with an authorised representative of a recognised trade union. However, if the employer did not recognise a trade union or had de-recognised a trade union, it could avoid the obligation to consult.
?????? Case C-383/92 Commission v. UK  IRLR 412: CJEU Held: Incorrect implementation of Directive.
??????? This led to the enactment of SI 1995/2587 below:
?????? The Collective Redundancies and Transfer of Undertakings Regulations 1995:
? Which extended the definition of those who must be consulted to "employee representatives elected by them", now amended by SI 1999/1925.
? The overriding duty on an employer when proposing to dismissal an employee for reasons of redundancy was consultation with the union or the worker representatives at the earliest possible opportunity. The SI then talked of consultation beginning "in good time".
?????? The Collective Redundancies Amendment Regulations 2006
? Implement the European Court of Justice's decision in Junk v. Kuhnel by amending s.193 TULRCA
? Made it clear that the Secretary of State must be notified of proposed collective redundancies 30 days before notice is given to any of the relevant employees.
? The consultation must take place even if the employer thinks that it would make no practical difference. Failure to consult leads to a protective award.
??????? Note also the private members' Notification of Redundancy Bill 2006 which, would have made it a criminal offence for an administrator of an insolvent company to issue notices of redundancy to the workforce without first having consulted with the employees about the management of the company's affairs and subsequently waited for a month.
2. TRANSFER OF UNDERTAKINGSParadigm example is where one business sells their business to another. Question in labour law is what happens to the staff of the vendor business.
? A. Sources of Business Transfer Law1. The Common LawAt common law, where the business of one employer is sold to another, there is no automatic novation or transfer of contracts of employment. Employment is regarded as personal contract.
? Nokes v. Doncaster Amalgamated Collieries  AC 1014: Lord Atkin described the principle of consent as "ingrained in the personal status of a citizen under our laws".Freedom and privity of contract have two relevant ramifications:
? (1) an employee cannot be transferred from one employer to another without the consent of that employee; and
Buy the full version of these notes or essay plans and more in our Labour Law Notes.