Employee musical chairs: can employers leave redundancy selection to a game of chance?

Written by Imogen Brown

Adam Ohringer

Imogen Brown

Introduction

Unfair redundancy dismissals can be hugely detrimental to employees and an expensive mistake for employers. The recent Employment Appeal Tribunal (‘EAT’) decision in Mogane v Bradford Teaching Hospitals NHS Trust [2022] UKEAT 139 reminds employers of the need for genuine consultation and reasonable selection criteria when choosing which employees to dismiss and which to keep on.  Adam Ohringer acted for the successful appellant in the EAT.

The Facts

A unit of the Respondent, an NHS trust, was running consistently at a financial loss. To remedy its spiralling deficits, it was decided that their staff count should be reduced by one. Unfortunately, that one staff member was the Claimant. She was chosen for dismissal because her fixed-term contract was due to expire first.

The Claimant was offered alternative employment, but refused it on the basis that it was, in effect, a demotion. After her employment ended, the Claimant brought a claim (among others) for unfair dismissal to the Employment Tribunal (‘ET’) and the legal dispute began.

The Law

Before analysing the ET and EAT’s decisions, it is worth briefly reminding ourselves of some important legal principles surrounding dismissals for redundancy:

• The employer’s decision to dismiss by reason of redundancy must be within the ‘reasonable band of responses’: employment tribunals will not consider what they would have done in the situation, but whether the employer had acted in a way that a reasonable employer could have done, given the circumstances (Iceland Frozen Foods Ltd v Jones [1982] IRLR 439).

• Genuine consultation is needed with the relevant employees: Any employee who might be affected by redundancies should be consulted about the impending redundancy, proposed redundancy selection criteria, and alternative employment possibilities at an early stage. This is essential in conducting a fair process (Williams v Compair Maxim Ltd [1] [1982] ICR 156).

• Any process of identifying the redundancy pool and subsequent redundancy selection criteria must be fair: The employer should seek to agree the redundancy pool and redundancy selection criteria with the employees or employees’ union. Whether or not an agreement is reached, the criteria must be objective, fair, and immune to the partialities of the person making redundancy decisions (Williams).

• It is irrelevant whether the employee would have been fairly dismissed anyway: an employer is liable for unfair dismissal even if the employee would or could have been dismissed fairly in different circumstances (Polkey v A E Dayton Services Ltd [1988] 1 ICR 142).

The ET’s reasoning

Turning, then, to the present dispute. The Claimant was chosen for dismissal because her fixed term contract of employment was due to end first. A fair and reasonable decision, the Respondent contended: if the Claimant’s contract was due to end anyway, why not choose her for redundancy over others?

The ET agreed. It held that the Respondent’s reason for dismissal was within the band of reasonable responses and that the Claimant had been fairly dismissed[1]. The ET also found consultation with the Claimant had taken place, although it did not explore the nature and timing of such consultations in detail[2]. 

The EAT’s reasoning

The Claimant appealed the ET decision on five grounds, all of which related to the Respondent’s redundancy selection process and the subsequent dismissal. In particular, the EAT sought to answer the following two questions:

(i) Did the employer hold a genuine consultation with the employee before dismissal?

No. The EAT found that the ET had failed to fully consider the timing and nature of the Respondent’s consultation with the Claimant. In fact, the evidence showed the employer had decided upon the Claimant’s redundancy well before “any level” of genuine consultation had taken place[3]. Williams tells us that consultation must take place at a formative stage, which means the employee should be able to influence its outcome. If not, the consultation process is unfair. An unfair consultation process leads to an unfair dismissal.

(ii) Is the date of fixed-term contract expiry a selection criterion that passed the ‘band of reasonable responses’ test?

No, and this is where party games become relevant. Adam Ohringer introduced the “compelling simile” of a game of musical chairs, arguing that the date for contract renewal is an arbitrary criterion on which to make employees redundant, just as musical chairs is a game based on chance[4]. Further, in allowing the ET’s decision to stand, the EAT would be effectively allowing employers to ‘stop the music’ at any point they liked – a mechanism that could be exercised whenever employers want to dismiss an employee under the guise of fairness. The ‘chairless’ employee could be dismissed with no consideration given to their ability, attendance record, or appraisal ratings. Put simply, this isn’t fair: no reasonable employer could act in such a way.

Practical implications of the EAT decision

There are three important lessons to take from the EAT judgment. First, the EAT emphasised that the requirement for genuine consultation is engaged whether the planned redundancies are collective or not. Although the important cases in this area (Williams; Polkey) refer to collective redundancies, the principles on consultation apply equally where only one employee is being dismissed (Freud v Bentalls Ltd [1982] IRLR 443; De Grasse v Stockwell Tools Ltd [1992] IRLR 269). Employers should therefore take care to consult properly on all redundancy dismissals, no matter the proposed size of the redundancy pool or the intended reduction in staff.

Second, consultation must be a genuine conversation between employer and employee (or union representative) at a formative stage. The tribunal will be quick to dismiss ‘sham’ consultations, especially those where the timing indicates the employer had already made up its mind before consultation took place. Employers should therefore ensure the affected employee(s) are capable of influencing the redundancy process at the time of consultation, to avoid any subsequent dismissals being deemed unfair. 

Third, the most potent message of the EAT judgment comes as a firm warning to employers: make sure your redundancy selection criteria aren’t arbitrary. A seemingly rational reason for dismissal is not necessarily a reasonable one. Redundancy party games might seem like a good idea until the music stops, a chair is snatched, and an employee is unfairly dismissed.

[1] ET judgment, at [10]

[2] ET judgment, at [11]

[3] EAT judgment, at [29]

[4] EAT judgment, at [17]