Reminder: employers should consult about a proposed redundancy pool of one

“Economic growth” has been a buzzword in the general election campaign, in a climate of ongoing economic uncertainty. Meanwhile, the development of more sophisticated AI tools means that businesses are rethinking the ways in which they operate. Against this backdrop, it is perhaps unsurprising that some employers are looking ahead to possible redundancies.

In a previous article about the Mogane v Bradford Teaching Hospitals NHS Foundation Trust case, we posed the question “Can you have a redundancy pool of one?” and concluded “Yes, in theory, but not if your decision to have a pool of one was arbitrary and you should have consulted with the single pooled employee.”

It appears this a common pitfall. The recent Employment Appeal Tribunal (EAT) decision in Valimulla v Al-Khair Foundation (applying the Mogane case) serves as a useful reminder of the importance of consulting on a proposed redundancy pool, particularly if the employer proposes to select a pool of one.

Background

In the Valimulla case, the claimant worked as a liaison officer involved in raising funds for the respondent charity and was based in the North West of England. Other employees performed the same roles in other parts of the country. During the Covid pandemic, there was a downturn in donations and the work for the liaison officers therefore decreased. The respondent placed the claimant at risk of redundancy in a pool of one. The other liaison officers were not placed at risk. Although three consultation meetings were held, there was no consultation about the appropriateness of the pool. The claimant was dismissed and brought a claim for unfair dismissal.

The Employment Tribunal held that the claimant had been fairly dismissed for redundancy. It accepted the respondent’s submission that the claimant’s role was “unique” and that he was therefore in a self-selecting pool of one. It concluded that the process was not so flawed as to render the dismissal unfair. The claimant appealed.

The EAT allowed the appeal. The Employment Tribunal had not considered whether the respondent had genuinely applied its mind to the appropriateness of the pool (ie why the claimant was placed in a pool of one despite other staff performing the same role, albeit at different locations). The EAT found that the redundancy consultation had only taken place after the key decision (the identification of a pool of one) had been made, which meant that the consultation was not meaningful, and the dismissal was procedurally unfair.

Lessons about redundancy pooling

The commentary in our previous article about the Mogane case remains relevant.

Here are a few lessons about redundancy pooling confirmed in the Valimulla case, particularly where you have a proposed pool of one:

1. Plan: Employers should carefully consider the pool from which employees should be selected for redundancy. This will involve considering what roles potentially affected employees have, the similarities and differences between the roles of other employees, and therefore the rationale for proposing to apply a particular pool.
2. Test: If an employer considers that a particular employee’s role is “unique”, this should be stress-tested. Ask yourself: are you artificially narrowing the pool in the hope of giving yourself an easy life, or is the role genuinely distinct?
3. Document: This analysis for arriving at the proposed pool should be documented.
4. Consult: No matter the number of redundancies planned, consultation is a key aspect of a fair redundancy process. To be meaningful it must take place at a time where it can potentially make a difference. Placing an employee in a redundancy pool of one often means that their selection for redundancy is inevitable. In such cases, fairness is likely to require consulting the employee about the proposed pool. As the EAT in Valimulla reminded us:
   
   

“Meaningful consultation does not mean simply informing staff about a decision or proposal, giving them opportunity to make representations, and then putting into effect the proposal or decision which had, in truth, already been made. Meaningful consultation means setting out a provisional proposal, along with the rationale, and providing an opportunity for feedback, comments or observations.”

5. Reflect: The employee’s response to the proposed pool should be considered. As the EAT in Valimulla said:
   
   

“A decision maker should consider the responses elicited through consultation with an open mind, considering whether they alter the initial proposal and why that is, if not, why not, but only then making a decision.”

6. Document: This final decision about the pool and its rationale should be documented.
   
   

Additional resources on redundancy exercises

For more detailed information on redundancy exercises, please see the other redundancy reminder blogs that we have published:

• Top ten pitfalls to avoid when handling redundancy exercises
• How to run a fair selection process
• Employee consultation: redundancies and beyond
• Alternatives to making redundancies
• Redundancy reminders: can you have a redundancy pool of one?
  
  

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, June 2024