Small-scale redundancies don’t require ‘general workforce consultation’, rules Court of Appeal

In a welcome development for employers the Court of Appeal has ruled that general workforce consultation is not mandatory for small-scale redundancies, overruling a previous EAT decision on this point. The case, De Banks Haycocks, has significant implications for employers managing individual or small-scale redundancies where fewer than 20 employees are involved within a single establishment over a 90-day period. We’ll speak to an employment lawyer about what this ruling means for businesses operating small scale redundancies.

Previously, the EAT decision had ruled that good industrial relations practice involves ‘general workforce consultation’ at a formative stage, including for small-scale redundancies in non-unionised workplaces. That ruling was viewed by many at the time as problematic because it wasn’t clear what kind of ‘general workforce consultation’ employers needed to conduct, particularly where there were no existing recognised trade unions or employee representative bodies. The good news is the Court of Appeal has now overruled the EAT. They said it didn’t make sense because a group of individual employees would have no mandate to represent the views of the group as a whole, only their own individual views. 

The key takeaway from this ruling is therefore that general workforce consultation is not mandatory for small-scale redundancies. The Court of Appeal says that requiring group consultation in these situations goes beyond the current statutory framework, which applies collective consultation rules only to larger-scale redundancies. As for the overall fairness of the process and the level of consultation required, the Court of Appeal said it depends on the specific facts, not on adherence to any additional, non-statutory requirements.

Whilst helpful, this ruling doesn’t go as far as granting employers carte blanche to bypass meaningful consultation. So, while group meetings are not mandatory, the Court of Appeal emphasised the importance of allowing individuals to express their views on issues that may affect the wider group, such as the rationale for redundancies, selection pools, and criteria, during the consultation process. This can be achieved through individual meetings, ensuring the consultation is meaningful and conducted at a formative stage, when employee feedback can still influence the decision-making process.

So, let’s consider the practical implications of this ruling. Earlier I spoke on the phone to employment lawyer Gill Ross who is based in Glasgow to get her reaction to it:

Gill Ross: “I think employers will be delighted that this decision has been overruled because it was difficult, it didn't make much sense, and I think probably a lot of our clients just kept on with the processes that they previously used with group briefings initially, and then individual consultation, because that that has worked in the past and doing wider workforce consultation just didn't really make sense. So I think a lot of employers probably haven't changed too much in terms of their practices. Going forward, I think the Court of Appeal made some interesting comments. Obviously,  it has always been a key factor of a fair redundancy process that consultation has to take place at a formative stage before decisions have been made and that's critical and nothing has changed in that respect and they have emphasised that's still to be the case. They suggested that group meetings might be helpful where, for example, there are issues that affect the collective group. So if you've got ten people at risk of redundancy, rather than just speaking to each of them on an individual basis about the whole of the consultation process and all of the issues, you could perhaps speak to them on a group basis about things like selection criteria, or the redundancy terms, or the timescales. All of that could be done on a group basis rather than an individual basis and then keep individual consultation meetings for issues that are particular to the employees. But I suspect most employers will probably stick to the methods that they've used, tried and tested methods for years, rather than switching between group meetings and individual meetings. It might have a time saving aspect for certain employers. I think they could think about what aspects they could build into group meetings but, yes, I think probably the main change in terms of what is going on with the wider picture with the Employment Rights Bill is that the removal of the single establishment test so while workforce consultation isn't required on small scale redundancies following this Court of Appeal decision in Haycocks, employers are going to face that more readily anyway because they're going to hit the 20 threshold more quickly.”

Joe Glavina: “The suggestion is that it's good practice to give employees at risk of redundancy a chance to comment on the redundancy and selection criteria before any scoring exercises are carried out and to give employees their own scores during the consultation process. Is that something you advise clients to do?”

Gill Ross: “Yes, that's the best practice I think, ultimately. There is consultation about what the criteria are, allow employees to review that before the scoring takes place and they should see their scores as part of the redundancy process and that is what didn't happen in Haycocks, that was one of the procedural problems. A lot of employers will have a set of criteria already where they will just use them all the time and they might not always consult with employees about what they are because that's what they've always used and they feel that they're fair and objective and they can provide sufficient evidence to justify scores. So, in that situation, some employers might feel that they don't need to consult because they may have previously consulted with unions, particularly if unions are happy with those criteria already they may just keep using them. There is always the issue of open book scoring versus closed book scoring. So closed book would be where they carry out the scoring process before they start consulting with employees, so that's already been determined, and then they just then consult with those who are identified as most at risk. That can lead to allegations of an unfair process but some employers choose to do that to minimise the impact on the wider workforce.”

Joe Glavina: “Employees don’t have an automatic right to appeal in a redundancy situation but it’s an option employers can offer. Is that something you advise generally?”

Gill Ross: “Yes, I think it's always good practice to have a right of appeal in place and Acas advise that that's good practice and I think all the employers that I work with would offer a right of appeal. Perhaps somebody who doesn't have under two-years’ service at the moment, they wouldn't offer a right of appeal because, again, there's limited risk but I always think it's part of any fair process that there is the right to appeal the decision,”

Joe Glavina: “Finally Gill, what’s your message for HR professionals in house legal as a result of this case?” 

Gill Ross: “Think about your redundancy process, plan what it's going to be, make sure it's done at an early stage and it's meaningful consultation. I know, in some circumstances, the redundancy decision is probably almost there, but the consultation should take place before those final decisions have been made so that employees can influence potential outcomes that maybe the employer hasn't thought about. Think about whether wider workforce consultation would be helpful for the employer and the employees involved and just ensure a fair process from start to end, including that right of appeal that we discussed as well.”

That case is called De Bank Haycocks and is a decision of the Court of Appeal. We’ve included a link to the judgement in the transcript of this programme for you.

- Link to judgement: De Bank Haycocks v ADP RPO UK LTD