Redundancy Law: Selection Pools & Potential Changes

Are businesses truly retaining their best talent during redundancies, or are they overlooking crucial steps in the process? This episode of the Employment Law Pod, hosted by Helen Goss and Andy Whiteaker, promises an enlightening discussion on the finer points of redundancy law, starting with the essential concept of selection pools. Using the compelling case of Valimulla v Al-Khair Foundation as a springboard, we dissect why consulting on proposed redundancy pools is indispensable, even for seemingly unique roles. As pandemic pressures ease, companies are reevaluating their structures, making our insights timely and critical. 

In the second half, we explore the potential overhaul of collective redundancy consultation rules that might come with a Labour government. Reflecting on the Woolworths' collapse, we untangle the term "establishment" and its ripple effects across multi-site organizations. Initially, UK courts interpreted "establishment" to mean the whole company, a stance that sent shockwaves through the business community. 

Join us for a thorough analysis that equips both employers and employees with the knowledge to navigate these complex legal landscapes. 

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Chapters

• 1:38 Case law: Valimulla v al-khair foundation
• 16:05 Potential Changes in Redundancy Law

Transcript

Andrew Whiteaker: 0:03 

Hello and welcome to the Employment Law Pod. My name is Andy Whittaker, I'm a partner in the employment team at Boys Turner and once again today I'm very lucky to be joined by my colleague and fellow partner in the employment team, Helen Goss. 

Helen Goss: 0:16 

Hi Andy and hi everybody. 

Andrew Whiteaker: 0:19 

And, as ever with the Employment Law Pod, we are going to be talking about some things that we have seen in the news, interesting cases or stories that link back to employment law and that we think are worth discussing in more depth. So, with that in mind, Helen, what are we going to be talking about today? 

Helen Goss: 0:37 

Well, there's a lot of stuff around redundancy coming over the desk at the moment. I don't know if you're finding that as well, Andy. 

Andrew Whiteaker: 0:45 

Yeah, I think that's fair to say yeah. 

Helen Goss: 0:46 

So I think probably this podcast and possibly also the next one, we are going to be looking at some of the curveballs or conundrums around redundancies for companies. So today we're specifically going to be looking at selection pools, that quest that businesses often have for the unique role so they're not going to have that obligation to do selection criteria and also the need to extend the pool across group companies. And then, of course, woolworths. 

Andrew Whiteaker: 1:17 

Yeah, that's right. I'm going to be headlining or spearheading a 90s revival a little bit later on to talk about Woolworths, but for the time being it's this interesting recent case about redundancy that sort of sparked this off for us. 

Helen Goss: 1:29 

Well, I'm not sure. I would say it was an interesting case. 

Andrew Whiteaker: 1:31 

Well, we're going to talk about it, Helen. So let's say this interesting. 

Helen Goss: 1:33 

We're going to talk about it, but it's going to lead to a slightly more interesting discussion. 

Andrew Whiteaker: 1:38 

Excellent, that'll work. 

Helen Goss: 1:38 

So it's just that conduit to a slightly more interesting discussion Perfect. So the recent case is Valimulla v al-khair foundation. Apologies if I've got the pronunciation wrong and it's essentially saying that employers should consult on a proposed pool for redundancy, especially when picking a pool of one, which sounds slightly odd, but it'll become a little bit clearer as we go through the case. So Mr Valimulla was a liaison officer for the Northwest of England and there were several liaison officers in different geographical areas and the need for liaison officers across the whole patch, the whole country, decreased. But the company put Mr Valimulla in a pool of his own, saying that he was in a unique role and the other liaison officers were not placed at risk. So to start off with that does sound like a slightly odd decision really. 

Andrew Whiteaker: 2:43 

Yeah, I mean, when we speak to clients about this sort of thing and they're talking about pooling, we'll often ask okay, so does the person do an entirely unique role? Are they the only person in the organisation who does that thing? Or if there are a number of people who do a similar role, or even the same role, but maybe in a different geographic area or covering a different region, then you might think about whether or not it is appropriate, not just because um you um for convenience or legal compliance, but also because you want to make sure you keep the you know the best people in the role, um for your future, and so you want to make sure you've got the best people and retain the best people. And just treating people as unique individuals doesn't always necessarily achieve that. 

Helen Goss: 3:27 

No, but I mean everyone who's listening to this podcast and you and I know that if a company can engineer a situation where it's a unique role, then it's potentially easier because they're not going to have to come up with complex selection criteria. And I found a quote about redundancy. So, one person's paranoia is another person's engineered redundancy. 

