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Redundancy selection based on sole arbitrary criterion unfair

Emma Johnston tells HRNews about Mogane v Bradford Hospitals Trust and the importance of early consultation in redundancy cases

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  • Transcript

    When it comes to redundancy employers have a fundamental duty to consult with employees before a decision is reached, giving them a chance to influence the outcome. So, adopting a selection pool that means an individual is inevitably going to be chosen is unfair.

    This is the EAT’s ruling in Mogane v Bradford Teaching Hospitals Trust on whether it was fair for a Hospital Trust to select a Band 6 nurse for redundancy on the basis that that her fixed-term contract was due to expire before that of her Band 6 colleague.

    The background is the two nurses carried out similar roles were both employed on a series of fixed-terms contracts. When the Trust ran into financial difficulties it decided to reduce the number of Band 6 roles and make Ms Mogane redundant. This was based on the sole criterion that her fixed term contract was due to expire first, effectively putting her in a selection pool of one. The Trust then went on to consult with her regarding alternative employment but, in the absence of a suitable role, she was dismissed. She subsequently brought an unfair dismissal claim against the Trust, but it was dismissed by the tribunal. On appeal the EAT reversed the Tribunal’s decision. The EAT found that once the Trust had taken the decision that the sole criterion would be end date of the fixed term contract it was inevitable that Ms Mogane would be selected so the process was inherently unfair. The Trust’s approach effectively bypassed any proper consultation which would have given Ms Mogane an opportunity to put forward her views and potentially affect the outcome of the decision. The EAT also made clear that the implied term of trust and confidence in every employment contract requires that employers will not act in arbitrary fashion towards an employee when it comes to the method of selection for redundancy. In this case the decision to choose the end date of the fixed term contract was arbitrary.

    So, any employer going through workforce restructuring should take note of this case, so let’s get a view from one of our lawyers. Emma Johnston has been looking at the judgment and earlier she joined me by phone from Edinburgh. I started by asking Emma what she sees as the employer’s fundamental error in this case:

    Emma Johnston: “Well, the fundamental error was really inadequate consultation. So, basically, there is a requirement for a fair redundancy dismissal for there to be a genuine and meaningful consultation and that must be taken at a time before there's any final decisions about who's to be made redundant. In this case, because there was only a single criterion in terms of choosing the pool, which was in this case the person's end date of their fixed term contract, then the result was that it was effectively a fait accompli. So, because that decision had been made before the consultation started, that employee couldn't influence the outcome, and therefore there was no genuine and meaningful consultation.”

    Joe Glavina: “A pool of one is pretty unusual but it’s not necessarily unfair. In what circumstances might a pool of one be okay?”

    Emma Johnston: “An employer does have quite a significant amount of discretion in that sense, and I don't think this case changes that fundamentally. It would be appropriate to have a pool of one in circumstances where an individual's job role is distinct, and they are the only person that carries out that role. However, the difference here was the fact that there were two Band 6 nurses doing, largely, the same type of work and the only difference between them was the fixed term contract end date. So, in those cases the expectation would be that both of those individuals would be pooled because they're carrying out the same type of work. But, if you have someone who is doing a role that sits in isolation to others, then it may still be appropriate to just have that pool of one.”

    Joe Glavina: “Now, a risk which is highlighted by this case is the potential for a breach of the implied term of mutual trust and confidence. How does that arise in the context of redundancy pools, Emma?”

    Emma Johnston: “I think that raises the risk a little bit for employers because I think it's bringing that to the attention of individuals that the way that these redundancy processes are carried out can go to this fundamental implied term of the contract. But interestingly enough there is some commentary out there about this case focused on the potential for an expectation that it's no longer appropriate just to have a pool of one. I don't think the case goes that far. However, it is important to think quite carefully about the pool and to record your rationale for the decision in relation to that because what you don't want to do is make the pool so wide that you're bringing in employees into this pool just out of concern for falling foul of this decision when, actually, there's no real chance that these individuals would be made redundant in the end, based on the particular proposal that you're working with. So, there is a slight risk, I suppose, that individuals would say, well, you know, this is a breach of the implied term of mutual trust and confidence because I'm being pulled into this redundancy situation and, actually, the proposal doesn't have anything to do with me.”

    That case is called Mogane v Bradford Teaching Hospital Trust and is a decision of the Employment Appeal Tribunal. We have put a link to the judgment in the transcript of this programme.


    - Link to judgment: Mogane v Bradford Teaching Hospitals Trust

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