Redundancy

The recent case of Fulcrum Pharma (Europe) Ltd v Bonassera has highlighted the need for employers to give careful thought to selecting which employees should be included in a redundancy pool and to fully consider issues of “bumping” when consulting with affected employees.

Typically, there is a redundancy situation where the employer has a reduced requirement for employees to carry out work of a particular kind.

Redundancy is a potentially fair reason for dismissal. Whether a redundancy dismissal is actually fair depends on whether the decision falls within the range of reasonable responses that a reasonable employer in those circumstances and in that business might have adopted.

An employer should:

  •  Warn and consult any affected employees (or their representatives);
  • Adopt a fair basis on which to select for redundancy; and
  • Take such steps as may be reasonable to avoid or minimise redundancy by redeploying potentially redundant employees within its own organisation.

Clearly, the employer also has to decide which employees should be included in the redundancy selection pool and the Fulcrum case illustrates one of the pitfalls for the unwary.

The employer in this case placed a Human Resources Manager in a pool of one and made her redundant without considering whether her assistant, a Human Resources Executive, should also have been included in the pool. The Employment Appeal Tribunal stopped short of ruling that the pool should definitely have included both employees but they upheld the Employment Tribunal’s finding of unfair dismissal on the grounds that the employer had failed to properly consider the possibility.

In addition, the HR Manager was not asked whether she would consider the more junior (and lower paid) HR Executive position if she was offered it. This failure to raise the question of “bumping” was held to amount to a failure to properly consult with the employee, another ground for a finding of unfair dismissal.

Two obvious changes to redundancy procedure suggest themselves to avoid falling into the same trap as Fulcrum Pharma:

1.       Include a brief explanation of how and why the redundancy pool has been identified when warning affected employees (preferably in writing) that they are at risk of redundancy and be prepared to discuss the issue in consultation.

2.       When consulting with senior employees, always ask them whether they would be willing to accept a relevant junior position if offered, regardless of whether the junior role is in the selection pool or not. There may be very good reasons (e.g. experience or a particular expertise) why you will choose not to “bump” the junior employee but the question should always be considered.

If you are considering redundancies, don’t risk making expensive mistakes: talk to our employment law experts first – commercial@blasermills.co.uk