Martland and others v Co-operative Insurance Society (Employment Appeal Tribunal)

Mr Martland and his colleagues were financial advisers for the Co-operative Insurance Society (“CIS”). In 2005 CIS sought to vary the contracts of the employees by way of negotiations with USDAW, the recognised trade union. When the negotiations failed the contracts were terminated and the employees were offered new contracts on different terms.

While some accepted the new contracts, others (including those who brought this case) did not and left the employment of CIS. They claimed that they were dismissed by reason of redundancy. For its part CIS said the reason for the dismissals was fair; citing “some other substantial reason”. The Employment Tribunal agreed and the claims were dismissed.

Section 163(2) of the Employment Rights Act 1996 places the burden of proving that there is no redundancy on the employer. The relevant part of the definition of redundancy (at Section 139) to this case is that the dismissal is attributable wholly or mainly to the fact that the requirement of the business for employees to carry out work of a particular kind has ceased or diminished or expected to.

While the employees accepted that it was necessary to change a failing business model they maintained that the roles under the new model differed in significant ways from the old; collections and servicing would disappear, administration would be almost non-existent, selling time was to increase by 50%, commission reduced and the personal stake in clients (book interest) would cease.

While the Employment Tribunal accepted that these changes could affect job satisfaction, the essential thing was whether it was a different job that amounted to the “cessation of work of a particular kind”. It was found that while the work was being performed in a different way this did not mean that the kind of work had changed.

The Employment Appeal Tribunal agreed with this decision as in the end the job was selling insurance. The Tribunal was entitled to find that the job was the same even though terms and conditions were significantly different.

It should be remembered that with any case of “dismissal and re-engagement” proper consultation should take place. In practice, the procedures involved are very similar to redundancy procedures, even though the dismissal will not necessarily be by reason of redundancy. Where 20 or more employees are proposed as being dismissed collective consultation obligations are triggered as the reason for the dismissal is “not related to the individual concerned”. Again this is a definition that covers redundancy. A failure to consult collectively can result in a protective award. Such an award can see each employee receiving 90 days actual pay in addition to any other compensation.