Andrew Whiteaker: 3:55 

Yes. 

Helen Goss: 3:55 

And, of course, a lot of companies sometimes have in their mind who they think is the person that needs to be made redundant not necessarily because it's just a performance issue, but if there is a need for a person or a one person headcount to go, then they usually, or very often, have in mind a person who fits that bill. 

Andrew Whiteaker: 04:21 

Yeah, although from time to time we we will receive documentation from our clients where they put a spreadsheet together which has sort of a big in red make this person redundant written next to it. Yes. At which stage we take a bit of a sharp intake of breath and think well, that wasn't the best thing to do. 

Helen Goss: 4:38 

We certainly do. But anyhow, let's just get back to the case and the facts. And then there's a lot really to discuss. So they put Mr Valimulla at risk but they didn't put any of his fellow liaison officers at risk. There were three consultation meetings um held but there was never any consultation about the pool and to be honest, I don't find that so unusual because they would have just said well, you're in a unique role, so therefore we are going to make that role redundant. There may be discussion about how to avoid the redundancy, other roles etc. 

Helen Goss: 5:18 

He was dismissed and he claimed unfair dismissal and in the tribunal his claim failed because the tribunal found that the process was not so flawed as to make the dismissal unfair. But it then went to appeal and the appeal was allowed. The work had decreased, not just in the northwest where Mr Valimulla was, but across the whole of the company. It did seem a little odd that he had been selected and it was decided by the company that he was in a unique role. So the finding was that there was no consultation about the pool for selection and that the tribunal had failed to consider whether the pool of one was a reasonable approach in the redundancy situation. 

Helen Goss: 6:11 

So, as I say, it's not really a particularly interesting case. But I think the issue of pools, selection pools in redundancy is quite a big subject and it's one that we see more and more at the moment, and it's almost a sign that the pandemic is fading slightly now in our memories and companies are going back to constantly looking at their offering and how they're lining themselves up with their clients and are they focused and organized in the right way. So there are a lot of reorganizations, which sometimes leads to the redundancy of particular roles, even if new roles are being created. So we do have a lot of queries about selection pools and inevitably companies do prefer I don't know if you find the same Andy a unique role, because then they just have to deal with one person and they don't have to upset a whole host of other people who potentially are also at risk. 

Andrew Whiteaker: 7:10 

Yeah, I think a redundancy exercise has the scope to be quite upsetting and quite destabilising. So to the extent that you're able to limit that uncertainty and to limit the number of individuals who might be affected even if we're not talking about making them all redundant but just putting them through a process where they are going through a period of time where there is uncertainty about their continuing role if you can avoid that, you would choose to do so. 

Helen Goss: 7:41 

Yes, because it's upsetting to the individual, but it's also upsetting to the business as a whole and it can cause a fall off in productivity because people are agitated and worried about their positions. But I was just thinking about how you determine the pool, and that's an important part in making sure that you've got a fair process. 

Andrew Whiteaker: 8:04 

Yeah, and at the risk of sounding controversial, one of the things that I do find interesting about that case is that the finding was that the process was unfair because they didn't consult about the pool. It wasn't necessarily about the pool that they decided upon in the end. 

Andrew Whiteaker: 8:19 

It was the fact that they did not consult about it. And that's one of the key things I think about redundancy is that, unlike with a, with a performance dismissal or a misconduct dismissal where there would be, we know have the ACAS code of practice and most employers will have an internal grievance procedure which sets out certain steps that you must take in order to make that dismissal fair. For redundancy that, yeah, there are no, there's no real sort of code of conduct in the same way, there's no. People often don't have those procedures, and so what represents a fair redundancy can be any number of different approaches and an employer can make different decisions and they can follow a different approach faced with different redundancy situations. 

Andrew Whiteaker: 9:07 

And none of that. That. It's not the case that automatically following one route will either make it fair or unfair, and a tribunal's job is not to say well, if we were running this process, we would have done it in this way, which would have made it fairer, or there were fairer ways that you could have done this. The test is only whether the decision or the process that you followed was unfair. It was not a process that a reasonable employer would have taken. 

Helen Goss: 9:33 

And that's the whole point, isn't? It Is that you've really got to show that you considered what the pool should be. And if you can show that you did consider it and you create your little paper trail to show that, then really the tribunal is not going to interfere with that and an individual is going to have a hard time overthrowing that. 

