In the recent case of Berkeley Catering Ltd v Jackson, the Employment Appeal Tribunal (EAT) clarified that the circumstances in which a potential redundancy situation arises are of limited relevance when assessing whether or not a redundancy situation exists.
Under section 139 of the Employment Rights Act 1996 (ERA), there are three potential redundancy situations: business closure, workplace closure or when there is a diminished need for employees to carry out work of a particular kind. It is the third scenario which the EAT was concerned with in this case. It is well-established that a potentially fair redundancy situation arises when there is a reduction in the amount of work available, or when the same amount of work is available but it is decided that fewer employees are requires to do that work. Mrs Jackson was the Managing Director of Berkeley Catering Ltd. The owner of the business, Mr Patel, decided to appoint himself as CEO and take considerably more responsibility for the running of the business than he had done before. This had the effect of diminishing and undermining Mrs Jackson’s role.
It was subsequently decided that the MD role was at risk of redundancy: the same amount of work was available but she was no longer required to do it. Mrs Jackson was ultimately dismissed. She argued that her redundancy was effectively a sham and had been engineered by Mr Patel, hence her dismissal was unfair. The EAT disagreed and held that “a redundancy situation either exists or it does not. It is open to an employer to organise its affairs so that its requirement for employees to carry out particular work diminishes. If that occurs, the motive of the employer is irrelevant to the question of whether the redundancy situation exists” (para. 20). Irrespective of his reasons for or manner of doing so, Mr Patel had, as a fact, taken on Mrs Jackson’s work leaving less for her to do. This gave rise to a potential redundancy situation in accordance with section 139 ERA.
This judgment will be welcomed by employers facing allegations of concocting a redundancy situation to exit a particular employee. That said, the fact that a potential redundancy situation exists is not a one-way ticket to a fair dismissal: the redundancy must follow a fair procedure and must be reasonable in all of the circumstances. The employer’s motive may not be be relevant when assessing if there is a reduced need for employees to carry out work, but it will still be relevant to the question of fairness, as will the way it treats the employee in the course of the redundancy process.