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Redundancy: does it matter if the employer’s actions deliberately created the redundancy ?

A recent case heard by the EAT suggests not. Obviously, each case is decided on its own facts but this appeal is helpful for the employer, especially the SMEs who, in these difficult times, may create a situation of one notwithstanding the fact that the requirements for the role may still exist.

In this case (Berkeley Catering Limited v Jackson) the claimant was the Managing Director. The owner, however, named himself the CEO. He then, for all intents and purposes, took over the role of Managing Director. This was done deliberately. The Company then made the Managing Director redundant relying on the legal definition of redundancy which is that the Company’s “requirements for employees to carry out work of a particular kind had diminished”.  The former MD then took a claim in the Employment Tribunal and claimed she had been unfairly dismissed. Her claim succeeded and the Employer appealed. The Employment Appeal Tribunal agreed with the employer and overturned the Employment Tribunal’s decision that this was not a redundancy. The EAT said that the ET must ask this question : is there, in fact, a diminution in the number of employees required to do the work ? Then, the EAT agreed that the Employer no longer had a requirement for employees to carry out the particular kind of work undertaken by the Managing Director. Thus, they found, there was a redundancy situation. The Company’s motive, they found, was irrelevant to identifying whether there was a redundancy situation. It could, however, be relevant to the question of overall fairness of a dismissal. 

At first glance this is a curious decision but on this strict analysis, and considering the situation in light of the legal definition of redundancy, surely the correct one. 

It is so easy for an employer, sometimes completely innocently, to make mistakes in how they implement redundancies and in particular who they choose to be made redundant. For this reason, it is far cheaper, and definitely much less time consuming, not to mention less stressful, to take expert legal advice before you embark on a redundancy process.  If you get the process right from the start, you will significantly lessen your chances of having your decision challenged in the Employment Tribunal.