In Contract Bottling v Cave, the employer was in financial difficulty and needed to make cuts in its administrative staff. It decided to create a ‘pool’ from which to select employees for redundancy. The ‘pool’ included employees engaged in warehousing, quality control and sales as well as the administrative staff.
The employment tribunal considered that because the employer had operated what appeared to be a ‘scattergun approach’ and had been intent on reducing the wage bill rather than focusing on the fact that the need for employees to do a particular job had diminished, the ensuing dismissals could not be said to be fair as being by reason of redundancy.
The EAT disagreed. The test for redundancy is a two-stage test:
- has the need for employees to do a particular job diminished? And
- has that situation caused these dismissals?
On the facts of the case, the EAT held that the dismissals were caused by a redundancy situation.
However, the EAT went on to say that the dismissals were still unfair because the employer ignored its own procedures and had created a redundancy matrix that was entirely subjective in character and therefore procedurally unfair.
Points to note -
- Note that tribunals should be reluctant to interfere with the size of a redundancy ‘pool’ but will be keen to check that objective criteria have been used to select employees from within the ‘pool’ for dismissal.
- The EAT in this case also sent a reminder that, in cases where dismissals are only procedurally unfair, employment tribunals must always consider making a so-called Polkey deduction from compensation to allow for the fact that the dismissal would have happened anyway. Even though it will only be an exercise in ‘impression and judgment’, the tribunal should consider the question every time.