#13952 - Redundancy - Employment Law

Eligibility (burden of proof on employee)
- within time limit (6 months [-1day] from termination)
- at least 2 years' service (continuous)
- not excluded class
Dismissal
- actual
- constructive
- non-renewal at end of fixed-term contract
Redundancy
- job redundancy (entire business closed)
- employee redundancy (position closed)
- place of work redundancy (where did they work)
- did the redundancy situation cause the dismissal?
- was previous/alternative job offered back?
- was the offer unreasonably refused or terminated?
Payment Calculation
- age factor x final week's gross pay (below stat min) x number of full years continuous service
Other Claims
- consider possibility of unfair/wrongful dismissal claims

STATE THE CLAIM BEING MADE - REDUNDANCY

An eligible employee, dismissed by reason of redundancy, will be entitled, at a minimum, to a statutory redundancy payment by his employer (ERA 1996, s 163). Claimant must be an employee, have been dismissed, have the requisite period of continuous employment and not be within an excluded class.

TIME LIMITS	Must be within time limits – 6 months (less 1 day) from EDT (effective date of Termination)
MUST BE AN ‘EMPLOYEE’	An individual who works under a contract of employment (s.230(1)) Not self-employed workers
HAVE THE REQUISITE PERIOD OF CONTINUOUS EMPLOYMENT PRIOR TO DISMISSAL	Two years continuous employment at the date of termination (s.108) The effective date of termination is calculated in the same way as for unfair dismissal (s.145) Notice periods apply to the calculation of the time served (s.97) e.g. Mary commenced work just under 2 years ago and is just one week short of having two years service – her contract provides that she must be given two weeks’ notice Part-time staff have equal rights with full-time There are no age limits
NOT BE FROM AN EXCLUDED CLASS	Minority of cases: Mariners Domestic servant & a relative of the employer
PRECEDENT	[NAME] is an employee as they have an employment contract (s.230(1)). They have the requisite period of continuous employment as [NAME] commenced work [YEARS] ago. [NAME] is not part of an excluded class. [NAME]’ employment was terminated on [DATE] therefore [he/she] would have to bring claim within 6 months (less one day) by midnight [DATE].’

Have been dismissed (s.136(1))

ACTUAL DISMISSAL

On the facts, [EMPLOYEE] was [DIMISSAL] therefore he has been actually dismissed without notice.

TERMINATION OF A FIXED TERM CONTRACT
EXPIRY OF THE CONTRACT UPON COMPLETION OF THE TASK
CONSTRUCTIVE DISMISSAL –( resigns due to employer repudiatory breach)

‘On the facts, [EMPLOYER] has…

(check any clauses for guidance on whether it could be argued that the reason is ok)

Reduction in salary (express term of contract
Change in job description (helpline worker now not a trainer, differences in the jobs i.e. no more face-to-face customer contact)

Change of contractual hours (does contract permit this) (Temp change not perm) (unsocial hours – 7pm finish)
Removal of a bonus
Transferring power to another on a permanent basis when employee is away is a breach of the implied term of trust and confidence
Not receiving a pay rise when all his colleagues have – breach of the implied duty of trust and confidence

This is a repudiatory (not minor) breach of [express or implied] terms of the contract which will entitle [EMPLOYEE] to resign (without or without notice) and discharge the contract for constructive dismissal (Western Excavating).

[EMPLOYEE] has a good chance despite it being difficult to prove. [EMPLOYEE] [DID/MUST] resign within a reasonable time of the breach [DATE EXAMPLE].

