Making redundancy consultation count: a look at the principles behind the Court of Appeal decision in De Bank Haycocks v ADP RPO UK Ltd

In a judgment in October 2024 in the case of De Bank Haycocks v ADP RPO UK Ltd [2024] EWCA Civ 1291, the Court of Appeal confirmed that employers do not have to conduct general workforce consultations over redundancies of less than 20 employees in non-unionised workforces for an individual redundancy dismissal to be fair.

The decision is a welcome clarification of the ‘fair process’ an employer must follow to effect a fair dismissal on grounds of redundancy. Employers must avoid the consultation process amounting to a tick box exercise and this article sets out the principles to bear in mind to minimise the risk of legal challenges.

Legal background

Determining Fairness in Redundancy Dismissals

Under Section 98(4) of the Employment Rights Act 1996, a redundancy dismissal will be fair if, considering the circumstances (including the business’ size and administrative resources), the employer acted reasonably in treating the redundancy as a sufficient reason for dismissal.  In other words, the redundancy dismissal will be fair if the employer followed a fair process in all the circumstances.

Typically, a fair process would involve the employer:

1. warning and consulting its employees or their representatives about the proposed redundancies;
    
2. adopting a fair selection process by identifying an appropriate pool of employees at risk of redundancy and using proper criteria to select potentially redundant employees; and
    
3. searching for and offering suitable alternative employment within the organisation, if available.

It is also well established that, for a redundancy consultation process with individual employees to be considered fair, employers must comply with the following key elements:

1. the consultation should happen when the redundancy proposals are still formative;
    
2. employees must receive adequate information and time to respond;
    
3. employers must carefully consider employees’ responses; and
    
4. if relevant, employers should consult with a recognised trade union.

Any procedural defects in the consultation can be remedied through a fair appeal process, however, it is better to take adequate steps to ensure the redundancy process is fair at the selection and consultation stage. 

Collective redundancy consultation

More onerous statutory requirements apply in cases where an employer proposes to dismiss 20 or more employees at one establishment within a 90-day period.  In those circumstances, the collective redundancy consultation requirements under Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 apply.  Those require employers to inform and consult with the trade union representatives of the affected employees or, if there are none, with their elected representatives. Collective consultations do not remove the requirement for individual consultations, but may reduce their burden in some circumstances.

The Court of Appeal in this case overturns the Employment Appeal Tribunal ‘s decision , which had suggested that a fair redundancy consultation required a general workforce consultation, even in cases of small-scale redundancies where the collective consultation requirements do not apply.

Facts

Mr De Bank Haycocks (“the Employee”) was a recruitment consultant employed by ADP RPO UK Ltd (“the Employer”) as part of a 16-person team employed to recruit for a single client, Goldman Sachs.

In 2020, demand for new employees at Goldman Sachs reduced by 50% and, the Employer decided it needed to make redundancies. All 16 employees in the team were assessed by reference to a redundancy selection criteria matrix and the Employee scored the lowest in this process.

The Employer decided to made two redundancies and established a consultation timetable. Employees in the pool were individually informed that they were at risk of redundancy on 30 June 2020.  The Employee was given a letter stating that a selection matrix scoring process would be used to determine who was selected and was provided with an example of the matrix. He was not informed of his scores or that scoring had occurred before the consultation began. There was a consultation period of 14-days, following which the Employee was dismissed on 14 July 2020.

The Employee lodged an internal appeal against his redundancy. His appeal was dismissed and he brought a claim for unfair dismissal at the Employment Tribunal (“ET”).

The ET dismissed his claim. It found that, while the Employee did not know about his scores until his internal appeal, a conscientious investigation into his concerns had been conducted at the appeal and that the redundancy process followed by the Employer was fair overall.

The Employee appealed to the EAT which upheld his appeal.  In a decision that was met with surprise by many practitioners, the EAT held that the Employee’s dismissal was procedurally unfair because the Employer had not engaged in meaningful consultation at a “formative stage” in the process.  It stated that a workforce-level consultation, in addition to individual consultations, was crucial for good industrial relations practice in redundancies.

Court of Appeal’s decision

The Employer appealed to the Court of Appeal (“CoA”), which allowed their appeal and found that the redundancy process had been fair.

1. No general requirement for general workforce consultation in small scale redundancies

The CoA disagreed with the EAT’s suggestion that general workforce consultations are required for good industrial relations practice in smaller-scale redundancies involving non-unionised workers. They argued that this approach would create a rebuttable presumption that a dismissal would be unfair if such consultation does not occur and deemed this unworkable.

The CoA stated that the EAT’s conclusion was not supported by existing caselaw and guidance, and appeared to be an attempt to address what the EAT perceived as an undesirable gap in statute.

2. Consultations must occur at a formative stage

The CoA confirmed that a fair consultation must happen when proposals are at a formative stage. “Formative” does not necessarily mean early in a temporal sense but at a point where the employer still has an open mind and the employee can realistically influence the outcome, making the consultation meaningful and genuine.

The CoA agreed that it was bad practice for the Employer in this case to have not consulted with the Employee about his scores during the consultation process. It was also bad practice for them to have done the scoring exercise before the consultation began, as employees should ideally have the opportunity to comment on the selection criteria beforehand. However, this did not automatically make the redundancy unfair.

It would have been unfair if the Employer were unprepared to reconsider and the Employee was denied a genuine opportunity to ask them to redo the exercise, which would have made the scoring exercise an effective decision to dismiss. However, in this case the Employee had the opportunity to challenge the scoring criteria and his scores during the internal appeal process, which had been conscientiously addressed and his concerns reasonably rejected. Therefore, although the Employer had departed from good practice, it was saved by the internal appeal process which carefully considered the Employee’s challenges and, overall, made the redundancy process fair. 

Key take-aways

1. General workforce consultations over redundancies of less than 20 employees in non-unionised workforces is not compulsory. There is a fundamental difference in a unionised situation where one individual is mandated to represent others.
    
2. The fairness or unfairness of a redundancy process is dependent on the facts and specific circumstances.  Fairness is to be assessed on a case-by-case basis and employers should follow the relevant statutory requirements and guidance (such as the ACAS guidance).
    
3. During a redundancy consultation, it is good practice for employers to give at risk employees the opportunity to comment on issues affecting them specifically (e.g. why they have been selected) and, particularly in the absence of a general workforce consultation, issues affecting the workforce (e.g. alternatives to redundancy).
    
4. While a robust internal appeal system can remedy procedural defects at the consultation stage, it is safer to follow best practice from the outset to reduce the risk of claims and the redundancy process being found unfair.  Specifically:
   
   a. consultation should occur when the proposals are still at a formative stage, meaning the employer should have an open mind and the employee should realistically be able to influence the outcome; and
   
   b. the selection criteria and individual scores should be shared with employees during the consultation process and employees should be able to comment on these before any redundancies are confirmed.

further information

If you have any questions regarding this blog, please contact Emmanuelle Ries in our Employment team or Kathaleen Anderson in our Dispute Resolution team.