Andrew Whiteaker: 9:55 

Yeah, if you can demonstrate to the tribunal. We've thought about this. We've applied our minds as to what the what the right way of doing this is, and we thought about whether we should include yeah um, you know more people in the pool that we decided that we wouldn't because of x, y and z reason and that those are, those are explicable and justifiable reasons. You're not just making something up to to, you know, just hide. Um, you know a campaign to remove a particular individual, for example. It's not the job of the tribunal to say well, I think maybe a better pool would have been this. It's only whether what you did was fair. 

Helen Goss: 10:27 

Yes, and it was a decision that you could reasonably exactly that that's it exactly so when you are looking at the pool, then obviously you're going to have to look at people who've got the same job title, but, but to just look at people who've got the same, uh, job title may not be enough no because often, as businesses evolve and develop, job titles change um, and also so do role, job roles, and so you need to look at what people are actually doing, not just what their title is, not just what their job description from 10 years ago says. 

Helen Goss: 11:03 

You need to look and see what are they actually doing, so should they also be included in the pool because of what they're doing? Or even, potentially, people whose skill sets are interchangeable? I'm not saying that always you have to choose someone, so if you're I don't know, I'm trying to think if you're looking at a waiter who serves the drinks as opposed to a waiter who serves the food. 

Andrew Whiteaker: 11:29 

Yes, it's entirely arbitrary that they've ended up doing the things that they're doing, but they could do both jobs equally well. 

Helen Goss: 11:35 

Exactly. So from that perspective, interchangeable would be something that you would need to take into account. And then I was thinking and do you need to potentially look at those whose grade is just slightly below or just slightly above? 

Andrew Whiteaker: 11:51 

Yeah, and that's even before we start thinking about bumping. 

Helen Goss: 11:53 

Oh, bumping's next time, next time we're going to talk about bumping and then geography, and that's I know what you're going to talk about with Woolworth. So we'll save your, your thunder for for that, um. And then, of course, there's the issue of, if you are a group of companies, the extent to which you're obliged to extend your pool across group companies. 

Um, and that's a bit of a difficult one, to be honest, because the Employment Rights Act refers to the employer's business, and that's generally taken to mean that to say that one entity that they are looking at. But if the companies work closely together and the people and the people work across them at a slightly moving way then it is going to be hard to say that you wouldn't potentially have to include people from different um companies, albeit within group. 

Andrew Whiteaker: 12:55 

But again, going back to your point that the, the test is, or the challenge is for the employer to demonstrate that they've thought about all of this, and so there might be good reasons why we I mean just touching on geography very briefly, you know, you've got I think in the case that you've referred to, there was a diminution in the requirement of work of a particular kind across the country, so it wasn't just in a particular region where the individual was and that was a problem, wasn't it? 

Andrew Whiteaker: 13:18 

yes, but in certain circumstances you could say, well, actually we do have a continuing need for someone doing this job in this region, but just not in in the other region, and that's where the redundancy lies. 

And this particular person, who is very successful and still has lots of work to do and lots of contacts they are key, they have really strong contacts with the clients that they work for and so, yes, we could put that person in a, in a pool with the other person who's in the less successful region. But that would be quite damaging for us if we resulted in, if it resulted in us having to make redundancy because we run the risk of damaging all of those client relationships. So in that circumstance you might be able to say, well, it is fair and reasonable for us to have decided to limit it in that way because it's it's the, it's the person who doesn't have, or the region that doesn't have, those clients and customers where there's the diminution, and it would be damaging for us to widen it out more broadly. 

Helen Goss: 14:18 

Exactly, and that's where geography potentially works, doesn't it? Because it's in that particular area. But what I think you often find is that when you have decided that the role that is at risk of redundancy is a unique role, if that individual doesn't agree, then in the consultation meetings, whether you introduce the consultation of that point or not, they will tell you that they don't agree and that they think, so-and-so, or that person or this person should also be involved in the selection pool, or that person or this person should also be involved in the selection pool. And it's at that point that you, the business, have got to decide. Well, am I going to insist that, no, it's just you, or am I going to say okay, well then, let's widen the pool. 

Andrew Whiteaker: 15:03 

In our case, it may have simply been sufficient for as, and either if the employee raised that particular subject, the employer said okay, now that's fine. Well, let's have a think about that then. What would you suggest around the pools? Yes, um, okay, we hear what you say, but actually we don't think that will work, for x, y and z reason. You've now consulted over it, you've listened, you've considered what they've got to say and then you've come to a decision. So it's not particularly onerous to do it, but the case is suggesting it is a step that does need to be done. 

