Constructive Dismissal and Redundancy

It might be unusual for an employee to do this because they will potentially miss out on redundancy pay and have to bring an Employment Tribunal claim in order to obtain their notice pay as well but can an employee resign during a redundancy exercise and claim constructive unfair dismissal?  The answer to this is yes.

A recent example involved Argos.  The employee was employed in Job A and when Argos was acquired by another company, redundancy occurred.  Initially the employee’s role wasn’t affected but there were some temporary changes to her role pending a later restructure.  The company announced the following year what the restructure would look like.  55 roles were identified as “at risk” including the employee’s job role A.  The employee was informed she was going to be pooled together with another employee and they would both be considered for a new position B.  The employee was given information about the consultation process and a copy of the job description for Job B.  While she was on holiday, the other potential employee in the pool resigned, leaving her to slot into the role that she had been competing for.  Argos’ view was that if there was a difference of no more than 30% between the two roles, they would map across and place the person into Job B. 

The employee concerned viewed Job B as objectionable, viewing it as a lower status role with fewer senior responsibilities and substantial change in job content.  She also did not consider that the 30% rule had been met.  Argos treated this as a grievance and held a meeting.  It stood by its position that she would map into the new role so she made it clear she was not happy, asking Argos to confirm in writing that her employment was terminating on the grounds of redundancy. 

Argos told her that from a particular date she would be carrying out the same duties that she had previously but under the new job title of Job B.  She appealed the grievance outcome and was eventually signed off work with anxiety for a month.  She resigned and brought claims for unfair dismissal and redundancy payment and wrongful dismissal (notice pay).

The Tribunal was critical of Argos for the following reasons:

1. There was no individual consultation with her about mapping her into the new role.  This was a breach of the implied term of mutual trust and confidence as well as of Argos’ own policy (Remember to check what you have written in redundancy policies!).
2. No proper analysis had been made of the similarities between the two roles, in particular there had been no assessment based on percentages and again this was a breach of the implied term of trust and confidence; and
3. Because of number 1 above, the employee had not been left with a proper understanding of why she had been mapped into the new role.  The assertion that it was a change of more than 30% was justified (ie. The employee’s side was taken).  

The Tribunal also found that the employer, Argos, had made things even worse when it came to the grievance.  In not going back and correcting those errors, and conducting the proper assessment at that point, it became a repudiatory breach of contract entitling the employee to resign.

Having found that the employee was constructively dismissed, the Tribunal went onto reject Argos’ argument that the new role was suitable alternative employment.

The case ended up in the Employment Appeal Tribunal (EAT) as is common with these sorts of issues.  The EAT agreed with the lower Tribunal and upheld the employee’s case.

As regards a constructive unfair dismissal, the EAT emphasised that there is a difference between showing the breach of contract that entitled the employee to resign and a question of the fairness.  The Tribunal are looking at the reason for that dismissal, whether it’s a potentially fair one, such as redundancy and whether it is reasonable in all the circumstances, including taking into account the size and administrative resources of the employer.  It was here that the EAT couldn’t follow easily the thought process that had occurred at the lower stage and it was in relation to this issue that Argos was successful.  The claim was then sent back to the original Tribunal to consider the question of fairness.  Even if ultimately the dismissal is found to be fair, the employee is likely to be successful in her wrongful dismissal and redundancy payment claim.

Refreshing Law Limited

1 September 2020