Redundancy update

Posted by Oliver Weiss on
Can an employer fairly dismiss an employee for refusing to work in a different location under a mobility clause when his or her workplace closes down? We look at a recent case, and also a salutary reminder of how not to carry out a redundancy process.  

Mobility clauses where a workplace closes

In the first case, Kellogg (an engineering, construction, technology and services company) decided to close down one of its offices. Employees were told that they would be transferring to another office in Leatherhead. While some employees with childcare and other responsibilities were allowed to leave under "exceptional circumstances" with a redundancy payment, Mr Fitton and Mr Ewer were not. They were told to move offices under a mobility clause in their contract. A six month compensation scheme was offered.

Mr Fitton did not have a car and his commute to the new office would be two hours each way. Mr Ewer was 64 and had been employed for 25 years. His commute of 18 miles was increased to 47 miles. He objected to this on the basis of his length of service and fact that this was too onerous as he approached retirement. For both employees it meant an additional 20-30 hours' commute each week, and both refused to go to the Leatherhead office. They were called to disciplinary hearings, following which they were both summarily dismissed. They submitted Employment Tribunal (ET) claims for unfair dismissal and statutory redundancy payments.

The ET found their dismissals unfair, and Kellogg appealed to the Employment Appeal Tribunal (EAT). Although the ET had concluded that redundancy was the reason for the dismissal, and there was a redundancy situation, the EAT held that the reason was in fact conduct because Kellogg alleged that Mr Fitton and Mr Ewer had failed to follow a reasonable instruction under their contracts of employment. However, even though redundancy was not the reason for dismissal, the dismissals were still unfair.

The EAT accepted the ET's ruling that the contractual mobility clause was too wide and uncertain to be enforceable. It purported to allow the employer to move employees to any new office location either in the UK or overseas either on a permanent or temporary basis. The instruction to move to the Leatherhead office under the clause was not lawful. Nor was the instruction reasonable, regardless of the six month compensation scheme. Mr Fitton and Mr Ewer's refusal to obey the instruction was reasonable in the circumstances, and the dismissals were unfair. Because the reason for dismissal was not redundancy, there was no entitlement to a redundancy payment (although Mr Fitton and Mr Ewer would have been entitled to a basic award of effectively the same amount).

This case is a good reminder that mobility clauses will be carefully looked at by ETs, both in terms of how they are worded and how reasonably they are operated in practice. In some circumstances they may allow an employer to avoid a redundancy situation and redundancy payments, but it will depend very much on the specific circumstances.

Perfunctory and insensitive consultation

In the second case, Mr Thomas had over 40 years' service with BNP Paribas Real Estate Advisory and Property Management UK Ltd (BNP Paribas). Following a strategic review, it was decided that the area of the business in which Mr Thomas worked had too many Director and Senior-Director roles than the business and volume of work warranted. Mr Thomas was put in a selection pool of one and told at a meeting – prior to any first formal consultation meeting – that he was at risk of redundancy. He was then immediately put on paid leave and told that he should not contact clients or colleagues. At his first formal consultation meeting the next day he was told he no longer had access to BNP Paribas' computer systems and that he should not access the premises of the company or any group company.

Following the initial meeting BNP Paribas wrote to Mr Thomas, whose name was Peter, beginning the letter, "Dear Paul". In the letter following the final redundancy consultation meeting, the notice of dismissal contained an inaccurate termination date. The final consultation meeting had been delayed by several days because Mr Thomas was on holiday, but the dismissal letter had failed to take this into account when specifying the termination date.

Mr Thomas submitted a claim for unfair dismissal and age discrimination. He alleged that his redundancy consultation was a sham with a predetermined outcome and that the real reason for his dismissal was because BNP Paribas had a practice of dismissing members of staff who were nearly 60.

The ET rejected both claims. It commented nevertheless that getting his name wrong and the termination date wrong was insensitive and that the consultation was carried out "in a perfunctory manner with a lack of sensitivity". However it went on to find that the consultation was reasonable and the dismissal was fair. It made no finding or comment about the fact that he had been put on garden leave even before the first formal consultation meeting, and prohibited from having contact with clients or colleagues. Mr Thomas appealed to the EAT.

Although the EAT accepted the ET's ruling on the age discrimination claim, it upheld Mr Thomas' appeal in relation to his unfair dismissal claim, and held that the ET's finding of a fair dismissal could not stand. The ET had failed to explain why it regarded the consultation as reasonable despite describing it as 'perfunctory and insensitive'. It had also failed to consider the reasonableness of the employer's actions in immediately putting such a long serving employee on garden leave, removing all access to company systems and telling him not to contact anyone even before he had had his first formal consultation meeting with him. It directed that another ET should rehear Mr Thomas' unfair dismissal claim.

This case is a good reminder to employers that they must take extra care in the way that redundancy processes are managed. In particular, employers should think carefully before putting an employee on garden leave in a redundancy situation because this is likely to lead to an inference that the redundancy is pre-determined, and therefore unfair. 

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Oliver heads up the London Employment, Pensions & Benefits and Immigration Team.

Oliver Weiss
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