Redundancy Fairness

In these tough economic times, employers and business owners alike can find themselves in a tough situation.  Employment Law rights are entrenched in UK legislation, which is required to follow what happens in the EU.  However, for small to medium sized businesses the level of rights afforded to employees these days can make things difficult for business owners. This can lead to difficulties when having to close or restructure a business.  Continuing to pay staff unnecessarily can be a massive drain on a business. But this is nothing compared the costs incurred when an employee successfully sues an employer at a tribunal.

Businesses have to be able to adapt in this economic climate. This is a requirement not just in terms of making a profit, but also in terms of the survival of a business. There has been much made in the media regarding redundancies from businesses struggling or going bust over the past few years.  However, a business must go through the correct steps when attempting to make an employee redundant.

Her Majesty’s Courts and Tribunals Service sees many cases where a redundancy situation has arisen with no warning to the employee. Handled incorrectly, a redundancy situation can equate to unfair dismissal.
There has however, been a recent case which means that not all surprise redundancy situations will end in an unfair dismissal claim. In Ashby v JJB Sports PLC, the claimant lost his case and it was heard that JJB had acted fairly in not consulting Mr Ashby about his impending redundancy.

The facts were not straightforward. Mr Ashby had worked at JJB Sports for ten years, starting as a Payroll Manager to head of HR and Payroll. Mr Ashby was responsible for overseeing the work of a team of HR advisors, but had no formal qualifications in the arena.

JJB had well-documented, serious financial problems and recently went into administration.  However, prior to this, the company attempted to restructure.  As such Mr Ashby’s role disappeared due to the need to bring in a higher level HR candidate to look after the HR function. Mr Ashby’s role was absorbed as part of this and as such he was dismissed.

Mr Ashby argued that he should have been given the opportunity to take on the role, given his background and experience. The fact that this had occurred and he had been dismissed equated to unfair dismissal in Mr Ashby and his team’s opinion.

However, the tribunal found that any attempt to allow Mr Ashby to pitch for the new role would have been futile. Whilst employers are generally required to consult with employees before making a redundancy, in this situation it was felt that it was pointless given the gap between Mr Ashby’s capabilities and what the new role required.

However, as imaginable in a case like this, the facts are very specific. As such, any employer seeking to use this judgement as a precedent would be advised to consult with a professional adviser before doing so.

Article written by Steven Maggs, employment law specialist.