When is it too late for redundancy consultation?

The background

The Employment Appeal Tribunal (“EAT”) has issued an important decision in relation to redundancy consultation: Mogane v Bradford Teaching Hospitals NHS Foundation Trust.

The employer operated a research unit, which employed two Band 6 nurses.  Both were on fixed term contracts. The Claimant’s contract was coming up for renewal, while that of her colleague still had a considerable time to run.

Due to financial circumstances (the unit was loss-making), the employer decided that a redundancy situation existed in the research unit, and that only one Band 6 nurse was required.  The employer decided that the Claimant would be the one to go, since her contract was the one coming up to expiry. 

Consultation took place with the Claimant on an individual basis, which largely focused on whether there were any alternative roles available for her.  She was dismissed and claimed unfair dismissal.

Tribunal decision and appeal

Her unfair dismissal claim was rejected by the employment tribunal on the basis that the employer had acted reasonably.  The employee appealed to the EAT which upheld the appeal and found that the dismissal was unfair.

That decision may not seem surprising, as there must be a real issue as to whether it could possibly be fair to single out the Claimant for redundancy, and not her colleague, simply due to the fact that her contract happened to be the one which was coming to an end.

But that is not how the EAT decided the case, and their decision has potentially far-reaching implications.

The EAT decision

The EAT considered the authorities relating to collective redundancy consultation and the requirement that consultation must take place when the proposals are still at a formative stage, it must be fair and genuine, and the employer must give conscientious consideration to the comments made by the employee representatives during consultation. 

The EAT emphasised that these rules apply equally to cases of individual consultation.  Looking at what had happened in this case, the EAT noted that the employer had effectively identified a “pool of one” –  in other words, it had decided not to pool the two Band 6 nurses and apply selection criteria, but rather to restrict the consideration of redundancy to the Claimant.  However, it made that decision before having any consultation with the Claimant.  The EAT decided this was unfair as it made the consultation meaningless – the decision to have a “pool of one” effectively meant the Claimant would be made redundant unless she agreed to take up any alternative employment, and she could not influence that through consultation. 

Or as the EAT puts it, once the decision had been made that only the person whose contract was about to expire would be considered for redundancy, “it immediately identified the Claimant as the person to be dismissed; it identified a pool of one and it made any consultation on the issue of dismissal from the existing role otiose from the time that decision was reached.”  And “the consultation was not at the stage where the Claimant could influence or potentially affect the outcome”.

The EAT concluded that “the absence of meaningful consultation at a stage when the employee had the potential to impact on the decision is indicative of an unfair process”.  Therefore, the appeal succeeded and the EAT held that it had been an unfair dismissal.

What does this mean for employers? 

The EAT judgement appears to suggest that it will be unfair to identify a “pool of one” before engaging in consultation with the affected employee.  The extent of this is unclear – it may be that this requirement could sensibly be restricted to cases where there are other staff doing at least similar work (if the role is genuinely and unquestionably unique, then what is served by consultation?)  In the Mogane case, there was clearly another comparable employee.  

The best advice for employers, though, is to always consult about the selection pools, and if a “pool of one” is proposed, to consult about that as part of the individual consultation process before firming up and finalising the plans.   Letters and consultation documents should refer to a “proposal” rather than a “decision” and the employer should be open to the possibility of taking a different approach following consultation.  

While the outcome of the appeal seems to be the correct decision, the EAT’s comments do seem to place additional burdens on employers in relation to individual consultation.  This decision should be noted by all employers, and carefully considered when embarking on a redundancy process.

As ever, expert advice on these issues is available from our team of employment lawyers.

This update contains general information only and does not constitute legal or other professional advice.

Douglas Strang, Senior Associate: dst@bto.co.uk / 0141 221 8012 / Connect with Douglas on LinkedIn