Helen Goss: 15:36 

Yes, and it needs to be done at the time so that actually the consultation can potentially make a difference. Yeah, so to raise it, I suppose, as an appeal within the internal procedure wouldn't have worked so well, because already the decision would have been made and so it would have been unfair at that point in any case. So that really is the issue in relation to pools. 

Andrew Whiteaker: 16:04 

Yeah. 

Helen Goss: 16:05 

So, coming on then from that geographical issue, let's talk about Woolworths, because it makes me want to put my head in my hands, but that's what we're going to address next. 

Andrew Whiteaker: 16:20 

So welcome back. It does seem to me that the 90s are really in fashion at the moment. We've got gladiators back on the TV, we've got the Labour Party riding high in the polls and by the time people listen to this podcast, we may have the result of the general election. 

Andrew Whiteaker: 16:35 

We may indeed, yeah, and we may have a Labour government, and I don't think there's anything more nineties, perhaps, than popping into your local Woolworths and picking up a bag of pick and mix. And the reason that we're talking about Woolworths in particular is not just because I'm feeling peckish, but it is because the Labour Manifesto, and indeed the Green Paper before the manifesto itself was published, spoke about potential changes to rules around collective redundancy consultation so what? 

Helen Goss: 17:09 

so what are the changes then? 

Andrew Whiteaker: 17:10 

okay, so there's a slight health warning here. Okay, there have been any number of podcasts, webinars, email newsletters, whatever you like, about what a labour party in government would mean for your business, and the truth is none of us really know, because we have a manifesto. Of course, we have a manifesto and we have some pledges, but obviously, by the nature of it being a manifesto, everything's relatively vague. We don't know exactly when things can be fluid we don't know, for example, where people are talking. 

Andrew Whiteaker: 17:44 

Well, this is a suggestion that we're going to remove worker status and just have employee and self-employed. We don't know how that's going to work. Um day one, unfair dismissal rights how's that going to work? So there's still a lot of uncertainty and so I am always slightly anxious about talking about. Well, in under a labour government, this will happen, but I'm going to do it anyway. Go for it. And where Woolworths comes into this is that where you are looking at making more than 20 people redundant in a 90-day period within an establishment and remember the word establishment then there is an obligation to collectively consult with either trade union representatives if you have a recognition agreement in place, or elected or appointed representatives of the affected employees. And that's long-standing, understood legislation, going back to the Trade Union and Labour Relations Act from 1992. That's there. We know that. We understand that. But there was a high degree of excitement about uh, 10 years ago I think it probably was Helen. It was around about that, wasn't it? 

Helen Goss: 18:56 

it caused a lot of upset, didn't it? 

Andrew Whiteaker: 18:58 

it certainly did, and this was in, uh, as a result of the fallout, of the collapse of Woolworths. Yes, because, um, after the financial crisis I think it was about 2009, something like that um, Woolworths sadly went into liquidation and we had to go to other places to get our, you know pick a mix um and um. 

Andrew Whiteaker: 19:20 

There were legal cases that emanated from that and in particular, there were legal cases around the approach taken by the business to consultation. Because remember that word establishment that I highlighted earlier on. The question was well, what does establishment actually mean? Do we mean that we're making 20 or more people redundant in a 90-day period in an establishment, and that establishment means the entire company, or does it mean a particular store? Because if we're talking about a particular store, there will be many stores where there were fewer than 20 employees and therefore that collective redundancy obligation would not arise, whereas if you're talking about the company, then clearly there would be many more than 20 people being made redundant and therefore those collective obligations would kick in. And what happened is that the courts in the UK initially held that actually you should read establishment to mean the entire company, and this set all manner of hairs running and considerable concern for our client base. 

Helen Goss: 20:30 

I remember talking to people at the time around it, because if you're a large employer with many different sites, well, we had, if you remember, an outsourcing company, yep, and so they had hundreds and hundreds of different sites, didn't they? That's right, and they may, from time to time, make redundancies yes, they right size their business as a result of changing demand um or they lose a small contract, or whatever it might be um. 

Andrew Whiteaker: 20:58 

In those circumstances, if you just look at the particular site, you know who's come and gone over the last three months, so you know whether those triggers would be hit. But you wouldn't necessarily know, if you're running a site in Truro, what's happening in the site in Inverness, for example. And so there was no, no one was really centrally set up to monitor the comings and goings. It's also worth remembering that the word redundancy for the purposes of of the trade union labour relations acts, um is, is broader than what we would ordinarily just perceive as being a redundancy. It can include the dreaded fire and rehire or where you dismiss someone, look to re-engage them on different terms conditions. 

