Summary and implications

The continuing economic downturn has led to a new surge in the number of employees being made redundant. In this briefing we highlight several recent developments in this area of law. In particular, we highlight recent judicial guidance on how you should approach a redundancy situation involving an employee who is absent on maternity (and other similar) leave; your new redundancy-information obligations under the Agency Workers Regulations; and a recent decision on protective awards.

The gist of the briefing is that you:

  • must always act proportionately in seeking to protect a woman from disadvantages she may suffer as a result of pregnancy or childbirth. In a redundancy scenario, this means that you may need to adapt or omit certain selection criteria. But, in doing so you must act proportionately so as not to discriminate unlawfully against other employees within the pool for selection;
  • are not obliged to make an offer of alternative employment to employees on maternity, adoption or additional paternity leave (in priority to all other employees), unless you consider that the particular vacancy is “suitable”. You determine suitability in accordance with what you know about the employee’s personal circumstances and work experience;
  • may face multiple individual claims for a protective award if you fail to elect representatives in a collective redundancy situation. However, a recent EAT decision suggests that an individual cannot bring a group action on behalf of other affected employees;
  • must provide appropriate information about agency workers, in the event of any current or future collective redundancies.

For a copy of the EAT judgment in Eversheds Legal Services Limited v De Belin click here

For a copy of the EAT judgment in Simpson v Endsleigh Insurance Services click here

For a copy of the judgment in Independent Insurance Co Ltd (In Provisional Liquidation) v Aspinall and another click here

For a link to the Agency Worker Regulations 2010 click here

Whilst pregnant employees are entitled to “special treatment”, you must not go beyond what is reasonably necessary

UK and European legislation provide that special treatment afforded to women in connection with pregnancy and childbirth would not amount to unlawful sex discrimination. In Eversheds Legal Services v De Belin, the EAT had to decide how far an employer could and should favour pregnant employees, in apparent compliance with the legislation.  

In finding in favour of the male employee, the EAT made it clear that “the obligation in question cannot extend to favouring pregnant employees or those on maternity leave beyond what is reasonably necessary to compensate them for the disadvantages occasioned by their condition”.

The upshot of this decision is that, when applying redundancy selection criteria, you must assess whether and in what way you may disadvantage pregnant employees or those on or returning from maternity leave. Remember that, in attempting to avoid discrimination against pregnant employees and those on or returning from maternity leave, you must not discriminate against other employees. If you identify a potential disadvantage to a pregnant employee, you ought to consider the least discriminatory ways to remedy it, i.e. adopting proportionate means to achieve a legitimate aim. Relevant examples include:

  • adaptation of selection criteria to allow you to assess the performance of pregnant and non-pregnant employees on an equal footing and on the basis of actual performance. To this end, you may need to base your appraisal on pre-maternity leave performance or drop certain assessment criteria altogether;
  • insofar as reasonable, do not deny pregnant employees or employees on maternity leave appraisals or similar assessments which depend on evaluation of their annual performance. Consider revising the assessment process to take into account the time the woman has spent working before and/or after maternity leave; and
  • remember that the legislation expressly provides that employees on maternity leave who have been selected for redundancy must be offered any suitable alternative vacancy, in preference to any other employee. The same applies to employees on adoption leave and to employees on additional paternity leave. There is no guidance on how you should act if you were to have fewer alternative vacancies than the number of employees on such types of leave. Such a case would call for specific legal advice.

Eversheds v de Belin (the facts)

Mr de Belin brought sex discrimination and unfair dismissal claims after being selected for redundancy by Eversheds. The substance of Mr de Belin’s claim was that his selection was tainted by sex discrimination since the only other employee who was in the “at risk pool” was given preferential treatment due to being on maternity leave. The female employee was given the highest possible score in relation to one of the selection criteria, based not on actual performance by her, but on notional, best possible performance, due to her being absent on leave in the relevant assessment period. Both the ET and EAT criticised Eversheds’ failure to adopt more realistic and less discriminatory selection criteria which would have allowed it to carry out an assessment that was based on actual figures.

Offer of alternative vacancy in preference to other employees: you decide if a vacancy is “suitable”

As mentioned briefly above, you are required to offer employees who, at the time of their selection for redundancy, are on maternity, adoption or additional paternity leave, any suitable alternative vacancy that is available before the end of their existing contract. Such an offer must be made in preference to any other employee selected for redundancy.

This obligation only arises if:

  1. the work to be done is of a kind which is both suitable for the employee and appropriate for him/her to do in the circumstances; and
  2. the terms of the position, as to the capacity and place in which the employee is to be employed and the other terms and conditions, are not substantially less favourable to the employee than if he/she had continued to be employed under the previous contract.

The EAT has recently confirmed that a vacancy is only “suitable” if it meets both of these requirements (Simpson v Endsleigh Insurance Services). The practical result of this decision is that you are not obliged to offer a vacancy which it reasonably considers is not suitable to the employee, taking into account the information you have about an employee’s personal circumstances and work experience. The EAT made it clear that “it is up to the employer, knowing what it does about the employee, to decide whether or not a vacancy is suitable”. Nor are you required to offer a vacancy which “might” be suitable, then engage in discussion with an employee about its potential suitability or otherwise.  

However, the EAT failed to clarify whether the burden of proving that a vacancy is suitable falls on the employer or the employee. It is, therefore, crucial that you keep detailed written explanation for the basis on which you reach a decision on suitability.  

Finally, if you conclude that a vacancy is suitable, you must offer it to the employee before the end of the leave period. If the employee accepts the new role, you have to keep it open until the employee’s eventual return from leave.

Compensation for breach of the collective redundancies consultation regime: individual claimants cannot recover on behalf of others

In the context of collective redundancies, the EAT has recently held that where an employer does not arrange for election of employee representatives, employees can bring claims for protective awards in their own right. However, the employees can only recover their own award: they cannot bring a claim, nor recover an award, on behalf of other affected employees. Only trade union and employee representatives can bring claims for protective awards on behalf of other employees (Independent Insurance Co Ltd (In Provisional Liquidation) v Aspinall and another). The upshot of this claim is that, in instances where there is no recognised trade union or elected representatives, an outgoing employee will not be able to pursue, or threaten to pursue, “representative” claims in order to negotiate higher settlements.

New, additional, information obligations were introduced by the Agency Workers Regulations

As of 1 October this year, if you engage in a collective redundancies exercise then, in addition to your existing information and consultation obligations, you must provide “appropriate representatives” with the following specific information about agency workers:

  • the number of agency workers working temporarily for and under your direction;
  • the parts of your organisation in which agency workers are working; and
  • the type of work the agency workers carry out.

If there are changes to this information during the consultation period, you will have to provide updated data.  

Failure to comply with this new requirement could lead to claims for protective awards, which can amount to up to 90 days’ actual pay per each affected employee. It is therefore imperative that you maintain up-to-date, easily accessible, information about all your agency workers.