Where employers need to reduce headcount among employees doing the same or similar job, employers will usually use a redundancy matrix scoring process to determine who will be provisionally selected for redundancy in this situation, with the lowest scoring employees being made redundant, subject to the availability of any alternative employment (vacancies).
Employees who are pregnant, as well as employees on maternity, adoption or shared parental leave; or who have recently returned from one of these types of parental leave and who are selected for redundancy where their existing roles become redundant, are entitled by law to be offered a suitable alternative vacancy, if one is available. While other employees at risk of redundancy should also be offered any alternative roles as part of a fair redundancy process if available, this category of employees have a priority right to be offered suitable alternative roles as a priority to other employees who are also provisionally selected redundancy. Should the employer fail to offer suitable alternative employment where it exists as a priority to this category of employees, the dismissal will be automatically unfair and the employer will be at risk of an unfair dismissal award in an employment tribunal claim.
The Employment Appeal Tribunal has ruled on whether alternative employment for this purpose includes one of the remaining roles where there is a headcount reduction. In this case, the issue was whether the redundant employee (who was on maternity leave at the time) was entitled to be offered one of the remaining team leader posts, in priority to other employees at risk of redundancy, when headcount among the team leaders was reducing by five from 21 to 16 employees. Overturning the employment tribunal’s decision, the Employment Appeal Tribunal ruled that in a pure headcount reduction scenario (as in this case), there is no ‘vacancy’ created by reducing the number of existing roles; such that the pre-existing remaining roles are not ‘suitable alternative employment’ for this purpose.
Key takeaways
This ruling usefully confirms that where the employer needs to reduce headcount and is provisionally selecting employees for redundancy from among a pool of employees doing the same or similar jobs, employees with priority rights to be offered suitable alternative employees (such as employees who are on or have recently returned from maternity leave) do not get additional rights to override the selection process; such that lower scoring employees can be selected for redundancy regardless of their priority status. This means that where an employee is currently on maternity leave or otherwise, whilst they are protected, meaning they have priority over any suitable alternative vacancies, they can be for selected for redundancy in the same way as anyone else via the selection criteria exercise. Where they are not selected to remain in their current roles, the employer must continue to explore suitable alternatives within the business.
By contrast, when roles are merged or significantly altered during a redundancy process, any newly created position may still qualify as ‘suitable alternative employment’ if it remains similar to the previous role. Employers must clearly communicate and offer such roles to employers at risk of redundancy and take into account any employees who have priority rights to be offered these roles.
FSB members should take legal advice by calling the FSB Legal Advice Line or booking a call via the FSB Legal and Business Hub prior to dismissing or making redundant any employee.