Redundancy pools of one – proceed with caution

What significance do the very recent cases of Mogane v Bradford Teaching Hospitals NHS Foundation Trust (EAT) and, as we go to press, Teixeira -v- Taika Restaurant Limited (EAT) have on fair redundancy procedures?

The facts of the case

In Mogane the claimant was a nurse who had been employed on a succession of one year fixed-term contracts between 2016 and 2019. There was one other nurse working at the Trust, on the same banding as the claimant employed on a two-year fixed-term contract. 

The claimant argued that she had been unfairly dismissed by the Trust albeit by reason of redundancy. She argued that the redundancy procedure the employer used was unfair as it chose her for redundancy in a pool of one because her fixed-term contract was to be renewed first. It had not considered with Mogane any alternative approach  to selection through a proper consultation process which meant the selection of her in a ‘pool of one’ was unavoidable. 

The Employment Appeal Tribunal (EAT) found in her favour. It decided that the Trust’s approach to to selection was determined before the consultation process had begun.

Thereafter the Trust  also failed to follow a proper process as it did not consider any alternatives to dismissal. The EAT emphasised that a proper consultation process is a vital part of a fair redundancy procedure. 

The Trust had chosen between the claimant and her colleague arbitrarily and on the basis that her fixed-term contract would expire first. The EAT commented that it was not within the Trust’s ‘reasonable band of responses’ to choose between employees arbitrarily in this way and could breach the implied term of mutual trust and confidence. 

Key findings

This case highlights the importance of carrying out a fair and proper consultation procedure in restructuring and other potential redundancy scenarios. Consultation must be genuine and meaningful. This means giving employees the opportunity to make suggestions about the proosed approach to selection so they can still potentially influence the outcome. 

The EAT explained that whilst a redundancy ,pool of one’ can be fair in certain circumstances, it should not be used where there is more than one employee without prior consultation. It is also imperative to ensure the selection criteria are not discriminatory and no decision is pre-determined. Employers should use fair selection criteria when there is a  pool of more than one,  and be seen to (a) apply their minds to the possibility of a pool of one; and (b) discuss that possibility with the affected employee. 

The judgement is somewhat  controversial as it  means that employers might  artificially widen pools of employees for potential redundancy even though they are not genuinely at risk. It  also suggests that claims of constructive dismissal could be brought by employees who feel they have been wrongly pooled by virtue of breaching the implied term of mutual trust and confidence. 

Interestingly, on December 2nd, in Teixeir, the EAT has decided that a tribunal was wrong to reduce unfair dismissal compensation to zero on the basis that a redundancy pool of one meant that dismissal was inevitable.

Mr Teixeira was employed as one of a team of ten chefs in a London restaurant. He was the least experienced member of the team and the only non-specialist chef. The COVID-19 pandemic caused a reduction in work at the restaurant. In April 2020, the employer informed Mr Teixeira, without any warning or consultation, that he was redundant. He was the only chef selected for redundancy. He brought a claim for unfair dismissal.

The employment tribunal found that Mr Teixeira’s dismissal was procedurally unfair. For the purpose of a Polkey reduction in compensation, it went on to consider if, and when, Mr Teixeira would have been dismissed if a fair procedure had been followed. The tribunal found that it would not have been unreasonable for Mr Teixeira to be placed in a pool of one meaning that there was a 100% chance that the redundancy would still have occurred when it did. His compensation was therefore reduced by 100%. He appealed to the EAT which ruled that the possibility of a pool of one being fairly chosen did not mean that the dismissal was bound to have taken place when it did. The tribunal’s reasoning failed to consider the requirement for some warning and consultation, even in the case of a small employer and even where a pool of one was reasonable. Some warning and consultation might have resulted in a larger selection pool and might have affected the choice of selection criteria. Even if the dismissal was inevitable, it might have been delayed, which would mean some compensation was due. 

More substantively, it could not be said that there was only one outcome. There might have been some compelling reason why a pool of one would have been properly selected absent any warning or consultation, but it was difficult to see what that could have been, as the business carried on and the other chefs were retained. It was erroneous for the tribunal to have decided that dismissal was inevitable and consultation would have made no difference,.

How Moore Barlow can help

We advise businesses of all shapes and sizes every week on how to plan safe and commercially sensible redundancies. 

If you require guidance and support on redundancy procedures, please contact our employment law team today.