No requirement for “general workforce consultation” in small-scale redundancies

Last year, in De Banks Haycocks v ADP RPO UK Ltd (which we wrote about here), the Employment Appeal Tribunal suggested that a lack of “general workforce consultation” at a formative stage could call into question the fairness of a redundancy process, even in cases where collective consultation is not triggered (i.e. 20 or more redundancies at one establishment in a 90-day period).

This decision was viewed as problematic by many as it was unclear what kind of “general workforce consultation” employers needed to conduct, particularly where there were no existing recognised trade unions or employee representative bodies.

The Court of Appeal has now shed some light on what employers need to do. We consider its decision and how it impacts small scale redundancy exercises.

A reminder of the facts

The claimant was one of 16 recruitment consultants employed by a UK subsidiary of a US parent company. Following the start of the coronavirus pandemic the demand for the team’s services diminished and a decision was taken to reduce the size of the team. The UK manager assessed all 16 employees and the claimant came last in these rankings.

The US parent company subsequently decided that two roles from the team should be made redundant. As the lowest scoring employee, the claimant was invited to a consultation meeting. He was given the opportunity to ask questions and suggest alternative approaches. He attended one further consultation meeting, followed by a final meeting during which he was handed a letter of dismissal. At no point was the claimant made aware of his score, nor how the rest of his team scored. The Claimant appealed and as part of this process was told his score (but not shown comparative scores).

Following his redundancy, the Employment Tribunal rejected the claimant’s unfair dismissal claim. The Tribunal held that the appeal process had been carried out conscientiously and that the claimant could not demonstrate that he should have been ranked higher. The Tribunal found the process to be fair overall.

The claimant appealed to the EAT arguing that, by the time he was consulted with, all the important decisions had been made.

The EAT required “general workforce consultation”…

The EAT disagreed with the Tribunal. It found that the dismissal was procedurally unfair because there had been a lack of meaningful consultation at a “formative stage” in the process.

The EAT considered a number of guiding principles established in previous cases, such as:

• Employers will normally warn and consult with employees directly or their representative.
• To be fair consultation should take place when proposals were still at a “formative stage”, and where the employee is given adequate information and adequate time to respond.
• Early consultation is a necessary part of a fair process, unless the employer can explain why that is not appropriate.
• It is question of fact and degree whether consultation is adequate in a particular case.
• An appeal can correct earlier failings; a redundancy process must be viewed as a whole.

Controversially, the EAT went on to state that “general workforce consultation” was good modern industrial relations practice in all redundancy situations, regardless of whether the threshold for collective consultation is met. The EAT concluded that there was a clear absence in this case of such consultation at the formative stage, and there was nothing which indicated that there were not good reasons to consult at a workforce level. That was enough to make the dismissal procedurally unfair.

This decision implied that in small-scale redundancy processes in non-unionised workforces, consultation needed to take place with a wider group of employees than simply those who would be selected for redundancy after scoring, replicating what would usually be done in a collective process.

The employer appealed against the EAT decision and challenged the proposition that there was a requirement for a “general workplace consultation”.

… but the Court of Appeal disagreed

The Court of Appeal restored the Tribunal’s finding that the dismissal was fair.

Is general workforce consultation needed?

No, said the Court of Appeal. The Court of Appeal broadly agreed with the EAT’s summary of previous case law, but did not think that a fair redundancy consultation process required “general workforce consultation” for small scale redundancies in non-unionised workplaces.

Like many of us, the Court of Appeal was not clear what “general workforce consultation” meant as a concept, noting that no detailed guidance was provided by the EAT. The term suggested that some form of group level consultation was needed. The Court of Appeal did not agree that group level consultation should be considered the “usual standard” in non-unionised workplaces. Instead, what consultation is appropriate should be considered on a “case-by-case basis”.

While the Court of Appeal recognised that group meetings may be a useful way of finding out the views of employees, it concluded that whether that is necessary will depend on the circumstances of each case.

Is consultation at a formative stage still needed?

Yes, even though there is no requirement for general workforce consultation, consultation at a formative stage remains of fundamental importance.

The Court of Appeal considered what is meant by consultation occurring at a time when proposals are at a “formative stage”. The Court agreed with submissions that it meant consultation “at a stage where it can make a difference to outcomes”. Consultation must occur when an employee can still influence an employer’s decision. This doesn’t need necessarily need to be early on in the process after a proposal has first been created. However, as the Court of Appeal noted, “no doubt the later in the process the consultation occurs the greater the risk that the decision-maker will have closed their mind”. This will ultimately depend on the facts.

Was the redundancy process fair?

The Court of Appeal said it was “bad practice” to carry out scoring before consultation had started. Nevertheless, it concluded that the consultation in this case was adequate.

The Tribunal was entitled to find that the employer had not taken a final decision about the redundancy until after the employee’s appeal, as until that point the employee had the opportunity to influence the outcome of the process. Indeed, the claimant had challenged the selection criteria in his appeal meeting but the challenge was reasonably rejected.

What does this mean for employers in practice?

It will be a relief for employers that, in small-scale redundancies, they are not required to carry out consultation at a group level or consult with a wider group than those who are at risk.

It was already well established that for a redundancy process to be considered reasonable, it requires genuine and meaningful consultation at a formative stage, at a time when the employees’ views can realistically influence the employer’s decision. That is still the case.

There are a number of points for employers to bear in mind:

• Even if workforce level consultations are not necessary, it may still be useful to hold group meetings. Individual consultation meetings will generally be sufficient to consult with individuals both on issues which are common to the affected workforce as a whole, and those peculiar to them.
• It is good practice to give employees at risk of redundancy a chance to comment on the redundancy selection criteria before any scoring exercise is carried out, and to give employees their own scores during the consultation process. However, a failure to do so will not inevitably taint the fairness of the process, as long as the employer remains genuinely open minded during the consultation about reconsidering the appropriateness of the selection criteria and scoring exercise.
• So as not to create unease amongst the workforce, employers may prefer to carry out the selection and scoring exercise during the preparatory stage and start consultations only with those employees who have been provisionally selected for redundancy. Whilst this does carry some inherent risk, it is reassuring this will not necessarily compromise the fairness of the process.
• Consider whether to allow a right to appeal. Employers are not automatically required to provide a right to an appeal in redundancy exercises, but whether an appeal has been offered will be relevant to the overall fairness of a redundancy process. Given that it provides an opportunity to correct any defects earlier in the consultation process, it can be a useful further step to take, particularly if the redundancy has proved contentious.

De Bank Haycocks v ADP RPO UK LTD – judgment available here.