Economic Dismissal

Question 1

s 139(1) ERA 1996

Answer 1

Dismissal = redundancy if the dismissal is attributable wholly/mainly to:

1) Cessation of business;
2) Cessation of/diminution in need of employees.

s 139(1)(b) - also redundancy if the requirements of the business for employees to carry out work of a particular kind has ceased or diminished or is expected to do so.

Question 2

Home Furniture

Answer 2

EAT - cannot be an investigation into the rights and wrongs of redundancy. Motives behind redundancy are not relevant.

Question 3

UK AEA v Claydon

Answer 3

C always worked on one site and refused to move to another when asked by employer. Contract of employment stated he might need to work on any site.

EAT applied contract test - since he was required to work on any sites in his contract, the employer did not owe him redundancy payment.

Question 4

High Table v Horst

Answer 4

CA adapted the test to focus on the real substance of the relationship - if employee has always worked on one site then he will not be required to relocate unless there is a mobility clause.

Question 5

Safeway Stores v Burrell

Answer 5

Clark J said that ‘diminishing requirements of for work of a particular kind’ has a three stage test:

1) Was employee dismissed?
2) Had the requirements of the employer’s business for employees to carry out work of a particular kind ceased or diminished/expected to?
3) Was the dismissal wholly or mainly caused by the state of affairs in stage 2?

Question 6

Murray v Foyle Meats

Answer 6

M was one of 35 workers in slaughtering hall who were dismissed - argued that the pool of redundancy should have been ALL workers employed on the same terms, rather than just those in the slaughtering hall.

HL held that M was made redundant since simple causation test was met - did diminishing demand for labour cause the dismissal? Lord Irvine said that diminution in need for employees should be allowed for redundancy irrespective of the employees’ contract or function they performed - so made the requirements for redundancy broader.

Question 7

s 141 ERA 1996

Answer 7

Employer can avoid liability for redundancy payment if suitable alternative job offer is made.

Question 8

Taylor v Kent CC

Answer 8

Suitable alternative employment offer = job should be substantially equivalent in terms of status, wages and types of duties.

Question 9

s 141(2) ERA 1996

Answer 9

Employee is NOT entitled to a redundancy payment if he unreasonably refuses an alternative employment offer. This applies where the provisions of the contract are renewed or the new contract is same regarding capacity, place and other terms and conditions of employment.

Question 10

s 141(4) ERA 1996

Answer 10

Employee is not entitled to redundancy payment if the alternative employment offer is suitable for him.

Question 11

s 98(2)(c) ERA 1996

Answer 11

Redundancy is a potentially fair reason for dismissal.

Question 12

s 98(4) ERA 1996

Answer 12

Reasonableness test for fairness of dismissal - takes into account size and administrative resources of the employer in determining whether the employer acted reasonably in treating the reason as sufficient for dismissing the employee.

Question 13

Devon PCT v Redman

Answer 13

Issue = was the employee unreasonable in rejecting an alternative employment offer and thus forfeited right to redundancy pay?

Court held that test under s 141(2)(b) is whether the particular employee in that particular situation acted unreasonably in refusing the offer of employment.

Thus, different test for reasonableness in redundancy generally than BoRR in Iceland v Jones.

Question 14

s 98(4) ERA 1996

Answer 14

Procedural fairness in redundancy applies in the same way as unfair dismissal.

Question 15

Duffy v Yeomans & Partners Ltd

Answer 15

CA dismissed appeal that dismissal was unfair because there was not a consultation - ET has to decide whether the employer could have acted reasonably by dismissing the employee without consultation in the circumstances of each case.

Question 16

Williams v Compair Maxam

Answer 16

Employer picked teams of core staff to be retained based on personal preference, but did not consult trade union about redundancies that were going to be made.

Dismissed employees claimed unfair dismissal on grounds of selection process. EAT held that in assessing whether the employer’s selection process for redundancy is fair, the tribunal must have regard to current standards of fair industrial practice. This includes consulting trade unions and informing employees in advance as far as possible about impending redundancy numbers.

EAT found selection on facts unfair since the current industrial standards were not complied with - should have consulted trade unions.

Question 17

Remedies for redundancy:

Answer 17

1) Re-employment or re-engagement;
2) Salutatory redundancy payment;
3) Unfair dismissal.

Note that C can bring claims for both redundancy payment and UD.

Question 18

s 162 ERA 1996

Answer 18

Sets out statutory redundancy payment. Comprises of the following elements:

1.5 x weeks gross pay for each year of employment if person is aged 41+

OR

1 x weeks gross pay if person is 22-40

OR

0.5 x weeks gross pay if the person is under 22.

This is for a max 20 years and subject to a weekly pay limit of £479.

Question 19

s 155 ERA 1996

Answer 19

2 year qualifying period of continuous service for redundancy payment.

Question 20

Polkey v AE Dayton

Answer 20

Polkey deduction still applies to UD where the reason is redundancy - so even if the dismissal may be procedurally unfair under s 98(4), if the dismissal by way of redundancy was substantively fair and consultation would have made no difference the compensatory award under s 123 ERA 1996 may be reduced accordingly.