In the recent case of Berkeley Catering Limited v. Jackson, the EAT held that the way in which a redundancy situation arises is irrelevant to whether a genuine redundancy situation exists.
Facts
The claimant was employed by the respondent as a Managing Director (MD), having taken over this role from the owner of the respondent. From 2017, the owner began to spend more time in the business, absorbing some of the claimant’s duties. The claimant alleged that she started to feel excluded from matters within her role and felt undermined and disparaged by the owner. In March 2018, the owner informed the claimant that he was taking control of management decision-making and operations. He went on to say that he would take on the title of CEO and her role of MD would be made redundant. The owner also confirmed that he would carry out all senior responsibilities, but not as MD. During this time, the respondent also offered an external candidate the role of Events Director, which was a new role in the business.
After a final redundancy meeting to consider suitable alternative work (including a new creative role), the respondent wrote to the claimant confirming that redundancy was unavoidable and there was no suitable alternative work. The claimant was, therefore, dismissed with notice. The claimant requested an appeal, but this was never arranged. The claimant issued a claim for unfair dismissal on the basis that she had been pushed out of the business and that there was no genuine redundancy situation.
ET decision
The ET ruled there was no redundancy situation as the role of MD continued with the owner fulfilling it, nor was there a business reorganisation constituting some other substantial reason for dismissal. This was not a situation where there was a diminishing need for an MD, or an MD function, because the duties were being filled by other staff. In contrast, the ET found there was a deliberate attempt to undermine the individual who was fulfilling the role of MD at the material time by the person who was about to take over. The ET also found that the respondent took on an external Events Director at this time, resulting in additional senior management capacity in the business. Therefore, the ET held the dismissal was unfair.
EAT
The respondent appealed, arguing there was a genuine redundancy situation.
The EAT allowed the appeal on this point. In particular, the EAT held that undermining the claimant (i.e. the employer’s motive) was not relevant to the question of whether a genuine redundancy situation existed. An employer’s motive and conduct are only relevant when determining the real reason for dismissal and whether it was fair.
The EAT found that the respondent had arranged its affairs so that the owner, with or without other existing employees, absorbed the work of the MD, whatever his reasons for doing so. There was, therefore, a diminution in the requirement of the business for employees to carry out work of that kind and, accordingly, a redundancy situation. If the new Events Director had taken over at least some of the MD’s work, or had taken over some of the owner’s work, which freed him to take over the MD’s work, there could have been an argument that there was no diminution in the requirement of the business for employees to carry out work at a senior level. However, the claimant’s duties were absorbed by existing staff, thereby proving the relevant diminution.
Of course, the existence of a redundancy situation does not necessarily mean the redundancy was the reason for dismissal. The case was therefore referred back to the ET to decide whether the claimant’s redundancy was fair.
The EAT’s decision provides further clarity that the manner in which a redundancy situation arises is irrelevant to the question of whether there is a genuine redundancy situation. It is, however, relevant to the question of whether the dismissal was fair, both in respect of the reason and the procedure followed. Employers should not treat this decision as meaning redundancy is a “get out of jail free card”. It remains essential to follow a fair and reasonable procedure when considering the dismissal of employees.
