UK: Court of Appeal rules that general workforce consultation is not mandatory for small-scale redundancies, overruling EAT

The Court of Appeal has overturned the EAT's controversial decision in De Bank Haycocks v ADP RPO UK Ltd, ruling that where statutory obligations to consult union or employee representatives over collective redundancies do not apply (ie, in individual or small-scale redundancies, of fewer than 20 employees at one establishment within a 90 day period), a dismissal made without first consulting relevant employees as a group, prior to selection of at-risk employees, could still be fair (depending on all the facts).

Previous case law has established that an unexplained departure from good industrial relations practice on redundancy consultation is likely to render a dismissal unfair.  The EAT in this case held that good industrial relations practice involves ‘general workforce consultation’ at a formative stage of the process, including for small-scale redundancies in non-unionised workplaces.  The Court of Appeal firmly rejected this idea, not least because a group of individual employees would have no mandate to represent the views of the group as a whole, only their own individual views. The Court considered that the EAT was in essence attempting to fill the gap in the application of the statutory collective consultation requirements, and any gap in the statutory requirements should more properly be addressed by legislation.

However, this does not mean that a non-unionised employer carrying out small-scale redundancies need only consult individuals over their own selection and suitable vacancies.  The Court made clear that, where there are no obligations to consult with union or employee representatives, consultation with the individual employees should normally allow them to express their views on issues which are common to the group (such as ways of avoiding or reducing dismissals, the selection pool and selection criteria) in addition to those issues specific to their individual position.  While group meetings may sometimes be helpful alongside individual consultation, they are not mandatory and the fairness of any subsequent dismissals will depend on the facts as a whole. 

This also means that a failure to allow an individual to express views on group issues could theoretically be remedied at an internal appeal, provided the employer can show it still had an open mind and would have been prepared to re-do the redundancy process should the individual persuade it that the process was flawed.  The need for consultation to take place when the redundancy proposals are 'at a formative stage' does not mean that it must begin once the proposal is formulated, rather that it must take place at a point when the employee can realistically still influence the decision.  If it takes place at a later stage, it will be harder (but not necessarily impossible) to show that the decision-maker has not closed their mind and consultation is adequate.

In this case the consultation with at risk individuals took place after they had been scored against criteria and provisionally selected.  The consultation did not cover the choice of criteria or scores (these were not provided to the claimant until the internal appeal), but did cover the business rationale for the redundancies, an opportunity to suggest alternative approaches, and suitable alternatives.   Although it would have been good practice to allow the individuals to comment on the selection criteria before scoring them, the tribunal had found that the employer had conducted a conscientious internal appeal covering the claimant's score and concluded that the employer would have been prepared to re-do the selection had it been persuaded that the criteria were flawed.  The Court of Appeal found no error in the tribunal's conclusion that, viewed overall, the redundancy process was fair.

The decision is a welcome relief for employers unenthusiastic about having to raise the prospect of redundancies with (and therefore unsettling) a large group of employees in a selection pool when only a few redundancies are to be made.  However, employers should consider whether, depending on the facts, it is appropriate to provide individual employees with an opportunity to comment on group issues (such as the rationale, the possibility of avoiding or mitigating redundancies, and the selection pool and criteria).  The Court stated that employers should not simply assume that the employees will have nothing useful to contribute on common issues. If such consultation is appropriate and unless there is good reason to wait, it should ideally start before individuals are scored and provisionally selected, but a failure to do so will not inevitably mean a subsequent dismissal is unfair as long as the employer remains genuinely open minded about re-doing the exercise based on feedback from the consultation.  Providing a right of appeal, though not obligatory, can provide a useful opportunity to correct any defects in the consultation process.

The Employment Rights Bill proposes significant changes to collective redundancy consultation obligations.  The threshold for consultation is to be applied to the aggregate number of proposed dismissals across all of an employer's sites and the remedies available for breach may also be enhanced (currently subject to consultation), while future changes including doubling the minimum consultation period have also been floated.  The government has not suggested legislating to extend statutory collective consultation obligations to smaller-scale redundancies – yet.