Redundancy and alternative employment

The recent Employment Appeal Tribunal case of Hendy Group Ltd v Kennedy is a reminder to employers of the importance of considering alternative employment in a redundancy situation.

Background

The Claimant was employed by car dealership, Hendy Group Ltd (“the Respondent”). The Claimant worked as a trainer of staff but had held various roles and had significant sales experience. He had worked for the Respondent since 2013.

A redundancy situation arose and the Claimant was selected for redundancy. Although the Claimant accepted the selection of his role for redundancy, he argued that his employer had failed to consider alternative employment for him and brought a claim for unfair dismissal.

The Law

Under the Employment Rights Act 1996, redundancy can be a fair reason for dismissal, but employers are required to act reasonably in treating that reason as sufficient for dismissing the employee. In a redundancy situation, acting reasonably includes a duty on the employer to consider alternative employment for an employee who is at risk of redundancy. Failure by an employer to consider alternative employment in a redundancy situation is likely to lead to an unfair dismissal.

Decision

The Employment Tribunal (“Tribunal”) found that the Respondent had failed in its duty to consider alternative employment and held that the Claimant had been unfairly dismissed. The Claimant was awarded almost £20,000 compensation. In reaching that decision, the Tribunal took into consideration the following:

• the Claimant was not offered any assistance by the Respondent in finding alternative employment during the consultation process;
• while the Claimant was told he could apply for posts listed on the Respondent’s intranet, no suggestions of possible posts were identified by the Respondent;
• following notice of termination of employment, the Claimant’s access to the internal systems was removed which meant he only had the same access as external applicants to jobs listed on the Respondent’s website;
• the Claimant made several applications for different roles in sales but he was offered no assistance by HR and the hiring managers were not informed that the Claimant was at risk of redundancy;
• after making several applications for sales roles which were rejected, the Claimant was informed on the last day of his employment that any further applications for a role in sales would not be progressed citing concerns about his motivation for doing so.

The Respondent appealed the Tribunal’s decision on the basis that:

• the Tribunal had substituted its own view in respect of the dismissal rather than consider whether it was within the range of reasonable responses; and
• the Tribunal had failed to consider whether a Polkey reduction should have been made to the compensation.

A Polkey reduction reflects situations where a tribunal can find that had a fair process been followed, the Claimant would have been dismissed in any event. In such cases, a tribunal can make a percentage deduction to compensation or award no compensation at all.

The Employment Appeal Tribunal (“EAT”) dismissed the appeal. It held that given the evidence it was open to the Tribunal to find that the approach taken by the Respondent had not been that of a reasonable employer and that there was no evidence of other reasonable steps which an employer may have taken such as engaging in conversations regarding potential roles, even if this meant demotion. It held the Tribunal had not substituted its own view. The EAT also held that the Tribunal’s decision to not make any Polkey deduction to the compensation was justified. The Tribunal had concluded that had the Respondent properly considered alternative employment, he would have secured an alternative role and the EAT agreed with this reasoning.

Comment

This case is a reminder to employers that it is not enough to simply say that an employee can apply for available roles, they must be able to demonstrate that they are actively looking at ways to avoid redundancy dismissals and consider alternative employment for those who are at risk. All available posts should be sent to the at-risk employee(s) (to an accessible email address), potential suitable roles identified and hiring managers informed that the employee is at risk of redundancy.

Case reference Hendy Group Ltd v Kennedy [2024] EAT 106