Packman t/a Packman Lucas Associates v Fauchon
Must there be a reduction in the number of employees required in
order for a dismissal to be by reason of redundancy?
In this case the EAT upheld the decision of an Employment Tribunal
that it was not necessary for there to be a reduction in headcount
for the statutory definition of "redundancy" to apply.
The EAT stated that it is necessary to analyse the situation in two
key respects: the employees and the work. The fact that the number
of employees does not change does not necessarily mean there is no
redundancy situation, as there may still be a relevant reduction in
the work required to be carried out by employees.
Due to a downturn in business and the introduction of accountancy
software, Packman identified a reduced need for book keeping work
to be carried out manually. Ms Fauchon was employed by Packman to
do such work and Packman asked her to accept a significant
reduction in her hours. Mr Fauchon refused and her employment was
terminated by Packman.
There was a dispute as to the reason for dismissal and Ms Fauchon
brought proceedings in the Employment Tribunal claiming a statutory
redundancy payment. Packman argued that Ms Fauchon had not been
dismissed by reason of redundancy because there was no reduction in
the number of employees required. The EAT held that Ms Fauchon had
been dismissed by reason of redundancy for refusing to work reduced
hours, despite the fact that Packman still required her to do her
There is significant scope for uncertainty regarding the
application of the statutory definition of "redundancy"
under s.139(1)(b) (which deals with the reduction or cessation of
particular work) to dismissals resulting from reorganisations and
changes in work levels.
An earlier EAT decision in the case of Alyward had
suggested that there had to be a reduction in the number of
employees performing work of a particular kind in order for a
resulting dismissal to amount to a s.139(1)(b) redundancy. This new
decision provides helpful clarification that this will not always
be the case.
Employers should undertake a broad analysis of the factual
situation underpinning a reorganisation or change in work
levels/hours when considering whether resulting dismissals will be
by reason of redundancy. A redundancy situation may arise where
there is a reduction in working hours but no reduction in overall
headcount. Equally, it may arise where the headcount is reduced but
the amount of working hours remains constant. The essential
question remains whether there is a reduction in the requirement
for "employees to carry out work of a particular
The EAT expressed its approval of the use of a full time
equivalent ("FTE") approach to assessing the hours of
work and number of employees required. While the approach will not
be appropriate in all cases, it can be a helpful way of identifying
whether the overall re
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
quirement for employees carrying out work of particular kind has
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The Pensions Regulator is continuing its crusade against employers who do not comply with their auto-enrolment duties. Those who think they are small enough not to feature on the Regulator’s radar would be well advised to think again.