UK Employment Law Coffee Break: Employment law reform, Court of Appeal rules on redundancy consultation, and our latest GPDR for HR newsletter

Employment law reform

Last month the government delivered its Employment Rights Bill seeking to deliver "economic security and growth to businesses workers and communities across the UK" as well as announcing other measures in its "Next Steps" paper.

At our In-house Lawyer Talks, a week of webinars aimed at in-house lawyers, our employment team will be looking at the new government's employment law reforms and other recent developments affecting the workplace. You can register here. Employment partner, Anna Elliot, and solicitor apprentice, Raihaanah Kulthoom, comment in HR World on the implications of the proposals for employers and what HR can be doing now.

Employment partners Olivia Sinfield and Anna Elliott will also be looking at the implications of remote working overseas and investigations during our In-house Lawyer week. Please do sign up to these webinars, and to any others in our programme which are of interest.

Court of Appeal finds no requirement for 'general workforce consultation' where small scale redundancies are proposed

We reported previously on an Employment Appeal Tribunal (EAT) decision which had led to speculation that a formal process of collective consultation may be required at a formative stage of a redundancy process, regardless of the number of redundancies proposed or whether or not there are trade union representatives in place.

The EAT had referred to a requirement to undertake "general workforce consultation" which would provide an "opportunity to have input from the workforce. That is an opportunity to propose other means by which the employer could minimise the impact of a redundancy situation".

The Court of Appeal has now helpfully stated that there is no specific requirement for "general workforce consultation" in situations where there is no trade union representation and/or the statutory rules on collective consultation do not apply.

Selection exercise carried out at an initial stage

Here the employer proposed a need for redundancies (but was not clear on the numbers) from the claimant's team and asked the team manager to assess the employees in line with its selection matrix. Following this exercise, the employer determined that two redundancies were required and the claimant, having scored lowest, was identified "at risk". The claimant was invited to individual consultation meetings but was not told that a selection process had already taken place, information about the selection criteria, nor his scores.

Following confirmation of his redundancy, the claimant appealed. At this point he was provided with further information about the selection process and his own scores, however his appeal was dismissed.

EAT states that consultation should take place at a 'formative stage' of any decisions

The Employment Tribunal dismissed the claimant's unfair dismissal claim. However, the Employment Appeal Tribunal upheld his appeal. It noted it was clear that where trade union representatives are in place they should "normally" be consulted at the formative stage of any decisions on redundancy selection processes; and likewise, there is a statutory duty to collectively consult where more than 20 redundancies are proposed in a 90 day period.

However, while it was less clear if consultation should take place at the formative stages of any decision on redundancy selection processes outside these scenarios, it noted that "the purpose of collective consultation is actually a reflection of good industrial relations… and that such consultation should generally occur at the formative stage of a process", "that might better be described as general workforce consultation rather than 'collective'" – the importance is the purpose of consultation at that stage and not the label attached it.

The EAT noted that while an internal redundancy appeal could correct a missing aspect of the individual consultation process, it could not repair the gap of consultation at the formative stage. There was nothing in this case to indicate that there were "good reasons" not to discuss the method of selection applied at a workforce level of consultation, noting in particular "the fact that the numbers to be dismissed were not settled until a major part of the process of selection had concluded".

Court of Appeal finds no requirement for 'general workforce consultation'

The Court of Appeal has now overturned the EAT's decision and found the claimant's dismissal to be fair.

In its decision, the Court of Appeal expressly states that it "cannot agree with the EAT that, in order to ensure that the opportunity for consultation on common issues is given in the case of smaller-scale redundancies in non-unionised workplaces, it should be treated as a requirement of good industrial relations practice – or 'the usual standard' – that the employer should in such cases conduct what it calls 'general workforce consultation', so that there is in effect a rebuttable presumption that a dismissal where there has been no such consultation will be unfair".  

The Court of Appeal noted that situations where collective consultation is required, either under the statutory procedures or where a trade union is recognised "are fundamentally different" to situations such as the one before it. In those situations "there will be someone who can be treated as expressing the views of the affected workforce and with whom those views can be discussed. That purpose is not replicated, even approximately by holding a general workforce meeting, or meetings (whether in real life or online); no one at such a meeting has a mandate to represent the individual employees, who will simply express their own views (or not)".

The Court of Appeal commented that it considered that the EAT was "seeking to fill what it perceived as an undesirable gap created by the fact that the statutory requirements do not apply to smaller-scale redundancies". However, if such a gap does exist, "it is more properly addressed by legislation or perhaps by Acas guidance".

It therefore saw no reason to depart from or add to the "well-established case-law as regards the requirements of a fair redundancy consultation" to take place at a formative stage, that is "at a stage when what an employee advances at that consultation can be considered and has the potential to affect the outcome".  

What does this mean for employers?

While this decision is helpful to employers, the Court of Appeal did emphasise that the adequacy of consultation must be considered on a case-by-case basis – "group meetings may indeed be a useful way of ascertaining the views of employees but their appropriateness will depend on the circumstances".

The Court of Appeal expressly stated that here "it was bad practice" for the line manager to carry out the scoring exercise before the consultation started as "it was good practice" to give employees at risk the opportunity to comment on the selection criteria to be used before the selection was done. However, this failure did not mean that the die was irrevocably cast – if in the course of the consultation, if the claimant (or anyone else) had persuaded the employer that  the criteria was flawed or that the line manager should not have been the sole decision-maker etc "it was not too late for the exercise to be re-done". The Court of Appeal referred to its own previous authority that in principle an individual procedural unfairness in a decision to dismiss can be cured by a fair internal appeal, as was the case here.

It is commonplace in the UK for employers who are considering making redundancies from a pool of employees to make some form of announcement, usually via a team meeting or other group communication, to confirm that a redundancy process is being considered and what that will entail, before inviting individual "at risk" employees to individual consultation meetings. As part of this process, typically employers will often provide a point of contact to whom any questions and concerns can be addressed.

It is also good practice for employers to share with "at risk" employees the selection criteria and how they have been scored so that this can be considered at individual consultation meetings. In this case there was never any opportunity to discuss the prospects of a different approach to any aspect of the redundancy process chosen by the respondent. The selection criteria, scoring and number of redundancies had all be determined before the claimant was even aware that redundancies were in prospect.

The EAT did recognise that the nature of employment has "changed radically since the 1980s" with a "reduction in trade union membership (outside of the public sector)" when the leading cases were decided on redundancy process and which impacts on what would now be considered good industrial relations practice. Employers may see the landscape evolving again with the current government's proposals around giving more visibility to trade union membership, and collective consultation requirements being triggered by the number of redundancies proposed across a business rather than a single establishment.

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