Definition of redundancy
The classic case of redundancy is where a business closes down altogether, or closes in the place where the employee works. But the concept is wider. An employee is also redundant if his or her dismissal is due to the fact that the business needs fewer employees to carry out 'work of a particular kind', or expects to do so.
This issue was considered in Martland and others v Co-operative Insurance Society Limited.
Redundancy in a re-organisation context
In the context of a business reorganisation or restructuring, a company may need to change the terms on which employees work. If the changes affect job content, it may be necessary to examine how substantial those changes are, in order to decide whether the definition of redundancy applies.
If, for example, a company decides to restructure 10 jobs within a department so that the content of the job changes substantially, it may in fact be deciding that it needs 10 fewer employees to do work of one 'particular kind' and 10 more employees to do work of a different 'particular kind'.
The tribunal’s decision
In Martland, the Co-op wanted to change some of the terms and conditions of its financial advisers. It was unable to obtain consent from the employees to the proposed changes so it terminated their contracts and offered to re-engage them on new terms.
The employees argued that they had been dismissed by reason of redundancy. The extent of the changes (that the company was seeking to implement) constituted a change in the kind of work so as to trigger a redundancy situation as a matter of law.
The company argued that this was not a redundancy but that the employees had been fairly dismissed for some other substantial reason (SOSR). The issue for the tribunal was whether the effect of the new arrangements was to alter the particular kind of work that the employees were carrying out.
The tribunal accepted that there were significant changes which were unwelcome to many of the employees.
However, it held that the changes proposed by the company did not mean that the employees would be employed in a different kind of job. Or that they would be required to carry out work of a particular kind which was different to the work they had performed under their existing contracts.
The tribunal therefore agreed with the company that the dismissals were for SOSR. The employees appealed.
The EAT’s decision
The EAT said that the tribunal’s role was to consider whether or not the change in the nature and quality of the tasks and the way in which they were being carried out was sufficient to justify an inference that the work that the employees did could now be described as being of a different kind.
It went on to say that there is no single right or wrong answer to that question and it involves assessing all the relevant evidence and reaching a judgment. The tribunal had done just that. As such the EAT upheld the tribunal’s decision. Click here for the judgment.
Implications for employers
It will be particularly important to ensure that implementing substantial changes to terms and conditions via the dismissal and re-engagement route does not trigger a redundancy situation in circumstances where the employer has an enhanced contractual redundancy scheme.