Redundancy Consultations - The Importance of Handling Them Correctly
In Thomas v BNP Paribas Real Estate Advisory and Property Management UK Ltd, the EAT has confirmed that a "perfunctory and insensitive" consultation process can impact on the fairness of a redundancy dismissal.
The case also highlights the risks of excluding employees from the workplace during consultation.
The Facts
Mr Thomas had been employed by BNP for 40 years and had reached the position of Director in the property management division. A strategic review of that part of the business found that it contained too many senior managers at Mr Thomas' level.
On 6 January 2016, the company met with Mr Thomas and informed him about the outcome of the review and that he was at risk of redundancy. Mr Thomas was immediately put on paid leave and told that he should not contact clients or colleagues.
The company subsequently wrote to Mr Thomas, but unfortunately the letter was addressed to "Dear Paul", when his name is Peter.
The consultation process ended on 14 February and Mr Thomas was served with notice of redundancy. The letter contained the wrong termination date and had to be corrected in a subsequent letter.
Mr Thomas issued proceedings against the company, alleging unfair dismissal and age discrimination. An Employment Tribunal found against him on both counts. In relation to the unfair dismissal claim, the tribunal found the dismissal fair despite what it described as a perfunctory and insensitive consultation process. Mr Thomas appealed to the EAT.
The Outcome
The EAT overturned the tribunal's decision in respect of unfair dismissal and ordered that the unfair dismissal claim be heard again by a fresh tribunal. It noted that the tribunal had not properly explained how the dismissal could be fair when the tribunal had been so critical of the consultation process.
At the sift stage, when the EAT decides if the appeal should proceed, the judge made the following comments:
“Speaking for myself, I find it surprising that an employer should find it necessary, if it is really at the beginning of a genuine consultation process which it has started 'at the formative stage', to put a long serving employee on gardening leave with no work, no contact with clients and no contact with fellow employees even before the consultation process has started.”
Best Practice
Where members of the senior leadership team are at risk of redundancy, it is often the case that they are put on paid leave and asked to stay away from work (known as garden leave) whilst the redundancy consultation process is ongoing. This judgement makes clear that putting employees on garden leave during redundancy consultation should not be the automatic position or a knee-jerk reaction by employers. The necessity of this course of action should be considered carefully in each case and timing can be critical. Placing an employee on garden leave too early could lead to allegations of predetermination and unfairness.
The case also serves as a reminder to employers of the need to treat all employees, in particular those with long service, with sensitivity during periods of consultation and ensure that any correspondence is correctly addressed.