Is a redundancy situation affected by the way in which it arises?

By December 17, 2020January 6th, 2021Employment, Latest

No, not if there is a genuine redundancy situation as per the EAT’s ruling in Berkeley Catering Limited V Mrs Jeannette Jackson UKEAT/0074/20/LA(V).

Background

An employee who has sufficient qualifying service is entitled to not be unfairly dismissed. Section 98 Employment Rights Act (“ERA”) 1996 , states that to fairly dismiss an employee, the employer must demonstrate that they: (1) have a fair reason for dismissal and (2) have acted reasonably in treating that reason as sufficient to justify dismissal. Section 139 ERA 1996 provides a statutory definition of redundancy, outlining the three situations whereby redundancies can arise: (1) business closure, (2) workplace closure or (3) reduced requirement for employees to carry out work of a particular kind.

Facts of the case

In Berkeley Catering Limited V Mrs Jeannette Jackson UKEAT/0074/20/LA(V), Mrs Jackson was appointed as Managing Director (“MD”) of Berkeley Catering Limited (“Berkeley”), in January 2016. Prior to this, Mr Patel, owner of Berkeley, had carried out this role.

From 2017, Mr Patel began to increase his involvement with the business, undertaking work that Mrs Jackson had previous been doing. Mrs Jackson’s case was that Mr Patel started to exclude her from activities and was undermining her position. A year later, Mr Patel told Mrs Jackson that he intended to take over from her as MD. In March 2018, Mr Patel announced that he was taking control of management decision-making and operations with the title of CEO and that the role of MD would be redundant.

In May 2018, Mrs Jackson was made redundant. She issued proceedings for unfair dismissal. Mrs Jackson argued that: (1) the Company had removed her from her position of MD by placing Mr Patel in the role of CEO, (2) she was undermined by Mr Patel before being removed, (3) there was no diminished requirement within the company in respect of her role and consequently there was no redundancy situation.

Decision of the ET and Employment Appeal Tribunal (“EAT”)

The ET upheld Mrs Jackson’s claim for unfair dismissal and concluded that there was no redundancy. Berkeley appealed the decision and the EAT upheld their appeal. The EAT was satisfied that a genuine redundancy situation had arisen as Mr Patel had deliberately arranged matters to take over Mrs Jackson’s duties. The judge stated that, “a redundancy situation under section 139(1)(b) 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.”

The EAT decided that Berkeley had arranged its affairs so that the work of the MD was absorbed by Mr Patel and other employees. There was therefore a diminution in the requirement of the business for employees to carry out work of that kind, thus creating a redundancy situation.

As regards the question of the reasonableness of the decision to dismiss, the EAT remitted the claim back to the ET to determine this issue.

Comment

This case clarifies that the manner in which a redundancy situation arises is insignificant; the issue is whether a genuine redundancy situation exists. In this case Mr Patel, even on his own case, treated Mrs Jackson badly and undermined her. This was irrelevant however as regards the issue of whether there was a redundancy situation.

It is important to remember that establishing whether a redundancy situation has arisen is only one part of the unfair dismissal test and as such Berkeley will still need to demonstrate to the Tribunal that it acted reasonably in treating redundancy as a sufficient reason to dismiss Mrs Jackson. This will involve a consideration of the selection and consultation process followed and whether any alternatives to dismissal were considered.

Bethanie Bailey

Author Bethanie Bailey

More posts by Bethanie Bailey