Packman (trading as Packman Lucas Associates) v Fauchon

Whether a dismissal is by reason of redundancy depends on the statutory wording, not on an assumed requirement for a reduced headcount. Under section 139 of the Employment Rights Act 1996, the requirements of a business for employees to carry out work of a particular kind may diminish because the amount of such work has reduced, even though the same number of employees remains. A dismissal caused wholly or mainly by that reduction may therefore be a redundancy dismissal. The statute requires consideration of both employees and the work they carry out. A reduction in hours alone does not constitute a dismissal, but a dismissal used to achieve that reduction may be by reason of redundancy. The EAT declined to follow Aylward, which had treated a reduction in employee numbers as essential.

Ms Fauchon provided bookkeeping services. A downturn in business and the introduction of Sage accounting software reduced the hours of bookkeeping work required. She refused a substantial reduction in her contractual hours and was dismissed.

An Employment Tribunal found that the dismissal was by reason of redundancy and awarded her £11,210. The employer appealed, contending that Aylward and Ors v Glamorgan Holiday Home Ltd required an actual or anticipated reduction in headcount. The central issue was whether reduced work for the same number of employees could satisfy section 139 of the Employment Rights Act 1996.

Appeal dismissed. The Employment Tribunal reached the correct result, although its reasoning was brief.

1. The starting point was section 139 of the Employment Rights Act 1996. The question was whether the dismissal was wholly or mainly attributable to the fact that the business’s requirements for employees to carry out work of a particular kind had ceased or diminished, or were expected to do so. The statutory causation requirement had to be applied to an actual dismissal within section 95.
2. The reference to employees in section 139(1)(b)(i) did not require a reduction in the number of employees. The statutory language linked two variables: employees and the work they carried out. A business might require fewer employees to perform the same work, or require the same number of employees to perform less work. In either case, a dismissal caused wholly or mainly by that state of affairs could be a redundancy dismissal.
3. There was no redundancy where the same number of employees performed the same amount of work, even if the hours were rearranged. That explained the outcomes in Johnson v Nottinghamshire Combined Police Authority and Lesney Products and Co Ltd v Nolan and Ors. Those cases did not establish that a reduction in work could never constitute redundancy without a reduction in headcount.
4. Safeway Stores PLC v Burrell had been concerned with the distinction between the employer’s general requirements for employees to perform work of a particular kind and the particular employee’s contractual work. Its passage concerning a diminution in work was not intended to make reduced headcount essential. Murray and Anor v Foyle Meats Ltd principally endorsed the rejection of the contractual-work approach.
5. The Tribunal had been bound to follow the applicable EAT authority, Aylward, while explaining its disagreement with it. A textbook could not replace binding authority. This EAT was nevertheless entitled to depart from a decision of equivalent jurisdiction and declined to follow Aylward because its reasoning was inconsistent with the statute and earlier Court of Appeal observations.

• Employment Appeal Tribunal: The appeal against the Employment Tribunal’s decision was dismissed. The finding that the dismissal was by reason of redundancy, with a redundancy payment of £11,210, was upheld.
• Employment Tribunal, London South: The claims were dismissed except for the redundancy claim. Reasons were given on 17 October 2011.