UK: EAT ruling suggests employers should consider general workforce consultation at a formative stage of all redundancy proposals, regardless of scale and union/other representation

An employer should consider whether to consult at a workforce level at a formative stage of all redundancy proposals, regardless of numbers (and therefore whether the collective consultation obligations apply) and whether there is union or other existing employee representation.  Employers unable to show good reasons why they have decided not to consult at this stage risk claims from individuals (with at least two years' service) that this renders their redundancy dismissal unfair.

Update November 2024: the employer successfully appealed this decision at the Court of Appeal - see our blog post here. 

A fair redundancy requires employers to act within the range of reasonable responses, informed by acceptable industrial relations behaviour.  Where 20 or more dismissals are proposed within a 90 day period, collective consultation obligations apply (under TULRCA) requiring the employer to consult with union or employee representatives about ways of avoiding or minimising the number of dismissals and mitigating the consequences. Consultation should take place at a formative stage, and will usually also cover the proposed selection criteria.  The representatives must be given adequate information and time to respond and their response must be genuinely considered by the employer. This should normally be followed by consultation with the individuals provisionally selected for redundancy, over the application of the selection criteria to them and the availability of suitable alternative jobs within the employer and the wider corporate group (if any).  A breach of the collective consultation obligations can (but will not automatically) mean that any individual redundancy dismissal is unfair;  the same goes for a failure to then consult the individual over their selection and alternative jobs.

The caselaw suggests that, for small scale redundancies where the collective consultation obligations do not apply, normally an employer should still consult at a formative stage with existing union or appropriate employee representatives, as a failure to do so could be deemed unreasonable, and this will certainly make sense from an industrial relations perspective.  But what if the workforce is unrepresented?  Should an employer consult in some way with individual employees at a formative stage of the proposals (and so prior to the selection of at-risk individuals) about the workforce level issues, such as ways of minimising dismissals or choice of selection criteria?  The EAT in Joseph De Bank Haycocks v ADP RPO UK Ltd has held that, unless there is good reason why not, the employer should.

The EAT considered that what amounts to good industrial relations practice has changed in recent years due to the reduction in union membership in the private sector.  Consultation at a formative stage is important for all workforces, to allow input on the broader issues such as ways to avoid or minimise the number of dismissals.  The implication of reduced union representation is that consultation at this formative stage must now be a requirement of good practice in unrepresented workplaces too.  The EAT did not wish to prescribe any particular form of workforce consultation, though noted that this could involve large-scale workforce meetings. This would normally then be followed by individual consultation with those provisionally selected about the impact of the proposals on them personally.  The EAT acknowledged that an employer's decision not to carry out general workforce consultation would not always render a dismissal unfair, but the employer would need to be ready to show why its decision was reasonable in the particular circumstances (for example, if it could establish consultation would have been futile).

In this case, workforce consultation over the proposed selection criteria would seemingly have made a difference.  Entirely subjective criteria had been provided by the US parent company of the employer.  The EAT noted that it is increasingly common for there to be an international element in the corporate structure of UK employers and considered that this also impacts on what is good industrial relations practice, given that practices will vary significantly in different countries.  It would not be good industrial relations to use a tool which is unusual in the UK simply because a global company has used it effectively in a different country.  Here, consultation at a workforce level might have identified the differences in national good practice so that the employer could have taken this into account and included more objective criteria.  The employer did not appear to have any good reason to omit workforce level consultation (the EAT intimated that time pressure might be one such reason, not relevant here), and this rendered the dismissal unfair.

Although the employer had heard the claimant's internal appeal against his selection, the EAT ruled that an appeal can only cure failures in the individual consultation process;  it cannot repair the lack of workforce consultation at the formative stage.

The ruling emphasises the need for employers to consider carefully whether they can provide some opportunity for workforce input on possible ways of minimising the impact of a redundancy situation and on the choice of selection criteria, prior to the provisional selection of and consultation with at-risk individuals.  Options other than workforce meetings could be reasonable depending on the circumstances.  For example, communications to the redundancy selection pool about the redundancy proposals and intended selection criteria could expressly invite comment through a designated channel (with comments then being genuinely considered and responded to in some way).  This will not always be a necessary component of a reasonable and fair process, but it will be prudent to have a paper trail showing consideration of the issue and good reasons, if deciding against.   The ruling also reminds global employers than what works in one country will not necessary work in another.