Andrew Whiteaker: 21:40 

So there was just no one was set up to monitor it and there was this concern that we don't necessarily know whether we're hitting that trigger because we've got nowhere following it. And even if we did know, then that just places quite an additional burden on us to make sure that we're collectively consulting every time we go through a redundancy exercise, even if we're just potentially losing one or two people in a particular site. 

Helen Goss: 22:06 

So this caused considerable concern, um in the aftermath of those of the walworth cases, but um the, the case was actually referred all the way to European court of justice because I do remember, Andy, that a lot of the huge companies with thousands of employees, because of that difficulty of keeping an eye on what was happening in all the different sites, were actually thinking they were going to have to employ someone to just keep an eye on what was happening in all of the sites to satisfy the Woolworths requirements. 

Andrew Whiteaker: 22:40 

or at the very least, invest in some software that would enable them to sort of track it, but the case did end up in the European Court of Justice. It was referred to come to a conclusion as to whether the word establishment should be interpreted as widely as that, and the indication given by the European Court was that it should not. And actually, establishment means what you think it means. It means an office, it means a factory, a particular location etc. 

Andrew Whiteaker: 23:11 

So there was widespread sighs of relief all round and that has continued until this day. But hidden away in the Labour manifesto and in the Green Paper as well, there is discussion around actually enhancing collective rights and potentially going back and, if you like, reintroducing the Woolworths principle and that actually, if you are making redundancies establishment, the wording may be changed and we're not talking about establishments anymore, we're talking about maybe employer for example, example, and that would be quite a substantial change. 

Andrew Whiteaker: 23:52 

as I said, I am quite loathe to sort of talk too much about what will happen under a Labour government because there's so much uncertainty about when things will be introduced, what might happen during consultation processes, how might the legislation be tweaked or amended as we get closer and closer to implementation. But it is something that sort of hasn't necessarily caught all of the headlines in the way that the day one unfair dismissal rights has, but it is nonetheless something that probably should be on the radar because it's something that we might well see introduced in the first year or so of a Labour government. 

Helen Goss: 24:28 

Yeah, no, absolutely. It seems that, as I said, there are a lot of companies who are looking at reorganisations and realigning their businesses, so I think there's still quite a lot for us to talk about in relation to redundancy procedures. If, for example, there are day one employment rights, then the process is going to become even more important for people who've got less than two years service, as is currently the situation. 

Andrew Whiteaker: 24:59 

Well, that's right, and we will sometimes see when an employer is facing redundancy. We know that last in, first out, for example, is not necessarily a wise approach to take. 

Helen Goss: 25:09 

It's been a favourite for a very long time. 

Andrew Whiteaker: 25:11 

It has, but there are potential indirect age discrimination issues that can arise from it. But also, if you just take a blanket approach that will just let all of the newbies go and keep the old guard, well, that's not necessarily doing the right thing for the business, because you might have hired some superstars who are, who are brilliant, whereas you might have some long-standing employees who are maybe, you know, not as effective and for whatever reason, and it makes no sense to just remove someone who's recently joined you, um, just because of their length of service well, but you always used to be able to do it well, it was always a favourite of the unions as well yeah, yeah, back in the day. 

Helen Goss: 25:52 

yeah, it was, but what I was going to say is I think that that's the subject we need to look at in a bit more depth in our next podcast, along with bumping, for sure, um, because that's the subject that employers are not very keen on um considering, but it is a part of a fair process to consider it, so that's probably something that we're going to need to talk about as well. 

Andrew Whiteaker: 26:14 

Well, as ever, and in keeping with the theme of our podcast, we will continue to keep our eyes on the legal press and keep our eyes open for any interesting cases or new stories that we think can link in nicely to employment law. And so redundancy is certainly something that we'll be watching. 

Helen Goss: 26:31 

Well, thanks, Andy, I enjoyed that canter through Woolworths. 

Andrew Whiteaker: 26:35 

My pleasure, as always, thank you. 

Helen Goss: 26:37 

So thank you everybody for listening and if you're interested in checking out the other episodes in the series, do go to the Boyce Turner website. You can also follow or subscribe wherever you listen to your podcasts. So thank you again and goodbye.