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Redundancy or Unfair Dismissal in Disguise?

Sadly, there is nothing new about employers using redundancy as a smokescreen for unfair dismissal, which is why the EAT’s recent decision in the case of Rentplus UK Ltd v Coulson is encouraging (albeit a warning signal for companies).

The ACAS Code of Practice on disciplinary and grievance procedures is very clear in its guidance for employers on how to handle disciplinary matters and misconduct. The Code does not apply, however, to redundancies.

Background

In the case under consideration, the EAT looked behind the reason for dismissal and found that redundancy was not the real reason for termination but that instead the dismissal amounted to sex discrimination.

The background to the case is that Ms Coulson was a senior employee of Rentplus UK Ltd, who was made redundant in 2018, following a reorganisation exercise. Prior to her dismissal, Ms Coulson had raised a grievance in which she claimed her role was not redundant,  that the number of staff increased after the reorganisation and that she had in fact been marginalised by the incoming CEO. Her grievance and appeal were not upheld by her employer and she ultimately brought claims for unfair dismissal and sex discrimination.

The tribunal upheld Ms Coulson’s claim and found that her role was not redundant. The requisite consultation process had not been followed, in that the CEO had not arranged meetings with Ms Coulson despite promising to do so. The hearing determined that Ms Coulson had been the victim of sex discrimination and that, as redundancy was not the real reason for termination, the ACAS Code applied such that an uplift of up to 25% of the compensation award could be applied.

Rentplus UK Ltd appealed the decision, claiming that the Code should not apply because the reason for dismissal was redundancy (i.e. that the ET had made a mistake). The EAT upheld the tribunal’s decision and labelled the grievance and the redundancy processes carried out by the company, a sham in both cases. 

Comment

The tribunal looked beyond the reason given by the employer for dismissal and determined that the ACAS Code did apply, but had not been followed. Employers should always consider whether the recommended procedures within the ACAS Code are being followed whenever they are dealing with disciplinaries, grievances and dismissals. Above all, they should be mindful that an employment tribunal will not necessarily take redundancy at face value and will impose the measures set out in the ACAS Code if it does not believe that the relevant dismissal was by reason of redundancy (i.e. that redundancy wasn’t genuine).