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Employment Law Case Update: Redundancy cover for dismissal

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When dismissing an employee, it is vital that employers do so using a fair procedure and are transparent about the reasons behind the dismissal.  In the case of S Sparks v DB Cleaners and Launderers Ltd, the employer used redundancy opposed to dismissal as a reason to rid themselves of an employee.

Mrs Sparks was an administrator with DB Cleaners and Launderers from 2012 until her resignation in February 2019.

In 2019, Mrs Sparks’ branch manager, Mr Little, investigated her use of free laundry service - a perk reserved for company directors. Mrs Sparks claimed her former branch manager had allowed the discount as compensation for her salary being unilaterally reduced by £3,000 when the firm was bought by a larger company in 2015. Mr Little concluded the investigation without bringing the matter to a disciplinary, concluding it was better to move forward with new instructions since he did not know the situation before his appointment.

After this investigation, many of Mrs Sparks’ duties were removed from her. She expressed her concerns to Mr Steed, the area manager, seeking an explanation. In response, after approaching higher management Mr Steed held a meeting with Mrs Sparks on 14 February 2019. At the beginning of this meeting he asked her to sign a document headed “without prejudice to negotiations.” Mrs Sparks claimed she was assured that signing it would not be detrimental to her job. Mr Steed then informed Mrs Sparks of the possibility of moving administration from Cardiff to Worcester, and asked how much money it would take for her to leave her job.

Mrs Sparks did not want to leave her job but Mr Steed allegedly kept pressing for an answer. At this meeting they worked out she would likely be entitled to a redundancy payment of £3,800.00. Mr Steed offered £1,500.00 plus her wages to the end of the month, giving her a day to decide. She refused the offer the next day and it was then increased to £2,000.00. She was allegedly told by both Mr Steed and Mr Little that if she didn’t accept the offer, she would end up with nothing and so accepted the £2,000.00.

Six weeks later, Mrs Sparks wrote to the company, raising a grievance about her dismissal. When it was rejected she brought claims in the Employment Tribunal (ET). 

The ET did not accept Mr Little’s reasons for dropping the initial investigation but considered the real reason was so that Mrs Sparks “could not be dismissed by this means without risk.” The company’s argument that Mrs Sparks freely entered into negotiations was also rejected. The ET found that she had been misled as to the purpose of the meeting with Mr. Steed and misled into signing a document, on the assurance her employment would not be affected.

The ET found the pressure exerted by Mr Steed amounted to an “ultimatum to resign or be dismissed”, amounting to a dismissal. The dismissal was substantively unfair because the company used it to avoid paying a statutory redundancy payment. The ET held it was also procedurally unfair because Mrs Sparks was not allowed input and not given the chance to put forward her own solutions to potential redundancy.

The ET awarded Mrs Sparks £12,897.95, based on lost wages, benefits, and statutory rights, but reduced by 10% to reflect that Mrs Sparks would have been made redundant anyway, had the right procedure been followed.

This case illustrates the importance of due process when dismissing employees. Further, employers should be cautious to not use redundancy as a cover for the dismissal of a difficult employee.

If you have any questions regarding this article, or you would like guidance on how to conduct a thorough and compliant dismissal or redundancy process, you can call our Employment team today on 023 8071 7717 or email employment@warnergoodman.co.uk.

This was previously part of our weekly Employment Law Newsletter. If you would like to subscribe, please email us at events@warnergoodman.co.uk or just fill in our subscription form.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.