TNS UK Ltd v E A Swainston

A dismissal may be by reason of redundancy where an employer, for financial reasons, decides that it no longer requires an employee to perform work of a particular kind. The cause of the diminished requirement is immaterial: under section 139 of the Employment Rights Act 1996, it may arise for any reason.

The tribunal must ask whether the employer’s requirement for employees to undertake the relevant work has ceased or diminished, or is expected to do so, and whether the dismissal was attributable to that state of affairs. It should not treat the commercial reasons for creating the redundancy as inconsistent with redundancy.

However, a genuine redundancy does not make a dismissal fair. Consultation may render the dismissal unfair where the decision to remove the post has been taken irrevocably before consultation and the process is merely cosmetic.

The claimant was employed as a Business Development Director in a loss-making business unit. The employer decided, as a cost-saving measure, to remove her post and largely cease business-development activity while continuing to provide services to clients.

The Employment Tribunal upheld her ordinary unfair-dismissal claim. It held that the dismissal was cost-driven rather than a genuine redundancy, and that consultation had been a sham. It rejected her separate contention that the dismissal was automatically unfair because of protected disclosures.

The employer appealed. The central issues were whether the Tribunal had erred in rejecting redundancy because the decision was financially motivated, and whether its findings on the inadequacy of consultation nevertheless sustained the finding of unfair dismissal.

1. Appeal allowed in part. The Employment Tribunal erred in holding that a dismissal motivated by cost could not be a redundancy. Its findings established that the employer no longer required a Business Development Director and would largely cease the business-development services performed by the claimant.

2. Under section 139(1)(b)(i) and section 139(6) of the Employment Rights Act 1996, the relevant question was whether the business’s requirement for employees to perform work of that kind had ceased or diminished, or was expected to do so, and whether the dismissal was attributable to that position. The reason why the requirement diminished was irrelevant. Financial necessity was capable of creating, and on the findings did create, a redundancy situation.

3. The Tribunal had wrongly conflated removal of the claimant’s post with termination of her employment. It had also treated the financial basis for the commercial decision as negating redundancy, contrary to the approach in [1997] IRLR 2000 and [1999] IRLR 562.

4. The error did not displace the finding that the dismissal was unfair. The Tribunal’s finding of a deeply flawed and sham consultation process was unassailable. The decision to remove the post had been taken irrevocably before consultation; the claimant had inadequate time and no real opportunity to challenge the commercial need for the post’s removal or the performance figures relied on. The dismissal was therefore procedurally unfair despite being for the potentially fair reason of redundancy.

5. The employer was entitled to advance a possible Polkey reduction at any remedy hearing.

• Employment Appeal Tribunal: allowed the employer’s appeal on the existence of redundancy, but upheld the Employment Tribunal’s conclusion that the dismissal was unfair because of the defective consultation process.
• Employment Tribunal, London South: by decision dated 10 August 2012, upheld ordinary unfair dismissal, rejected automatic unfair dismissal for protected disclosures, and held that no genuine redundancy situation had been shown.