Court of Appeal confirms scope of redundancy consultation

It is well established that for a redundancy dismissal to be fair an employer must warn and consult employees when proposals are at a formative stage. The employee must have enough information and time to respond and the employer must give genuine consideration to the employee’s views.

The issue in De Banks Haycocks v ADP RPO UK Ltd was whether fair consultation requires general workforce consultation, even if statutory collective consultation requirements do not apply. The EAT suggested that it does but the Court of Appeal has overturned that decision.

What happened

ADP was a recruiter. It decided it needed to make two employees redundant. It drew up selection criteria, applied those to the relevant pool of employees and then told the two employees with the lowest scores that they were at risk of redundancy. There was a 14 day individual consultation period with each of the at risk employees. This covered the business rationale for the redundancies, gave the employee an opportunity to ask questions and suggest any alternative approaches and considered suitable alternative employment. Mr De Banks Haycocks was dismissed for redundancy at the end of the consultation.

For reasons that are not clear, he was not given the selection criteria or his scores during the initial process but had this information before his appeal. His appeal was not upheld and he claimed unfair dismissal. The employment tribunal accepted that the appeal had been handled conscientiously and rejected his claim. He appealed to the EAT.

Things took a slightly surprising turn in the EAT, which considered that it was good industrial relations practice for an employer to conduct “general workforce consultation” about redundancies at a formative stage, even if collective redundancy consultation obligations didn’t apply. Without such consultation, subsequent redundancy dismissals were likely to be unfair. As ADP had not carried out any general consultation, Mr De Banks Haycocks’ dismissal was unfair. ADP appealed.

Court of Appeal decision

The Court of Appeal said that fair redundancy consultation does not necessarily involve some form of group workforce consultation and that this is not “the usual standard”. Redundancy situations arise in a wide range of circumstances. Tribunals must assess whether an employer has carried out adequate consultation on a case-by-case basis, reflecting the underlying principles of what amounts to fair consultation.

These require employers to consult an employee at a stage when their views can realistically still influence the employer’s decision. It will be harder to show that consultation is adequate if it takes place at a late stage in the redundancy process. That is factual question for the tribunal.

In this case the tribunal was entitled to find that the employer did not take a final decision about the redundancy until after the employee’s appeal. Until that point he had a chance to influence the outcome of the process. Although it is good practice to allow employees to comment on selection criteria before they are applied, and to give employees their scores once scoring has taken place, it did not follow that the consultation in this case was inadequate because that had not happened. 

Mr De Banks Haycocks had an opportunity to persuade ADP that the scoring process should be re-done or that there were alternatives to redundancies. On the facts, he did not challenge the selection criteria or his score at the appeal stage, so he had not lost the opportunity to influence the employer’s decision. The tribunal was entitled to find that the dismissal was fair.

Next steps

As the Court of Appeal observed, the earlier EAT decision was problematic. General workforce consultation has not been required previously if collective consultation obligations don’t apply and is not mentioned in ACAS guidance. It was difficult for employers to know what they had to do to comply with a general duty of the sort suggested by the EAT. According to the Court of Appeal, any gap in protection should be addressed by Parliament.

The government has not said whether it intends to act. However, the Employment Rights Bill requires employers to carry out collective redundancy consultation in a wider range of circumstances, whenever they are proposing 20 or more redundancies within 90 days, regardless of whether the dismissals are at one establishment.

Authored by Jo Broadbent, Imtiyaz Chowdhury and Stefan Martin.