Minor breaches wont justify a resignation unless ‘last straw’, which is the last of many minor breaches, resignation may be justified as employers conduct is looked at as a whole (Abbey National v Robinson)

DEFINITION	Look at the actual situation rather than what the contract says S.139(1) ERA Where the business ceases to operate Where the business ceases to operate in the place where the employee is employed Where the employer no longer needs as many employees
‘JOB REDUNDANCY’	Where the business ceases to operate (s.139(1)(a)(i)) The employees are automatically entitled to a redundancy payment Temporary cessation of business is a redundancy situation ‘First we must look if there is a redundancy situation. Under s.139(1)(a)(i) an employee who is dismissed by reason of the closure of the employer’s business will be dismissed by reason of redundancy. On the facts, [EMPLOYER] is ceasing to operate [temporarily] therefore [EMPLOYEE] is being dismissed by reason of job redundancy’.
‘PLACE OF WORK’ REDUNDANCY	Where the business ceases to operate in the place where the employee was employed (s.139(1)(a)(ii)) i.e. where the employee actually work (factual test) or could be required to work (contractual test) ‘First we must look if there is a redundancy situation. Under s.139(1)(a)(ii) a dismissal is considered redundancy where the business ceases to operate in the place where the employee was employed. On the facts, [EMPLOYER] is moving the business to [LOCATION/DISTANCE] in order to [REASON] therefore [EMPLOYEE] is being dismissed by reason of work place redundancy’.
‘EMPLOYEE’ REDUNDANCY	Where the employer no longer needs as many employees (s.139(1)(b)) Initial overstaffing Even though the same amount of work is being done Fellow employees can absorb the work done by the dismissed employee Implementation of new technology Re-organisation of work methods may produce a more efficient system requiring less employees Taking on an independent contractor to do the same work Work carried out by an employee may be done in fewer hours so the employer seeks to reduce hours WORK OF A PARTICULAR KIND If the nature of the work has changed fundamentally so that work of a particular kind has ceased or diminished, even though it has been replaced by different work = still redundancy (e.g. plumber replaced with a heating technician due to implementing new heating system (Murphy v Epsom College) If an employee is replaced because they are too slow and the employer cannot afford them = NOT redundancy as doesn’t come under work of a particular kind as the work hasn’t ceases or diminished In Safeway Stores v Burrell [1997], the EAT held a 3-stage process to see whether a redundancy situation under s.139(1)(b) existed. Was the employee dismissed? If so, Had the requirements of the employer’s business for employees to carry out work of a particular kind ceased or diminished, or were they expected to cease or diminish? (applicants contract irrelevant) If so, Was the dismissal of the employee caused wholly or mainly by that state of affairs? ‘First we must look if there is a redundancy situation. Under s.139(1)(b) ERA 1996 an employee is dismissed by reason of redundancy if the reason for his dismissal is that the requirement for employees to do work of a particular kind has ceased or diminished. On the facts, [EMPLOYEE] was dismissed because [EMPLOYER] has [CHOOSE REASON 1-5 ABOVE] therefore work of a particular kind [JOB] has ceased/diminished; and the dismissal was caused wholly because of this reason (employee redundancy) (Safeway Stores v Burrell)’

DEFINITION

Look at the actual situation rather than what the contract says S.139(1) ERA
- Where the business ceases to operate
- Where the business ceases to operate in the place where the employee is employed
- Where the employer no longer needs as many employees

‘JOB REDUNDANCY’

Where the business ceases to operate (s.139(1)(a)(i))

The employees are automatically entitled to a redundancy payment
Temporary cessation of business is a redundancy situation

‘First we must look if there is a redundancy situation. Under s.139(1)(a)(i) an employee who is dismissed by reason of the closure of the employer’s business will be dismissed by reason of redundancy. On the facts, [EMPLOYER] is ceasing to operate [temporarily] therefore [EMPLOYEE] is being dismissed by reason of job redundancy’.

‘PLACE OF WORK’ REDUNDANCY

Where the business ceases to operate in the place where the employee was employed (s.139(1)(a)(ii))
- i.e. where the employee actually work (factual test) or could be required to work (contractual test)

‘First we must look if there is a redundancy situation. Under s.139(1)(a)(ii) a dismissal is considered redundancy where the business ceases to operate in the place where the employee was employed. On the facts, [EMPLOYER] is moving the business to [LOCATION/DISTANCE] in order to [REASON] therefore [EMPLOYEE] is being dismissed by reason of work place redundancy’.

