Redundancy Flashcards
What is redundancy?
Redundancy is defined in S139(1) ERA 1996. An employee is presumed to be dismissed for redundancy if the dismissal is wholly or mainly attributable to:
a. The closure of the business;
b. The closure of the workplace; or
c. Changes in the requirements of the business.
It must be redundancy that lead to dismissal and not vice versa. The dismissal by be ‘by reason of redundancy’.
Once dismissal is established, S163(2) ERA 1996 provides a presumption that is was redundancy for ET purposes.
What tests are used in redundancy?
In the course of Employment history there have been two conflicting tests used for determining whether work of a particular kind has ceased or diminished, the contract test and the function test.
The Contract Test
The contract test focuses on how the duties of the employee were defined in the contract of employment. If the employer’s demand for the contractual duties had ceased or diminished, the employees would be redundant. Nelson v BBC
According to the contract test, if duties are narrowly defined as the actual job carried out by the employee, and that the job has gone, the employee is redundant. However, if the duties are widely defined in the contract, whilst the job performed by that employee may have gone, there may be other available jobs he or she could still be required to perform under the contract. In this case the dismissal will not be by reason of redundancy (Haden v.Cowan)
The Function Test
The Function Test focuses on the duties actually performed by the employee. If the employer’s demand for employees to do the work actually performed by the employee had ceased or diminished, the employee would be redundant. According to the function test, if the actual job carried out by the employee has gone, the employee is redundant regardless of whether, under the contract, he or she could be required to do other work.
What test is used now?
Neither of these tests proved satisfactory and in Safeway Stores plc v Burrell the EAT proposed a new radical approach. EAT applied the following test:
a) Was the employee dismissed?
b) Had the requirements of the employer’s business for employees to carry out work of a particular kind ceased or diminished, or were they expected to cease or diminish?
c) Was the dismissal of the employee caused wholly or mainly by that state of affairs?
This test was approved by the HOL in Murray and Another v Foyle Meats Ltd.
In order to claim a redundancy payment, a worker must:
a. Be an employee (S130(1) ERA 1996);
b. Have been continuously employed for 2 years with the same employer (S155 ERA 1996);
c. Have been dismissed by the employer by reason of redundancy (S139 ERA 1996).
The definition of dismissal - which, for the purposes of redundancy, is contained in S136 ERA 1996
The redundancy provisions in ERA 1996 do not apply to all employees. The classes of people who are not eligible for redundancy payments are, Some crown servants, members of the armed forces or police service.
The redundancy provisions in ERA 1996 do not apply to all employees. The classes of people who are not eligible for redundancy payments are, Some crown servants, members of the armed forces or police service.
Leaving employment early following redundancy
S142 ERA 1996 provides that if an employee who has been told that they are being dismissed for redundancy gives notice in writing that they wish to leave early and the employer does not object, they can still claim to have been dismissed for redundancy purposes. If the employer does object, the ET can decide whether to grant a redundancy payment or not and, if so, how much.
What will the employer look at to determine redundancy?
An employer looking to make redundancies will need to take the following steps:
a. Consultation with employees
b. Notification to the department for Business, Energy and Industrial Strategy (BEIS)
c. Selection of employees
d. Asking employees if they are willing to take voluntary redundancy
e. Offering alternative work
f. Redundancy payments
Cosultation
Consultation procedure is Governed by SS188-195 TULR(C)A 1992.
The requirement to consult arises where an employer proposes to dismiss 20 or more employees at one establishment within a period of 90 days or less (S188(1) TULR(C)A 1992).
The employer must consult within good time (S188(1A) TULR(C)A 1992).
Consultation must be carried our ‘with a view to reaching agreement’ with representatives as to ways of; avoiding dismissals, reducing numbers to be dismissed, mitigating the consequences of any dismissals.
Employer must consider any representations made to it by the representatives about the proposed redundancies and reply to them, giving reasons if it rejects any.
Must be special circumstances to arrant lack of consultation.
Protective Award
If a tribunal finds that an employer has acted in breach of S188 the tribunal may make a protective award:
Protective award means that employees are to be kept on the payroll for the period of the award, that is, employees will be entitled to wages which they should have received in addition to any claims for unfair dismissal compensation or redundancy pay.
Award will be made unless the employer can show that it was not reasonably practicable to comply with the requirements and it took such steps to as were reasonably practicable.
S192 TULR(C)A 1992 provides that an employee may complain to the tribunal about non-observance of a protective award within 3 months.
Time limit for bringing a claim
Applicant has three months from the date of the proposed or actual dismissal in which to make such a compliant (or longer if the ET considers that it was not reasonably practicable for it to be presented within 3 months).
Award
Length of award is at the discretion of the ET subject to a limit of 90 days.
Award is payable when 20 or more employees are being considered for redundancy within 90 days, even if employer’s intention is to offer most of them alternative work, Hardy v Tourism South East.
SS190 and 191 TULR(C)A 1992 provides that the entitlement of the award ceases if a suitable offer of alternative employment is made which is unreasonably rejected or accepted and later unreasonably terminated by the employee. A trial period of 4 weeks or longer is permissible.
S192 TULR(C)A 1992 provides that an employee may complain to the tribunal about non-observance of a protective award within 3 months
Fines
An employer may claim exemption from the consultation provisions on the ground that its own consultation scheme is at least as favourable, S198 TULR(C)A 1992.
If an employer fails to give notice, it may be fined up to £5,000, S194 TULR(C)A 1992.
In order to establish that the employer acted reasonably, the ET must be satisfied that the employer had a fair selection procedure.
Cox v Wildt Mellor Bromley Ltd, employer must show how the employee came to be dismissed for redundancy upon what basis the selection was made, and how it was applied in practice.
