Redundancy and ‘pools of one’: the need for proper planning and consultation

Following our recent webinar on managing redundancies, we examine the recent case of Teixeira v Zaika. The case highlights the need for employers to take care when planning a redundancy process and the need to carry out a fair consultation process.

Facts

Mr Teixeira was one of ten chefs in the business. He was by far the least experienced and the only 'non-speciality' chef. The Covid pandemic caused a reduction in work at the restaurant. In April 2020, the employer informed Mr Teixeira by telephone, without any warning or consultation, that he was redundant. He was given one months' notice. He was the only chef selected for redundancy. He brought a claim for unfair dismissal.

The Employment Tribunal decided that Mr Teixeira had been unfairly dismissed. However, the Tribunal did not award any compensation to Mr Teixeira, on the basis that regardless of the lack of procedure, his dismissal was "inevitable". Mr Teixeira appealed this decision.

Appeal

The Employment Appeal Tribunal (EAT) overturned the Tribunal's decision.

The EAT confirmed that there is a general requirement for warning and consultation before making redundancies, even within a small employer. Some level of warning and consultation might have resulted in a larger selection pool and might have affected the choice of selection criteria. In the EAT's view, it could not be said that there was only one possible outcome.

What the implications for employers of not properly considering redundancy selection pools?

Before selecting an employee for dismissal on grounds of redundancy, an employer must consider what the appropriate pool of employees for redundancy selection should be ("the selection pool"). The question of how the pool should be defined is primarily a matter for the employer to determine and, provided an employer genuinely applies its mind to the choice of selection pool, it will often be difficult for an employee to challenge that choice.

In this case, if the employer had given proper consideration to the selection pool, it might have been reasonable for the selection pool to only have included Mr Teixeira. However, the employer failed to do this, and also failed to carry out any consultation process at all. As such, the dismissal was unfair and Mr Teixeira is entitled to compensation. As a minimum, Mr Teixeira’s compensation is likely to cover the period of time that it would have taken to follow a fair consultation process (for example, one month). However, owing to the employer's total failure to consider the selection pool, Mr Teixeira's compensation could significantly exceed that amount.

Top tips

To help ensure you follow a fair process*, here are some of our top tips:

1. Give proper consideration to the business reasons for considering redundancies.
2. Consider the appropriate 'selection pools' before you commence consultation, and always make a written note of the reasons why you have decided on a particular selection pool.
3. Clearly set out in writing the reasons for proposing redundancies and the proposed selection criteria, so that employees can understand and participate in consultation.
4. Ensure that selection is carried out in a fair and non-discriminatory way.
5. Consultation must be genuine and meaningful, ensuring it is a 2-way process. In particular, consultation should be commenced before a decision has been taken to make an employee redundant.

*Please note that top tips are not intended to cover a statutory 'collective consultation' process in which an employer is proposing to dismiss 20 or more employees at one establishment within a period of 90 days.