Compensation for an unfair redundancy process


The compensatory award for an unfair redundancy should not be reduced to zero.

Looking to make just one person redundant? The Employment Appeal Tribunal recently decided that having a redundancy pool of one did not mean that dismissal was inevitable and said that the employee should have received some compensation. This serves to illustrate that you should still follow the full process, even when dismissing just one employee, or you could end up with an unfair dismissal claim on your hands.

In Teixeira v Zaika Restaurant Limited, the Employment Appeal Tribunal found that the Employment Tribunal should not have reduced the compensatory award for unfair dismissal to zero on the basis that the respondent could have decided on a redundancy pool of one, and so there was a 100 percent chance the claimant would have been dismissed on the same date that the unfair dismissal took place. The Employment Appeal Tribunal considered the extent to which a tribunal can reduce a claimant’s compensatory award where the redundancy dismissal was procedurally unfair due to a lack of any warning or consultation.

The claimant was a chef who was made redundant by his employer in April 2020 after a significant reduction in work due to the pandemic. Unlike the other chefs working for the employer, the claimant, who was the only chef dismissed, was not working as a specialty chef. The employer did not follow any procedure before dismissing the claimant and therefore accepted that his dismissal was procedurally unfair.

The Employment Tribunal reduced the claimant’s compensatory award to zero on the basis of its finding that there was a 100 percent chance that the claimant would have been dismissed on the same date that the unfair dismissal occurred. The Tribunal found that it was not unreasonable for the employer to determine that the claimant, as a non-specialty chef, was in a pool of one and that, even if he had been pooled with the other chefs, he would have been the lowest scorer.

The Employment Appeal Tribunal disagreed and noted that some consultation about the redundancy could have resulted in the selection of a pool of more than one and might have affected the choice of selection criteria. It also noted that, even if the dismissal was inevitable, it might have been delayed to some extent by consultation. The Employment Appeal Tribunal remitted the case to the Employment Tribunal for it to consider various factors, including what selection criteria would have been adopted and what the outcome would have been, as well as how long any consultation would have taken if dismissal had remained the inevitable conclusion.

The case is a helpful reminder for employers of the importance of following an appropriate process and consulting with the employee, even in circumstances in which redundancy is highly likely or inevitable. Contact us if you need legal advice about following the correct redundancy consultation process in your workplace.

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