Redundancy and the Principal Reason for Dismissal

The Problem

Imagine the scenario.  You are the employer and you have an employee who is ‘just not cutting it’.  The director is putting pressure on you to ‘do something about it’.  However, because of their length of service, the employee has the right not to be unfairly dismissed.  There is nothing you can do quickly, which is why performance management procedures do not appeal, so you have to consider your options.  You wonder if you could make him redundant?  We are often asked to advise on scenarios like this.  Often there is an existing ‘redundancy situation’ which is obvious or which can be genuinely created.  However, the risk remains – if the employee is aware of their failings will they connect their dismissal to the redundancy situation or to some other reason?

This is what happened in Fish v Glen Golf Club. Mr Fish was employed by Glen Golf Club as its secretary.  He was dismissed, purportedly by reason of redundancy. Prior to dismissal Mr Glen had felt that the club had been critical of him and that this was the reason for dismissal.  Indeed, during the disclosure exercise in the proceedings he discovered a draft management report which was critical of his performance.  The tribunal found the reason for dismissal was redundancy.  Mr Glen objected to this and appealed on the grounds of perversity.

The Principles

When an employee is dismissed, it is for the employer to show a potentially fair reason for dismissal.  While there may be more than one reason for dismissal, it is for the tribunal to identify the principal reason for dismissal.  Sometimes an employer proffers a reason for dismissal which turns out not to be the real reason for dismissal and tribunals should be alive to this possibility.

In this case the EAT upheld the tribunal’s decision, finding there had not been a perverse decision of the tribunal in concluding the principal reason for dismissal was redundancy.

The Practice

When considering its decision, the EAT was very aware of previous case law which noted that, “Even where there is a redundancy situation, it is possible for an employer to use such a situation as a pretext for getting rid of an employee who it wishes to dismiss.  In such circumstances, the reason for dismissal will not necessarily be redundancy.  It is for the industrial tribunal in each case to see whether, on all the evidence, the employer has shown them what was the reason for dismissal”.

In this case the tribunal had examined whether a redundancy situation existed, within the legislative meaning, as well as whether the principal reason for dismissal was redundancy.  It had recognised that “the fact that a dismissal occurs during a redundancy situation does not necessarily show that it was because of the redundancy situation that it occurs”. The EAT found that the tribunal had not jumped straight from the fact that there was a redundancy situation to the fact that this was necessarily the cause of the dismissal.  Neither did the tribunal commit the error of identifying redundancy as the sole reason for dismissal, identifying it as the principal reason.

In light of the warnings of this case, when considering how best to remove an employee, employers should keep in mind that labelling a dismissal as redundancy does not necessarily mean a tribunal will agree.  Indeed, employers should also keep in mind that engineering redundancies is often risky, especially if evidence would indicate the principal reason for dismissal is not redundancy.

The critical point for employers is to proceed with caution and ensure there is weight of evidence pointing to a genuine redundancy situation and away from, say, performance concerns.

For more information, help or advice please contact Tim Davies on 0191 211 7927.