In the case of Lynam & Anor v Birmingham City Council UKEAT/0072/17/JOJ, the Employment Appeal Tribunal (EAT) held that the Council had breached the employment contracts of a group of employees by failing to offer them the opportunity to apply for a voluntary redundancy package before dismissing them.
In December 2013, the Council announced that it was proposing to make redundancies as a result of expected budgetary cuts in 2014/2015. As part of those proposals, the Council posted a notice on its intranet with the heading "Voluntary Redundancy information and guidance for employees". The notice said that:
- the Council intended to offer a generous voluntary redundancy package to 'affected' employees; and
- affected employees would be contacted and invited to apply for voluntary redundancy.
However, in September 2014 a group of employees (the Claimants) were told that voluntary redundancy would not be available to them, and instead they were made compulsorily redundant with effect from the end of April 2015. They subsequently issued proceedings for breach of contract, based on the Council's failure to allow them to apply for voluntary redundancy notwithstanding its earlier offer.
The Council defended the claims, arguing that the Claimants had no contractual right to apply for voluntary redundancy, so there was no breach of contract. In particular, the Council argued that:
- it had only offered an enhanced voluntary redundancy package once before, and was unlikely to do so again after 2014/15. As such, there was no "implied" contractual right to voluntary redundancy;
- only employees invited to apply for voluntary redundancy had a contractual right to make the application; and
- the contractual right was limited to a right to make an application. Even if an application was made, those employees had no right to receive a voluntary redundancy package.
At first instance, the Employment Tribunal found in favour of the Council's arguments. However, the Claimants appealed to the EAT.
The Council's argument around whether or not there was an implied voluntary redundancy policy was simply not relevant. The claim was simple - the Council had told the Claimants that they could apply for voluntary redundancy, and had then told them they could not. The EAT held that the focus had to be on what the Council had communicated to its employees - taking that into account, the EAT found that there had been a breach of contract.
The notice stated that all affected employees (which included the Claimants) would be contacted and invited to apply for voluntary redundancy. The fact the Council would not necessarily grant them voluntary redundancy if they applied did not affect the Council's obligation to invite them to do so. Further, at no point had the Council communictaed that there was any restriction on the right to apply for voluntary redundancy.
What does this mean for employers?
This decision is a helpful reminder for employers to be mindful of their communications to staff in the period leading up to possible redundancies. Given the finding in this case, there is a real risk that employers could be forced to deliver on any promises made, even where changing circumstances mean that it is no longer commercially practicable to do so.