Redundancy and the danger of diving into a pool of one
Whilst the Government’s Coronavirus Job Retention Scheme ("CJRS") remains in force until 31 October 2020, businesses across the UK continue to feel the financial strain due to the global pandemic. The CJRS has assisted in keeping businesses afloat and people employed, but as the country slowly starts to re-open, employers are considering how significant the impact has been and how their workforce will look moving forward. In many cases, redundancies are unfortunately inevitable.
Dismissal by reason of redundancy
Redundancy is one of the potentially fair statutory reasons for dismissal, if the reason for dismissal is due to any of the following:
- The employer ceases carrying on the businesses in which the employee worked.
- The employer ceases carrying on the business in the place in which the employee worked.
- The business needs fewer people carrying out work of a particular kind.
Employers must ensure that a fair process in followed and failure to follow such can render the dismissal unfair. A fair procedure is considered to comprise of the following:
- Providing warning and consultation
- Determining a fair basis for selection
- Considering alternative employment
- Providing the opportunity to appeal
Identifying a “pool”
After identifying a potential redundancy situation, the next steps for an employer is generally to identify the employees who are potentially at risk. Should there be more than one individual carrying out a specific role, these individuals should be alerted that they are all in a ‘selection pool’ and a scoring procedure will be carried out to identify the lowest scoring individuals.
What happens, however, where there is a sole individual carrying out a role and therefore a hypothetical “pool of one”?
The case most employment lawyers revert to is the Employment Appeal Tribunal ("EAT") case of Halpin v Sandpiper Books Ltd, which confirmed a single employee can be considered for redundancy in a pool of one. In this case, Mr Halpin had been posted from the UK to China sometime before the employer decided to outsource its China operation. As a result of the outsourcing, Mr Halpin was made redundant. The EAT determined that Mr Halpin was an obvious pool of one as he was the only employee working in China.
It is clear from this case, and other subsequent cases, that a pool of one is a potentially fair reason for dismissal in a redundancy scenario. Tribunals are, however, quick to point out that such a pool is not without its risks.
Risks of using a pool of one
Although using a pool of one can be fair and reasonable, tribunals are conscious that it is often used as a method for an employer to target individual employees. It is, therefore, absolutely key that employers correctly consider pools and where a pool of one is identified, employers have evidence to back up their reasoning for the pool. If a tribunal were to decide the individual is not a genuine standalone employee, they would likely find that the redundancy process was unreasonable, resulting in an unfair dismissal finding.
What does this mean for your business?
Whilst commonplace, using a pool of one can increase the risk of an unfair dismissal claim arising. Employers should consider their options for the most appropriate redundancy pool and if identifying a pool of one, there must be good reason for doing so. Consideration should be given beforehand as to whether the employee is in fact standalone.
What do you need to be doing now?
Although employers can continue claiming wages through the CJRS, the scheme is expiring at the end of October 2020. This means that employers now have less than four months until they will be required to stand on their own feet when paying employees’ wages.
It is worth noting that should your company be considering redundancies, in particular between 20-99 dismissals, at least 30 days of consultation is required before the first of the proposed dismissals. Where over 100 are proposed, the consultation period increases to at least 45 days.
Therefore, if as an employer, you are considering redundancies for one of the three reasons outlined above, now is the time to get the ball rolling. Consultation must be started in good time in any event and can be done so regardless of whether your employees are furloughed.
These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.