Redundancies can be tricky to get to grips with and things can very easily go wrong. If the correct redundancy process isn’t followed, you could easily have an Employment Tribunal claim on your hands from an employee arguing unfair dismissal. In short, following some simple but important procedural steps can avoid a large compensation pay-out down the line.
You may have heard the latest saga with Twitter and their recent redundancies. Twitter is now facing several unfair dismissal claims from employees who are alleging that a “sham redundancy” process was carried out, because Twitter didn’t consult or warn their staff before making them redundant.
Another example of things going wrong is the recent case of Mr Archie Teixeira v Zaika Resturant Ltd. This case shows how skipping a few procedural steps in a redundancy process can lead to serious problems for an employer. Let’s take a closer look at the case:
What were the facts?
Like many other businesses in the hospitality industry, the employer, a restaurant, suffered significant losses after the pandemic and had no choice but to make staff redundant. The employer had a team of ten chefs, Mr Teixeira was the only non-speciality chef and the chef that had been employed for the least amount of time. As a result, Mr Teixeira was selected for redundancy from a pool of one.
Mr Teixeira later claimed unfair dismissal against his employer and the EAT agreed with him.
What went wrong?
The employer didn’t consult or warn the employee of the redundancy. The Tribunal commented that even if an employer is a small business with very little staff, they still have to warn their employees of the likelihood of redundancy and consult with them properly by seeing if there’s anything that can be done to avoid redundancy.
In this case, if the employee had been given the chance to discuss his potential redundancy with his employer, between them, they may well have come up with a different and fairer selection criteria where by more than just one employee could have been considered for redundancy. Instead, the employer decided that because Mr Teixeira was a non-speciality chef and had been with them for the shortest amount of time, the selection pool should be made up of just him.
The employer claimed that Mr Teixeira in this case would have been made redundant anyway, even with a fair process, because he was the only one in the redundancy selection pool and was selected because he wasn’t specialised and was employed for the shortest amount of time. However, the Employment Tribunal said that even if, after a fair consultation process, the employee was still selected to be made redundant, at least then the delay caused by the consultation would mean that the employee was entitled to some compensation, and not left with nothing.
How to avoid making the same mistake?
- If you’re thinking about redundancy, you should always warn your employees and consult them on the possibility of being made redundant. This will ensure that they’re fully aware of what’s going on. This should always be done, even if you think that redundancy can’t be avoided.
- Think about your redundancy selection pool. It’s always a risk to use pools of one in a selection process as you will always be asked to explain the reasoning behind your decision. This is another reason why you should consult with your staff at the start of the redundancy process; you may come out of it with a larger selection pool or your selection criteria might change slightly to make it fairer on employees.