11th July 2017

Legal Issues – Redundancy and discrimination

Making employees redundant is a difficult process for the employees concerned, and can be a challenging one for employers. In many cases the main risk to the employer will be a claim, or several claims, of unfair dismissal. However, employers must also keep in mind the potential for discrimination issues to be present, particularly given that compensation for discrimination has no cap, in sharp contrast to an award for unfair dismissal.

While discrimination can happen in relation to any of the nine protected characteristics of the Equality Act 2010 (EA), the two characteristics that we see most often discussed in cases involving redundancy are disability and pregnancy / maternity.

With the former, a redundancy process could potentially be discriminatory if an employee’s disability, or something arising from it, was the reason for the employee’s dismissal. Such was the claimant’s argument in Charlesworth v Dransfields Engineering Services Limited.

In that case, Mr Charlesworth was absent due to receiving treatment for cancer, which is an automatic disability under the EA. During his absence his employer decided that his duties could be absorbed by others as a cost-saving measure. His employer implemented a redundancy process and Mr Charlesworth was dismissed. He then claimed unfair dismissal and disability discrimination, in particular arguing that he had been discriminated against for a reason related to his disability because his disability-related absence was the reason his employer could identify they could do without his role.

The Employment Tribunal (ET) rejected his claims. It held that, although the company was able to conclude that they didn’t require him because he was absent, his absence was not the reason for his dismissal, and they could have come to the same conclusion even if he had not been absent. Mr Charlesworth appealed but the Employment Appeal Tribunal (EAT) agreed with the ET. In the EAT’s view, Mr Charlesworth’s absence was the background or context within which the employer could identify the redundancy; however it was not the reason for it.

The EAT had reached a pretty different conclusion in the case of SG Petch Ltd v English-Stewart. In that case, the employer had concluded that the employee’s role could be absorbed by other members of the team since this had been happening without difficulty while she was off on maternity leave. The ET concluded that, because it became apparent to the employer during the maternity leave that there could be a reduction of staff by way of redundancy, the employee’s dismissal was on the grounds of maternity leave for discrimination purposes. However, somewhat controversially, the EAT overturned that finding; since the ET had found that there was a redundancy situation and the reason for dismissal was redundancy, it made no sense to say that the reason for dismissal was maternity leave.

But that wasn’t the end of the matter. Maternity law stipulates that a dismissal will be automatically unfair where the reason or principal reason for the employee’s selection for redundancy is a reason connected with the fact that the employee took, sought to take or availed herself of the benefits of maternity leave. It was clear here that the employer had identified the redundancy situation as a result of the employee taking maternity leave. The EAT said that this was sufficient to mean that the reason for the employee’s redundancy was connected with maternity. The EAT sent the case back to the ET to consider whether the employer could argue that it could have come to the same conclusion (that the employee was surplus to requirements) irrespective of her maternity leave.

With maternity, discrimination can often also come to the fore in relation to a failure to inform employees on maternity leave of potential alternative roles. In one case, Johal v Commission for Equality and Human Rights, Mrs Johal was on maternity leave during a restructure. Her employer kept in touch with her in relation to the restructure but didn’t bring a potential alternative role to her attention. It did however inform another employee on maternity leave about it.

The ET and EAT held that Mrs Johal had not been informed of the vacancy due to an oversight, and not because she was on maternity leave, but that was due in large part to its other communications with her and the fact that it had mentioned the vacancy to the other employee on maternity leave.

In contrast, in Watt v Croydon College, the employer did not keep in touch with Ms Watt on any aspect of the restructure that occurred during her maternity leave, and even ignored her emails on the subject. Ms Watt was also not informed of a vacancy that arose and the role in question was eventually offered to a male employee.

The ET held that the reason why Ms Watt was not informed of the potential alternative role was because she was on maternity leave and upheld her discrimination claim accordingly.

As can be seen from these cases, the outcome of most claims depends largely on the individual circumstances. It can often be a fine line between the maternity or disability-related absence being the background to a redundancy situation, or the reason why the employer concludes that there is one. There is however an underlying message that employers need to be cautious not to treat employees in a redundancy situation adversely because they are absent due to disability or maternity (or indeed any other protected characteristic). Doing so could result in not only unfair dismissal claims but potentially far more costly discrimination claims.

If you have any questions on any of the issues raised in the above article please contact Seanpaul McCahill.

11th July 2017