Key legal findings
In Birkett v Integral UK [2024] EAT 107, the EAT held that the employment tribunal had made insufficient findings in respect of:
• the respondent’s process of searching for alternative jobs, at the time of the claimant’s dismissal, and
• the circumstances in which the claimant was unsuccessful for a specific vacancy, for which he had been interviewed
Both issues were relevant to the fairness of the claimant’s dismissal for the purposes of section 98(4) of the Employment Rights Act 1996 (ERA 1996):
• the Tribunal merely to state a conclusion on a disputed point that there were, for example, no vacancies, without any analysis of, and findings on, the respondent’s enquiries, was not sufficient
• if findings are not made about the basic fairness of the recruitment process, the risk is that it would be open to any employer to absolve itself of liability by offering an interview, without a wider analysis of the fairness for the purposes of ERA 1996, s 98(4)
Material Facts
The claimant was dismissed by reason of redundancy by the respondent.
The respondent secured an interview for the claimant for a vacancy in Manchester after his employment had ended.
The claimant was unsuccessful in being appointed to the Manchester vacancy.
The Employment Tribunal did not hear evidence from the managers who interviewed the claimant as to why he was unsuccessful for the vacancy.
The Law applied to Birkett
· Employment Rights Act 1996, section 98(4) deals with the fairness of dismissal and states that where the employer has fulfilled the requirements of subsection (1), the determination of whether the dismissal is fair or unfair, having regard to the reason shown by the employer, depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee.
· Case law:
Morgan v The Welsh Rugby Union [2011] IRLR 376
Williams v Compair Maxam [1982] ICR 156 -
Submissions of the Parties
The claimant argued that the Employment Tribunal failed to make necessary findings on whether the respondent took reasonable steps to find suitable alternative employment, and on the fairness of the interview process for the specific vacancy.
The respondent argued that the Employment Tribunal's findings were sufficient, as it considered the respondent's redundancy policy and the claimant's previous concerns about relocating or accepting a lower salary.
The Ruling
The matter was remitted to the same Employment Tribunal, if possible, to remake findings only on the two issues identified:
(i) the respondent's process of searching for alternative jobs for the claimant, and
(ii) the circumstances in which the claimant was unsuccessful for the specific vacancy he was interviewed for, when considering section 98(4) of the Employment Rights Act 1996.
The Employment Tribunal's decision to dismiss the claimant's claims for discrimination and its finding that the respondent had shown a fair reason for dismissal (redundancy) were not disturbed.
What are an employers' obligations to find suitable alternative employment in redundancy cases?
Under UK law, employers have a duty to take reasonable steps to find suitable alternative employment for employees selected for redundancy. This obligation is rooted in both statutory requirements and case law. Employers must actively search for alternative roles within the organisation or group and consult with the affected employees about these opportunities.
The Employment Rights Act 1996 (ERA 1996) provides that if an employee unreasonably refuses an offer of suitable alternative employment, they may lose their entitlement to a statutory redundancy payment.
The case of Williams v Compair Maxam Ltd established that employers must do "as much as reasonably possible" to secure alternative employment for employees facing redundancy. That the employer will seek to establish criteria for selection which so far as possible can be objectively checked against such things as attendance record, efficiency at the job, experience or length of service, rather than depending solely on the opinion of the person making the selection. This principle was further examined in Aramark (UK) Ltd (appellant) v Fernandes (respondent) - [2020] IRLR 861, where the Employment Appeal Tribunal (EAT) held that merely placing an employee on a 'bank list' for potential future employment did not satisfy the obligation to find actual alternative employment. However, it is still considered prudent for employers to place potentially redundant employees on such lists to give them every reasonable chance of securing alternative employment before dismissal.
Morgan v The Welsh Rugby Union [2011] IRLR 376 is the key authority in recruitment. This was a profile case concerning the selection of a new national coach development manager by the Welsh Rugby Union. There were two candidates. The first was Mr Morgan, the current national elite coach development manager. His role was to develop coaches with the ability to coach at the premier level of the game. There was a separate post of community rugby coach education manager, held by John Schropfer. His remit was to focus on the development of coaching at lower levels of the game.
Employers are also required to offer a trial period of at least four weeks for any new or renewed employment offered as an alternative to redundancy. This trial period allows both the employer and the employee to assess the suitability of the new role. If the employee terminates the contract within this period, they are treated as having been dismissed when their previous employment ended and may still be entitled to a redundancy payment unless the refusal of the new role was unreasonable Laing v Thistle Hotels plc - 2001 Scot (D) 16/4.
In the case of Gwynedd Council (appellant) v Barratt and another (respondents) - [2021] IRLR 1028, it was highlighted that employers must prioritise employees at risk of redundancy over external candidates when filling available vacancies, provided these vacancies constitute suitable alternative employment. If there are fewer vacancies than employees at risk, a selection process may be held, and it is for the tribunal to decide whether the process was fair.
Overall, the employer's duty to search for suitable alternative employment is a critical aspect of handling redundancies fairly and lawfully. Failure to take reasonable steps in this regard can lead to claims of unfair dismissal and potential liability for redundancy payments.
PW-LA are here to advise employers and employees on all types of dismissals before and after this arises. We advise employers to ensure that they always follow and record procedures they have followed. We advise employees that under no circumstances before seeking independent legal advice, should you resign in response to an employer's failures or conduct that causes you to feel aggrieved.
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