With the number of redundancies on the increase, this is a question frequently being asked by Guernsey employers. The answer is always the same. Based on past Tribunal decisions and the Commerce & Employment Code of Practice, the answer has to be a resounding "yes".
Employers need to appreciate the importance of a consultation process in any redundancy situation (however large or small the organisation). In fact, the Tribunal just recently reaffirmed its importance in the recent case of Guernsey Gas Limited.
Following its decision to undergo a restructuring programme driven primarily by the need to reduce overheads, Guernsey Gas embarked on a consultation process which it claimed was "clear, fair and best practice procedure". Mr T, who was selected for redundancy, disagreed, claiming that the procedure was flawed, and brought an action before Guernsey's Tribunal for unfair dismissal.
In January 2012, Guernsey Gas informed all staff in a group wide communication of its proposals to restructure the organisation, and the reasons behind its decision. Subsequent one to one meetings were then scheduled with staff to provide a more detailed understanding of the proposals. During his one to one, Mr T was informed by senior management that two potential opportunities may become available under the revised structure which Guernsey Gas believed may be suitable for him. Mr T offered no response.
One month later, Guernsey Gas held its first all staff meeting in which senior management gave a formal presentation explaining the proposals, the rationale for the changes and the potential for redundancies. Mr T did not attend this meeting due to annual leave but was given a copy of the presentation upon his return.
A second all staff meeting was convened shortly thereafter. This allowed Guernsey Gas to respond to those issues raised by its staff in the one to ones. Mr T attended this meeting during which he was presented with "Notification of Potential Redundancy" (the "at risk" letter). This letter informed Mr T that he was facing redundancy but advised that he was also in a selection pool for two alternative roles. Mr T simply responded to senior management asking not to be considered for any alternative role. No reasons for his decision were given.
Two weeks later, Mr T attended a formal consultation meeting with an independent HR consultant (appointed by Guernsey Gas) and confirmed his decision not to be considered for any role going forward. Over the following six weeks all affected staff were invited to communicate with senior management or HR in the event they had any further issues. Mr T did not accept this invitation and did not raise any issues.
Therefore, on 17 July 2012 (five months since the initial process began), Mr T was handed a "Termination of Employment" letter confirming that he had been selected for redundancy and offered the right of appeal against the decision which he chose not to exercise. Instead, Mr T wrote to senior management indicating his intention to register a claim for unfair dismissal.
At the hearing Mr T's allegations were threefold:
i) the process was flawed as it was not conducted under the correct redundancy policy. In particular, he claimed that Guernsey Gas should have adopted a redundancy policy applicable to its parent company and if the correct policy had been applied, he would have been offered one to one meetings with the CEO of the parent company;
ii) once notified of being "at risk" he was given insufficient time in which to respond to his inclusion in the pool for selection; and
iii) he was not given sufficient time to raise queries about the alternative roles. Unsurprisingly, the Tribunal rejected his claims outright and decided that Mr T had not been unfairly dismissed. It found no evidence to support the allegations.
To the contrary, witness evidence confirmed that staff did not consider themselves to be employees of the parent company so could not comprehend why Mr T felt the parent company policy should apply. In any event, there was no guarantee that Mr T would in fact have attended any meeting with the CEO given his apparent lack of willingness to attend any meetings with Guernsey Gas.
Further, Mr T had been given ample time to consider his inclusion in the pool for redundancy selection. The proposals had been underway since January 2012 and Mr T had known that changes were afoot for a considerable number of weeks before any final decision was made; during that time he had failed to ask any questions, or engage in any meaningful consultation with Guernsey Gas.
The Tribunal, clearly puzzled by his actions, including his refusal to be considered for any alternative roles, had little sympathy for Mr T's plight and failed to see on what grounds any of his allegations had merit. Instead, the Tribunal praised Guernsey Gas for taking account of the four basic principles of fairness by creating an open and transparent consultation process.
This decision is yet another reminder to employers of the need to undertake a fair consultation procedure taking into account the four basic principles, namely:
i) the duty to consult the employee
ii) the duty to warn of redundancy
iii) the duty to establish fair criteria for the selection of employees
iv) the duty to explore alternatives to redundancy
Whilst it is appreciated that the time and resources utilised in adopting such a process is not one to be envied (particularly for smaller organisations), we, as lawyers, cannot stress the importance of implementing a consultation procedure. Redundancy is a fair reason to terminate an employment contract, but the reason itself is not enough. Employers will only avoid successful unfair dismissal claims if they follow a fair and reasonable procedure such as an open consultation process. As the Tribunal acknowledged in Guernsey Gas, throughout the entire consultation process all employees were given several opportunities to raise questions about the proposals and fairness of the procedure; it had proved highly effective and employee input resulted in a number of changes and additional roles being created compared to the initial proposals. Employee input cannot be underestimated and this is central to creating a fair and reasonable consultation process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.