Should employers carry out a “general workforce” consultation even if they are making less than 20 people redundant?

In a potentially significant EAT decision, De Bank Haycocks v ADP RPO UK Ltd suggests that employers carrying out smaller scale redundancies (i.e. less than 20 redundancies proposed in a 90-day period) will need to carry out a form of “general workforce consultation” prior to dismissal. 

In this blog, we look at what a “general workforce consultation” might include and what this means practically for employers carrying out smaller scale redundancy exercises.

Facts

In 2020 a recruitment organisation (“ADP”) experienced a 50% downturn in its demand for work and decided to reduce the size of its workforce.

ADP’s US parent company provided a UK manager with a set of standard selection criteria and asked her to score her 16 team members with a view to reducing team numbers by two.

At the beginning of June 2020, she carried out a scoring exercise (independently and without consulting with the team) and gave the Claimant (Mr De Bank Haycocks) the lowest score. A second team member was also provisionally selected but later accepted voluntary redundancy.

Some weeks after the initial scoring exercise, ADP invited the Claimant to consultation meetings on 30 June and 14 July 2020. ADP did not consult with the Claimant on the selection criteria, nor did it give the Claimant a copy of his scores, or those of the other 15 staff as a comparison. The Claimant was able to ask questions and suggest alternatives to the redundancy.

Following its consultation, ADP dismissed the Claimant for reason of redundancy.

The Claimant appealed, arguing his score was too low. He was provided with a copy of his score at the appeal stage; however, ADP did not share any comparative scores from the other members of the team.

The Claimant brought a claim for unfair dismissal. At first instance, the employment tribunal dismissed his claim. It held that the appeal stage had rectified ADP’s earlier failure to provide the Claimant with his score and the Claimant couldn’t prove that ADP should have ranked him higher (to change the outcome).

The Claimant appealed, arguing that the tribunal had failed to consider ADP’s lack of consultation on both the selection criteria and on the selection pool at a formative stage which, he argued, could have made a difference to the outcome. 

EAT’s decision

The employment appeal tribunal (“EAT”) upheld the Claimant’s appeal and found that ADP had unfairly dismissed the Claimant. 

It found:  

• there was a “clear absence of consultation at the formative stage” and “the absence of meaningful consultation at a stage when employees have the potential to impact on the decision is indicative of an unfair process”.
• consulting at an early stage gives employees the opportunity to discuss the proposals and suggest alternatives to avoid redundancies. The EAT discussed the example of employees proposing and agreeing to take a pay cut as a way of avoiding redundancy altogether. Although that example won’t be relevant/appropriate in every circumstance, it’s a clear example of how early-stage consultation can influence the overall outcome. 
• the appeal did not (and could not) rectify the absence of early-stage consultation.

Good industrial relations in the modern workplace

The most significant part of the EAT’s judgment was its general comments for employers on what good industrial relations practice should look like in today’s workplace. This will vary widely depending on the type of employment, workforce and specific circumstances. However, a key element will be that a reasonable employer should engage in consultation to minimise the impact of a redundancy situation, by avoiding dismissal or limiting numbers affected.

It recognised that there are more unrepresented workforces today than in the 1980s. Where collective consultation obligations are triggered unionised and non-unionised workforces are essentially treated equally in terms of good industrial relations because the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”) sets out a mechanism for electing employee reps (where there is no recognised union) and consulting on prescribed matters such as ways to avoid the redundancy (etc).

However, in smaller scale redundancies where collective consultation obligations are not triggered and where there is no recognised union, there has perhaps been a temptation for employers to overlook what the EAT described as the “general workforce consultation” stage i.e. to give employees an opportunity to comment on the redundancy proposals and ways to avoid or limit dismissals while the proposals are still at a formative stage (and instead move straight to individual consultation). 

To avoid a “dichotomy in the law”, the EAT held that there should also be some form of what it described as “general workforce consultation” unless this would be futile. Individual consultation would then be in addition to this.

What should general workforce consultation involve?

So, what should general workforce consultation involve in a smaller scale redundancy process (where collective consultation obligations are not triggered)? The EAT provided some guiding principles for employers: -

• General workforce consultation must critically, take place at a “formative stage” in the consultation process when there is still an opportunity to make a difference to the outcome.
• It must give affected employees the opportunity to input on the redundancy proposals and propose other means to avoid redundancy.
• Providing these principles are addressed, the EAT was not prescriptive about the consultation process itself. It recognised that it could take different forms and good practice will depend on the circumstances. 
• Employers will therefore need to consider an appropriate mechanism to consult in these circumstances. This won’t necessarily involve the need to appoint representatives, but this may be appropriate/useful in some cases. It may be as simple as initial workforce level comms to all affected employees or a townhall style meeting to invite input/responses to the redundancy proposal.

What is likely to be unfair (as per the facts of this case) is employers skipping through to the individual consultation stage without any opportunity for those affected to comment on the redundancy proposals. 

Many employers may, as a matter of good practice, already hold an initial “at risk” meeting with all those staff affected and provide a period of time for those staff to comment on the initial proposals and selection criteria. The fundamental mistake the employer made in this case was its failure to put all relevant staff at risk and invite comment on the redundancy proposals and proposed selection criteria, before embarking on the scoring process itself. 

Comment

• Employers may be concerned that widening out consultation where collective consultation obligations are not triggered adds time and risks unsettling the workforce. However, non-compliance (without a good excuse) risks a finding of unfair dismissal. 
• Employers can take comfort in the lack of formality prescribed by the EAT – this decision doesn’t go so far as to introduce a rigid form of collective consultation akin to the statutory scheme “via the backdoor”. All employers should however be prompted to review the timing and scope of their consultation process to ensure it covers these “general workforce” principles before the individual consultation stage.
• Providing that employers can evidence they have given employees a genuine opportunity to input on the redundancy proposals and propose other means to avoid the redundancy and at a formative stage, this should go some way to evidencing a fair consultation process.
• This is a novel decision and it may well be subject to appeal or comment from the higher courts. Watch this space.

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