The law says that for a redundancy situation to exist, there has to be a reduction in the need for employees to do work of a certain kind, among other things. In Berkeley Catering Ltd v Jackson, the Employment Appeal Tribunal (EAT) held that the motive of the employer was irrelevant when deciding whether a redundancy situation existed or not.
Ms Jackson, who had previously been the company’s commercial director, took over the role of managing director in January 2016 from Mr Patel, the owner of the company and the son of its founders. Nine other managers reported to the MD.
From 2017 onwards, Mr Patel started to increase the time that he spent in the business. He also started to undermine Ms Jackson by excluding her from certain activities and disparaging her to the people who reported to her. In early March 2018, Mr Patel announced that he was taking control of management decision-making and operation, with the title of CEO. As such, the MD role would be redundant. The company sent Ms Jackson an “at risk of redundancy” letter on 15 March 2018. At a meeting on 10 April, Mr Patel told her that there was no suitable alternative work for her. Her redundancy was confirmed on 19 April.
Ms Jackson lodged a claim for unfair dismissal, arguing that there was no reduction in the requirement for the company to have an MD and that the employer had acted in bad faith by dismissing her on the ground of redundancy.
Section 139(1)(b) of the Employment Rights Act (ERA) states that there is a redundancy if there has been a diminution of the need for “employees to carry out work of a particular kind ...”
The tribunal found that the MD role continued but that Mr Patel was doing it and that he was deliberately cutting Ms Jackson out of the business. It also noted that an external human resources consultant had suggested that the company needed to recruit an operations director to relieve the burden of work on the MD. Far from diminishing, therefore, the role of MD was in fact overloaded.
As a matter of law and fact, therefore, the tribunal concluded that there was no redundancy as there was no diminution of the need for an employee to carry out work of a particular kind.
The employer appealed on the ground that the tribunal had erred in law because it had focused on whether there was a reduction in the amount of work instead of whether there was a reduction in the employer’s requirement for employees to do that work.
Upholding the company’s appeal, the EAT held that employers are free to organise their affairs in whatever way they want. In that event, the motive of the employer is irrelevant to the question of whether the redundancy situation exists. As section 139(1)(b) ERA makes clear, a redundancy situation either exists or it does not. That is therefore the question on which tribunals need to focus.
In this case Berkeley arranged its affairs so that Mr Patel, with or without other existing employees, absorbed the work of the MD. It was irrelevant what his reasons were for doing so. As a result, there was a diminution in the requirement of the business for employees to carry out work of that kind and accordingly a redundancy situation existed.
The EAT stressed however, that that does not mean that an employer’s motive and their conduct towards the individual employee are irrelevant to a claim for unfair dismissal.
First, even if a redundancy situation exists, it does not necessarily follow that the redundancy was the reason for the dismissal. Second, even if the employer proves that the reason was potentially fair, such as for redundancy, section 98(4) ERA requires the tribunal to decide “whether in the circumstances … the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee.”
The EAT remitted the case back to the tribunal to determine if the redundancy situation was the reason for Ms Jackson’s dismissal and if so whether her dismissal was substantively or procedurally unfair.
This case confirms that it is not always helpful to consider whether a redundancy is “genuine”. In the circumstances of this case, it was important to consider whether there was a reduction in the employer’s requirement for employees to do the work available and if so whether the reason for the employee’s dismissal was redundancy.