How to Conduct a Fair Redundancy Exercise – Guideline EAT Ruling

A redundancy process in which a decision to dismiss is effectively taken in advance of consulting an affected employee will almost never be fair. The point was made by the Employment Appeal Tribunal (EAT) in the case of a nurse who was selected for redundancy solely because her fixed-term contract was shortly due to expire.

The nurse worked in a research unit that was losing money and needed to shed staff. She was selected for redundancy for no other reason than that her contract was coming up for renewal sooner than that of a colleague. Her unfair dismissal complaint was rejected by an Employment Tribunal (ET) on the basis that her selection fell within the band of reasonable responses open to her employer.

Upholding her appeal against that ruling, the EAT noted that, once the decision was made that the employee with the shortest time remaining on their contract should be selected, the nurse’s dismissal became a fait accompli. The decision effectively placed her in a pool of one and rendered any subsequent consultation on the question of dismissal pointless.

Given that she was effectively chosen to be the employee dismissed before any consultation took place, the EAT was able to reach its own conclusion that her dismissal was unfair. If not agreed, the amount of her compensation would be assessed by a differently constituted ET.

In giving general guidance on the fair conduct of redundancy processes, the EAT noted that the implied term of trust and confidence requires that employers will not act arbitrarily towards employees in the methods of selection. Fairness requires genuine and meaningful consultation to take place at a formative stage when the employee concerned can still potentially influence the outcome.

Where the choice of criteria adopted to select for redundancy has the practical result that the selection is made by that decision itself, consultation should take place prior to that decision being made. It is not within the band of reasonable responses, in the absence of consultation, to adopt a single criterion which simultaneously identifies the pool of employees under threat of redundancy and the particular employee who is to be dismissed. Whilst a pool of one can be fair in appropriate circumstances, it should not be considered without prior consultation where there is more than one employee.