Redundancy selection and pools of one

The Employment Appeal Tribunal (EAT) has considered the redundancy dismissal of a nurse where the sole selection criterion used was that her fixed-term contract ended before that of her colleague, and no consultation took place prior to the decision being made.

Was this, as the employee’s representative put it, akin to a game of redundancy ‘musical chairs’ with the employer choosing when to turn off the music?

Background

An employee with more than two years’ service has the right not to be unfairly dismissed by their employer. For a dismissal for redundancy to be fair, the employer must:

1.   establish that redundancy was the real reason for the dismissal; and

2.   have acted reasonably, “in all the circumstances of the case”.  Broadly, this means following a fair procedure.  In the context of a redundancy dismissal this means, for example, there must be genuine and meaningful consultation, the employer must consider appropriate pools for selection and the employer must look at alternative employment.

To what extent does redundancy consultation need to be ‘genuine and meaningful’? This is not covered in the relevant legislation, so the EAT had to consider the scope of this obligation in the recent case of Mogane v Bradford Teaching Hospitals NHS Foundation Trust.

This case also provides a helpful reminder of a number of other key principles linked to fair redundancies and fixed-term workers.

Facts

Ms Mogane was employed by the Bradford Teaching Hospitals NHS Foundation Trust (the Trust) as a Band 6 nurse on a series of fixed-term contracts since 2016. Another Band 6 nurse was also employed on fixed-term contracts.

In March 2019, Ms Mogane was invited to a meeting at which she was told about the financial difficulties the Trust was facing. Shortly after this, the Trust decided that Ms Mogane should be made redundant because her fixed term contract was the first of the two nurses’ contracts to expire.

A redundancy ‘consultation’ process began, which consisted of the Trust unsuccessfully attempting to find alternative employment for Ms Mogane. She was dismissed in December 2019.

Ms Mogane claimed unfair dismissal. An Employment Tribunal rejected Ms Mogane’s claim, finding that because the Trust was under financial pressure, she had been fairly selected for redundancy. Ms Mogane then appealed to the EAT.

Decision

The key question for the EAT was whether the pool applied by the Trust was a pool a reasonable employer could adopt in all the circumstances? The EAT found that the answer to that question was no. In agreeing with Ms Mogane and allowing her appeal, the EAT noted the following.

• Consultation is a fundamental aspect of a fair redundancy procedure. This is true of individual redundancy situations as well as collective redundancy situations.
• For consultation to be genuine and meaningful it must take place at a stage when the employee can still potentially influence the outcome.
• Where the choice of selection criteria has the practical result that the selection for redundancy is made by that decision itself (i.e. where the criterion simultaneously decides the pool of employees and which employee is to be dismissed), consultation should take place as to the selection criteria to be used before the choice of selection criteria is decided upon.
• The Trust’s decision to dismiss Ms Mogane on the grounds that her contract was up for renewal soonest, immediately identified Ms Mogane as ‘a pool of one’ and as the person to be dismissed, before any meetings or consultation took place with her. Ms Mogane’s representative described this arrangement as being like a game of ‘musical chairs’ which an employer could exploit by deciding when to turn the music off.
• Given that Ms Mogane was effectively chosen for dismissal before any consultation took place with her, the EAT substituted a finding that she was unfairly dismissed for redundancy.

Comment

For anyone involved in running redundancies exercises, this case illustrates a number of useful points.

Getting redundancy pools right

Pools of selection containing a single employee are sometimes used by employers undertaking a redundancy selection exercise. And they can be fair in appropriate circumstances. But, where there is more than one employee doing the same job and the choice of selection criterion means that the pool is reduced to one simply by application of the criterion, that criterion should not be adopted without prior consultation. Generally, in most cases it is advisable to adopt multiple criteria to ensure a fair redundancy selection process.

Expiry of fixed-term contracts and dismissal rights

This case also serves as a useful reminder that the expiry of a fixed term contract is still legally a dismissal. As such, a fair reason and process is required for employees with over two years’ service, in order to avoid a successful unfair dismissal claim.

Protections for fixed-term workers

Whilst such a claim wasn’t brought in this case, employers should also be aware that – unless their selection can be objectively justified - selecting fixed-term employees for redundancy solely on the basis of their fixed-term status could amount to less favourable treatment under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002.

Constructive dismissal and redundancy selection

Finally, note that the EAT flagged that the implied term of trust and confidence requires that employers do not act arbitrarily towards employees in the methods of selection for redundancy. This might support constructive dismissal claims based on disputes around selection criteria.

Read the judgment here.

Contributors: Sarah Maddock and Catherine Roylance

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