Legal background
The law obliges an employer, who is proposing to dismiss as redundant 20 or more employees at one establishment within 90 days or less, to consult collectively about the dismissals.
If an employer fails to do so, an employment tribunal can make a protective award of up to 90 days’ pay for each employee dismissed as redundant, or proposed to be dismissed as redundant. As the protective award is based on actual pay, it can be very expensive for employers to fall foul of this legislation.
In this case, the question arose as to whether or not three individuals who had volunteered for redundancy should have been factored in when deciding upon the number of proposed dismissals.
Facts
Optare Group Ltd (OGL) made 17 compulsory redundancies, immediately on the back of 3 voluntary redundancies. OGL did not consult collectively, and the TGWU alleged this was in breach of the legislation (ie, the 3 volunteers should have been included in the numbers of employees it proposed to make redundant). OGL, by contrast, argued that it didn’t need to include the three volunteers as it did not propose to dismiss them by way of redundancy.
Judgment of employment tribunal and EAT
Neither the employment tribunal nor the EAT agreed with OGL. Both were of the view that OGL had proposed to make 20 people redundant within a 90-day period – this meant the collective consultation provisions were engaged and a protective award could be made for failure to consult.
It is worth looking at the rationale lying behind the employment tribunal’s conclusion that the employees had not resigned and had in fact been dismissed by reason of redundancy. It was influenced by the particular facts, namely that the three individuals had not volunteered prior to the redundancy selection exercise occurring. The only reason they volunteered was because they had been invited to do so when OGL tried to mitigate the impact of the redundancies.
Against those particular facts, the EAT agreed with the TGWU that it would be wrong to go further and investigate the reasons behind an individual's decision to volunteer. In its view, where an employer in an existing redundancy situation invites employees to volunteer for redundancy, some of them do so and, as a result, their employment is terminated, that allows a tribunal to conclude that the proper cause of the termination of their employment was their volunteering to be dismissed.
Practical lesson
Employers sometimes fall into the potentially dangerous trap of automatically assuming that those who volunteer for redundancy are resigning rather than being dismissed, and fail to include them when calculating the number of employees they is proposing to dismiss.
As illustrated in this case, employers usually seek volunteers to mitigate the impact of proposed redundancies, and employees volunteer in response to that invitation. In this sort of situation, employees are not resigning, but are volunteering to be dismissed.
This is not to say that someone who volunteers for redundancy must always be regarded as having been dismissed. It will depend on the precise facts. In deciding this issue, tribunals will take account of the realities in which the resignation occurred, the nature of the scheme of which resignation is a part, and the documentation which reflects what the parties believed they were doing.
When seeking volunteers to mitigate the impact of any proposed redundancies, the safest course of action for employers to take is to factor in those volunteers when calculating the overall number of employees they are proposing to make redundant. This will ensure that they do not inadvertently fall foul of their collective consultation obligations.