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May 2013 - Sham redundancies - know your rights

Sham redundancies – are you a victim?

By Karen Bristow, lawyer specialising in Employment

There are not many families that have avoided that dreaded word ‘redundancy’.  It is hard enough for employees to come to terms with their employment being terminated when there is a genuine redundancy situation.  It becomes impossible when their employer just uses the term redundancy as an excuse to dismiss when there are no genuine grounds for doing so.

An employer can only lawfully dismiss you for a potentially fair reason under English law.  These reasons are:

1. Capability – where they believe you are unable to do your job properly, e.g. underperformance, inability to work with colleagues or because of persistent or long-term sick leave.   
2. Misconduct – where you have been found guilty of gross misconduct or a series of acts of misconduct which you have been disciplined for.
3. Statutory restriction – where your ongoing employment would break the law, e.g. a lorry driver who has been disqualified from driving.
4. Redundancy – where the employer’s requirement for employees to carry out work of a particular kind has ceased or reduced.
5. Some other substantial reason (SOSR) - a ‘catch-all’ category which applies if there is a substantial reason to dismiss, e.g. refusing to accept reasonable changes following a business reorganisation.  

Employers will often look to avoid dismissing employees where they have a potentially fair reason to dismiss, such as on capability, misconduct or SOSR grounds, due to the time-consuming procedures in place which they would be expected to follow.  For example, a fair procedure to dismiss an employee who is under-performing would involve proper investigation/appraisal of the employee's performance and identification of the problem, warning of the consequences of failing to improve and a reasonable chance to improve.  In these cases they may engineer a redundancy situation to dismiss the employee, especially where the employee is in a unique role.

Sometimes employers wish to dismiss for discriminatory reasons (e.g. because of the employee’s age, sex, race, disability, sexual orientation, gender reassignment, marriage or civil partnership or religion or belief), for automatically unfair reasons (e.g. because of jury service or because the employee has complained about issues relating to health and safety, working time, minimum wage, flexible working or perhaps because an employee has whistle-blown or joined a trade union) and so they seek to dismiss under the guise of a  redundancy.  

For a redundancy dismissal to be fair, there must be a genuine redundancy situation, the employee must have been fairly selected for redundancy and the employer must have followed a fair procedure.  When determining the fairness of a redundancy dismissal Employment Tribunals are not normally entitled to investigate the reasons behind the redundancy situation. 

There is no requirement for employers to demonstrate that they were forced into making redundancies because of economic reasons, a sound commercial reason which can be objectively justified will suffice.  This does not mean to say that they will always take the employer’s reason at face value, especially where an employee establishes facts which suggest that their selection was discriminatory and the redundancy situation was a sham. 

Examples of cases which Employment Tribunals have found ‘redundancies’ to have been a sham and discriminatory:

While off work due to illness, an employee discovered she was pregnant and informed her employer. Later the same day the employer delivered a letter to her home saying they were commencing a 14-day consultation period for redundancy due to a down-turn in business. The letter said they were considering making about 11 people redundant, but actually she was the only person dismissed.  Although she was still off work ill she was fit to attend a meeting, but was not invited to do so.  18 days later she received a letter dismissing her.  The tribunal found that the timing of the letter warning her of redundancy, the failure to meet her or consider alternative work and the fact that she was the only person made redundant, all indicated that pregnancy was the true reason for dismissal

An employee aged 58, who was employed as a field service engineer.  The employer experienced a fall in orders and also wanted to reduce overheads in its UK operation, and so decided to lose one of its three field service engineers. It assessed the engineers and because this engineer’s score was lowest decided to select him for redundancy.  He was called to a consultation meeting where he was told that he would be made redundant.  The tribunal concluded that the redundancy situation was not genuine; the need for UK-based engineers had not ceased or diminished and in any event the dismissal was discriminatory of the grounds of his age as the employer had decided he should be made redundant before the consultation period commenced.  Neither of the other engineers was called to a consultation meeting, there was no consideration of alternatives to dismissal or of alternative work.  The engineer selected was substantially older than the other two engineers and the employer had recently recruited a much younger engineer in the USA. 

It is important to know that there are very short time limits that apply to Employment Tribunal claims, e.g. three months (less one day) from the date of dismissal or the date of the discriminatory act, so if you think your dismissal for redundancy was a sham, don’t delay in seeking advice as you could be prevented from brining a claim if your time limit has expired. 

If you think that your employer has dismissed you, or is trying to dismiss you, for an unfair or discriminatory reason but the are labelling it ‘redundancy’, why not call one of our qualified employment lawyers for advice on 01256 460830 and you can email Karen Bristow, lawyer in our Employment team at