Employment Law Case Update: Unfair Redundancy Procedure

Carrying out redundancies will be a sensitive matter for all concerned and it is vital that employers follow the necessary procedures and do not come to any conclusions before the relevant meetings.  Our Employment Law team today review the case of Mr J Choudhury v Gatehouse Bank plc 2020 in which the Employment Tribunal (ET) considered whether a redundancy process had merely been ‘cosmetic’.  

Mr Choudhury worked for the company from May 2015 until his dismissal in August 2019. In December 2018 he became concerned that he had personal liability for company assets in Paris. He wrote to the company’s CFO asking for details of the assets’ insurance cover, and more emails were exchanged regarding this issue in the days leading up to Christmas.

On the morning of December 25, Mr Choudhury phoned and sent further emails to his line manager, Mr Stockwell, asking about the indemnity issue. Mr Stockwell responded by email that the company would fully indemnify him. Mr Haresnape, the CEO, had been copied in to the 25 December emails and in response wrote: “Do you realise that for many today is a festive period and your emails could have waited until after tomorrow? Please think about this.”

The ET heard that at a meeting with Mr Choudhury in January 2019, Mr Haresnape was annoyed at the Christmas Day disturbance and told Mr Choudhury that he would not like it if his Eid celebrations were disturbed. Mr Choudhury’s notes following the meeting indicate that it was heated, and that Mr Haresnape was deeply angry. Mr Choudhury’s view was that after this meeting Mr Haresnape regarded him as “a difficult character”.

In June 2019, it looked as if a deal between the company and a potential investor was not going to move forward and, as a result, a restructure would be necessary. In a phone call, Mr Stockwell and Mr Haresnape listed several names of people whom they planned to make redundant. Mr Stockwell relayed that their HR consultant “was of the view that ‘we just make them redundant… that we compromise’,” but also told Mr Haresnape not to mention any names yet.

One of the names was Mr Choudhury’s. Mr Haresnape referred to Mr Choudhury as a “pain in the arse” and reminded Mr Stockwell that Mr Choudhury was “the guy hassling us on Christmas Day”. At this time, Mr Choudhury was on leave for Eid, and Mr Haresnape said, “It’s now Eid as far as he is concerned and therefore this is dead important probably as well, unlike Christmas for us, which was not important in the slightest.” Mr Stockwell concluded “he’s gone now, that’s it, we don’t need him anymore”.

Mr Stockwell completed a restructure plan in early July 2019 and soon after met with Mr Choudhury for an initial consultation meeting. Mr Choudhury raised several concerns, including that he felt his redundancy was linked to his strained relationship with Mr Haresnape.

In August 2019 Mr Choudhury received an outcome letter which confirmed that he was being made redundant effective immediately and that he would be paid in lieu of working his notice period. Mr Choudhury appealed his redundancy but was unsuccessful.  He subsequently filed a claim for unfair dismissal.

The ET accepted that there was a diminution in work at the company but concluded that the company had failed to follow a fair redundancy process. Judge Joffe said “the consultation was a cosmetic exercise” and that “a planned outcome of the redundancy process was the dismissal of [Mr Choudhury]”. Discussions between Mr Stockwell and HR were about constructing a process to make the redundancy look fair in order to achieve this pre-determined outcome.

The company was ordered to pay Mr Choudhury £20,134.25 for unfair dismissal.

This case reminds employers that they should not begin a redundancy procedure having already decided on the outcome. Employers should consult with the affected employees in good faith, and genuinely consider any alternatives. When choosing who will be made redundant, employers must apply objective criteria and not allow personal feelings towards the employees to affect the process.

If you have any questions regarding this article, you can call our Employment team today on 023 8071 7717 or email employment@warnergoodman.co.uk.

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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.