Mr Haycocks worked as a recruitment consultant for ADP Ltd, a UK subsidiary of a US company. Mr Haycocks was part of a team of 16, employed solely to recruit employees for one particular investment bank. When the bank’s requirement for recruitment services fell by around 50% as a result of the Coronavirus pandemic, ADP Ltd decided to reduce its workforce.
The UK manager was given a standard matrix of selection criteria from the US parent company, which she used to assess the 16 employees. Each employee was scored between 1 and 4 on 17 entirely subjective criteria, with Mr Haycocks coming last in the ranking. Scoring took place at the start of June 2020 before the parent company decided how many employees would be made redundant.
It was decided that the team had to lose two roles. Mr Haycocks was invited to a meeting on 30 June at which he was told that there was a requirement for redundancies, and that he could ask questions and suggest alternative approaches. He was then invited to a further meeting on 8 July and at a final meeting on 14 July he was handed a letter of dismissal. In these meetings Mr Haycocks was unaware of what scores he had achieved and was not given the scores of other employees as a comparison. He appealed against the dismissal decision. An appeal meeting was held on 10 August, by which time Mr Haycocks had been given his score, but his appeal was unsuccessful. He brought a claim of unfair dismissal.
The employment tribunal rejected Mr Haycock’s claim. It accepted that he knew nothing about his scores until after his dismissal but concluded that the appeal process was carried out conscientiously. It found that Mr Haycocks had not demonstrated that his score should have been higher.
Mr Haycocks appealed to the EAT. He argued, among other things, that the tribunal had overlooked the need for consultation, and that the lack of consultation at a formative stage meant the dismissal was unfair.
The EAT allowed Mr Haycock's appeal. It reviewed the extensive case law on the requirement of reasonableness as it applies to redundancy dismissals. It noted that, much of the caselaw was from the 1980s and the theme of the case law is that it reflects what is considered to be good industrial relations practice. While the substance of what amounts to good practice will vary widely depending on the type of employment, workforce and the specific circumstances giving rise to the redundancy situation, there are certain key elements including that a reasonable employer will seek to minimise the impact of a redundancy situation by limiting numbers, mitigating the effect on individuals or avoiding dismissal by engaging in consultation.
The EAT observed that the nature of employment has changed radically since the 1980s, in two particularly significant ways:
1) trade union membership has become less common, and
2) employment with an international element in the corporate structure has become more common.
Consequently there are now many more redundancy situations where there is no recognised representation for employees. While the authorities are clear that, where there are representatives, they should normally be consulted at the formative stage of any decision on redundancy selection processes, it is less clear that this should apply in an unrepresented workforce. This is because of the distinction that has been drawn between collective and individual consultation. The EAT (in particular the lay members) considered that this fails to recognise the reality of good industrial relations in the modern employment environment. In the EAT’s view, collective consultation is a reflection of good industrial relations in either type of workplace, and should be an opportunity for the workforce to suggest other means by which the employer could minimise the impact of a redundancy situation.
As for the international dimension to some redundancy processes, the EAT observed that the notion of good industrial relations will vary significantly between nations. In the present case, a selection matrix using entirely subjective criteria, which came initially from the USA, may not reflect the usual practice in the UK. This observation reinforced the importance of consultation at the workforce level: if discussions had taken place at an early stage, differences in good practice would probably emerge and it would be possible for an employer to take account of them.
Applying these principles, the EAT concluded that the tribunal had failed to address the clear absence of consultation at the formative stage. There was nothing in the judgment to indicate that there were good reasons for the employer not to discuss the redundancy proposals at the workforce level of consultation. This meant that there was never any opportunity to discuss the prospects of a different approach to any aspect of the redundancy process chosen by the employer. The absence of meaningful consultation at a stage when employees have the potential to affect the decision is indicative of an unfair process. Without an explanation as to why omitting the workforce level of consultation would be reasonable in these particular circumstances, the tribunal had not provided sufficient reasons to explain its decision. The EAT went on to hold that, on the facts, there was no good reason for this consultation not to take place. It noted in particular the fact that the numbers to be dismissed were not settled until a major part of the process of selection had been concluded, which showed that there was no pressure of time. As for the appeal, while this could correct any missing aspect of the individual consultation process (e.g. the provision of DBH’s own scores), it could not repair the gap of workforce consultation at the formative stage.
What does this mean for employers?
This is a significant decision which brings forward the timing of consulting with employees at risk of redundancy including where there is no requirement to collectively consult. The change is particularly important for employers with non unionised workforces and where there is no standing consultation body. Employers will need to decide whether to risk unsettling the workforce by consulting with all those at risk at an early stage or whether to run the risk of a claim in line with this case if there has been a lack of proper consultation at a formative stage. A middle ground would be to consider setting up a standing employee consultative body with whom proposals could be canvassed, although this would be a significant change of approach for many UK employers. We do not know whether this case will be appealed and will let readers know if it is.