‘EMPLOYEE’ REDUNDANCY

Where the employer no longer needs as many employees (s.139(1)(b))

Initial overstaffing

Even though the same amount of work is being done
Fellow employees can absorb the work done by the dismissed employee

Implementation of new technology
Re-organisation of work methods may produce a more efficient system requiring less employees
Taking on an independent contractor to do the same work
Work carried out by an employee may be done in fewer hours so the employer seeks to reduce hours

WORK OF A PARTICULAR KIND

If the nature of the work has changed fundamentally so that work of a particular kind has ceased or diminished, even though it has been replaced by different work = still redundancy (e.g. plumber replaced with a heating technician due to implementing new heating system (Murphy v Epsom College)
If an employee is replaced because they are too slow and the employer cannot afford them = NOT redundancy as doesn’t come under work of a particular kind as the work hasn’t ceases or diminished

In Safeway Stores v Burrell [1997], the EAT held a 3-stage process to see whether a redundancy situation under s.139(1)(b) existed.

Was the employee dismissed?

If so,

Had the requirements of the employer’s business for employees to carry out work of a particular kind ceased or diminished, or were they expected to cease or diminish? (applicants contract irrelevant)

If so,

Was the dismissal of the employee caused wholly or mainly by that state of affairs?

‘First we must look if there is a redundancy situation. Under s.139(1)(b) ERA 1996 an employee is dismissed by reason of redundancy if the reason for his dismissal is that the requirement for employees to do work of a particular kind has ceased or diminished. On the facts, [EMPLOYEE] was dismissed because [EMPLOYER] has [CHOOSE REASON 1-5 ABOVE] therefore work of a particular kind [JOB] has ceased/diminished; and the dismissal was caused wholly because of this reason (employee redundancy) (Safeway Stores v Burrell)’

DID THE REDUNDANCY SITUATION CAUSE THE DISMISSAL OF THIS EMPLOYEE?

EMPLOYEE REDUNDANCY

‘Secondly, we must consider whether the redundancy situation caused the dismissal of this employee. Bumping occurs when employee A’s job disappears then employee A is transferred to a new workplace and employee B is dismissed. On the facts, [EMPLOYEE KEPT ON]’s job has ceased [DEPARTMENT GOING] therefore [HE/SHE] has been moved to [REDUNDANT EMPLOYEE]’s role and [REDUNDANT EMPLOYEE] has been ‘bumped’ [OUT/INTO ANOTHER ROLE] by reason of redundancy ((W Gimber & Sons Ltd v Spurrett).’

PLACE OF WORK REDUNDANCY

Mobility clauses

In Bass Leisure Ltd v Thomas [1994] this was held to be factual, AND

High Table Ltd v Horst [1997] (CofA);

If an employee has worked in only one location, that is their place of work-regardless of any mobility clause in their contract.
If an employee has worked from several locations, the place of work is still to be established by a factual enquiry, taking into account any contractual terms that might assist in evidencing their place of work, for example a mobility clause.

E.g. if they asked to work in a different location and refuse then it is possible that they may be dismissed for reasons of conduct (Home office v Evans) not redundancy

‘Secondly, we must consider whether the redundancy situation caused the dismissal of this employee. If there is a mobility clause within an employee’s contract and the employee is offered alternative employment then they may not automatically qualify for a redundancy payment. [EMPLOYEE]’s contract contains a mobility clause therefore [HIS/HER] failure to move was a breach of contract (misconduct) which lead to her dismissal (Bass Leisure Ltd v Thomas) not redundancy’.

IF NO employee entitled to redundancy payment – (see below)

Offers of employment s 141(2)-(4)	Before the ending of the old contract, he must be offered a new contract and...

#13952 - Redundancy - Employment Law

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