For redundancy to apply, the circumstances must fall within the meaning of section 139 Employment Rights Act 1996 (ERA) namely the employer has ceased, or intends to cease continuing the business, or the requirements for employees to perform work of a specific type or to conduct it at the location in which they are employed has ceased or diminished.
In the case of Berkeley Catering Limited v Jackson 2020, Jackson (J) was employed as the Managing Director for the employer, Berkley Catering Limited (BCL). The owner of (BCL) decided to take on the role of Chief Executive Officer (CEO) thereby taking control of management decision-making and business operations; eventually this undermined (J)'s position as Managing Director resulting in (J) being made redundant as the requirement for (J) to carry out work of a particular kind had diminished.
Unfair dismissal
(J) claimed unfair dismissal stating there was not a redundancy situation as the (CEO) deliberately undermined her position as Managing Director by absorbing her role. (J) claimed that removing her from that role thus did not fall within the framework of diminished requirement. The Employment Tribunal (ET) decision was that there was no redundancy and the matter went to Employment Appeal Tribunal (EAT) to decide if there had indeed been a redundancy situation.
The (EAT) overturned (ET) decision and explained that to determine if a redundancy exists or not, one must determine whether there has been a diminution in the number of employees required to do the work. (BCL) via their (CEO) had arranged its affairs such that its requirement for (J) to carry out particular kind of work undertaken in the capacity as a Managing Director had diminished thus creating a redundancy situation.
The (EAT) emphasised that the employer’s motive and conduct in deliberately undermining (J)’s position was irrelevant to there being a redundancy situation, however employers are reminded that such conduct would be relevant to a claim for unfair dismissal where although a redundancy situation existed, it did not necessarily follow that the redundancy was the reason for the dismissal. In Timex Corporation v Thomson [1981] IRLR 522 the EAT held that an actual redundancy situation was or could have been a mere pretext for getting rid of an employee whom the employer wished to dismiss.
Also, even if the employer can establish that the reason for the dismissal was potentially fair such as redundancy, section 98(4) ERA still requires the (ET) to decide “whether in the circumstances … the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee,” thus an unfair dismissal claim may succeed on the basis of substantive and/or procedural unfairness and not on the existence of redundancy.
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