Economic dismissal deemed unfair following lack of consultation with “Pool of One” employees

Quick shots

• The employer had failed to conduct “meaningful consultation” with the employee, making the dismissal “procedurally unfair”.
• A fair redundancy process requires employers to adhere to a thoughtful and well-documented process of sharing and consultation, which includes clear communication with affected employees.

Background

Zubair Valimulla worked for the Al-Khair Foundation as a Mosque Liaison Officer (MLO) based at the charity’s Bolton branch. Three other employees carried out the same or similar roles across the UK, primarily raising funds for the charity through local schools and mosques.

During the COVID-19 pandemic, donations to the charity were significantly reduced and all revenue collection staff were furloughed, including Valimulla, who was placed at risk of redundancy in a one-person pool. During the consultation process, Valimulla presented a business case, setting out the options available to retain his position. Valimulla was not consulted on the suitability of this pool, although no other staff performing the same duties as him were placed at risk.

The charity eventually dismissed Valimulla in October 2020 due to redundancy, and he subsequently filed an unfair dismissal claim with the Employment Tribunal (ET).

Layoffs for economic reasons

Redundancy is a potentially justifiable reason for dismissal in the UK. However, for a dismissal to be justifiable, a tribunal must be satisfied that the employer considered the dismissal to be a sufficient reason for dismissal in the circumstances of the case. Employers have discretion to make business decisions that may result in redundancies, but they are expected to act reasonably in doing so. The tribunal will determine whether an employer has acted “reasonably” in a redundancy case based on:

• meaningful consultation was carried out, meaning employees were consulted before decisions were finalised and were able to influence the outcome;
• the employer has “genuinely applied its mind” to the dismissal process; and
• given the size and resources of the employer, the measures were reasonable.

In considering the above, the court has a duty to scrutinise the employer’s dismissal process, including the manner in which the employer grouped “at risk” employees and the subsequent criteria used to select individuals for dismissal.

The decision of the labor court

The court dismissed Valimulla’s complaint, finding that his employer had conducted a generally fair procedure.

Valimulla appealed on several grounds, the most important being that the ET had erred in law because it had failed to address the issue of why he had not been consulted about his presence in a one-person group.

The decision of the Labour Appeal Tribunal

The EAT allowed Valimulla’s appeal and substituted its own finding that he had been unfairly dismissed.

The EAT considered that, since Valimulla had expressly raised the issue in his claim that he had not been consulted about the pooling, the EAT should have considered the issue when considering the overall fairness of the proceedings, but it did not.

As consultation should take place when it can make a difference, in this case the EAT concluded that consultation with the Valimullas should have begun before the selection pool was decided.

The EAT considered that “given the lack of any of them “A meaningful consultation on the key issue in this case, namely why (Valimulla) was placed in a group of one, when other staff were performing the same role, albeit in different locations… there can only be one outcome, namely that the dismissal was procedurally unfair.” (Emphasis in original.) The charity was ordered to pay more than £16,000 to compensate Valimulla for the unfair dismissal.

Key points to remember

In unfair dismissal cases, the court must look at the overall process in each scenario to determine whether a fair procedure was followed. This is another case that demonstrates the importance of meaningful consultation at the outset of an individual dismissal situation.

While the EAT’s decision does not necessarily mean that employees must be consulted individually on the selection criteria in every redundancy scenario (unlike a collective consultation exercise, where employee representatives must be consulted on the criteria), it is a reminder that employers may benefit from careful consideration of why each group of employees is appropriate and justifiable in each redundancy process.

Implementing a thoughtful and well-documented consultation and sharing process, including clear communication with affected employees, can help demonstrate efforts to work towards a reasonable response that meets the needs of the business while being a fair procedure overall.

Ogletree Deakins’ London office and Global Reorganizations practice group will continue to monitor developments in the law and provide updates on the Cross-Border, Global Reorganizations and Downsizing blogs as additional information becomes available.

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