Reduced amount of work, same number of employees is still a redundancy, Court says

It has been settled law that for there to be a potentially far redundancy dismissal, there has to be a reduced need for employees of “a particular kind”. That covers a situation where, for example, there is a reduced need for plumbers but an increased need for heating engineers, such that overall there is the same total need for employees in the business.

However, the Employment Appeal Tribunal has given a ruling that there can still be a redundancy dismissal even where there has only been a reduction in work for the same number of employees to do.

Under S139 (1) (b) (i) of the Employment Rights Act 1996 an employee is dismissed by reason of redundancy if their dismissal was wholly or mainly because their employer’s requirements for employees doing work of a particular kind has ceased, diminished or is expected to do so.

The leading case of Safeway Stores Plc v Burrell [1997] IRLR 200 EAT confirmed that “it is necessary to look at the overall requirement for employees to do work of a particular kind; not at the amount of work to be done”.

Alyward v Glamorgan Holiday Home Ltd t/a Glamorgan Holiday Hotel EAT/167/02, relying on Safeway, held that a reduction in the number of employees doing the work (i.e. headcount) is required to meet the statutory definition of redundancy.

Now the EAT in Packman t/a Packman Lucas Associates v Fauchon UKEAT/0017/12 say that there is no need for a reduction in headcount to satisfy the statutory definition of redundancy.

FACTS of Packman

Ms Fauchon provided book-keeping services for Packman Lucas Associates. Because of downturn in business Packman had a diminished need for book-keeping and asked Ms Fauchon to significantly reduce her weekly hours. She refused to work reduced hours and was dismissed.

Ms Fauchon brought tribunal proceedings against Packman. The employment tribunal found that she had been dismissed by reason of redundancy and was entitled to a statutory redundancy payment. In reaching its decision, the tribunal referred to Aylward, but did not follow it.

Packman appealed against the tribunal`s decision arguing that Aylward was a binding authority and should have been followed.

The EAT’s decision

The EAT’s view in Packman on the effect of Safeway is that focus must be on the employer’s need for employees generally to do work of a particular kind. The EAT set out that in any event a holistic approach is needed focusing on all words of the statute and not one aspect looking at “two variables that are linked: the employees and the work”.

On the face of it, the EAT’s decision in Packman appears quite controversial with potentially significant effects. Might employers now be able to argue that there can be a redundancy even where an employee has been dismissed and replaced with another employee, provided there has been a significant fall in the amount of work to be done? Might employees be able to claim redundancy pay in situations where they presently cannot?

Perhaps Packman will remain a case limited to its facts. It has to be wondered if a similar result would have been achieved had the tribunal found that the employer was trying to impose a change in working hours in a situation where in reality there was a redundancy situation, hence the dismissal was unfair. The employee would then have received a basic award anyway. Did the EAT really need to revisit the definition of redundancy?

Let’s hope that the law has not be made complicated in one aspect of employment law that we thought had been long settled.