Case Law Update: Redundancy Mapping and Suitable Alternative Employment
Key contact: Claire Knowles
Author: Rebecca Mahon
Businesses across the country are facing a difficult winter. With local and national restrictions being imposed, belts are being tightened with the inevitable consequence of companies looking at where cost savings can be achieved. Restructuring functions to ensure that they are operating efficiently is an important and sensible step for businesses to take during this time. However, where those restructures result in redundancies, businesses need to be able to demonstrate they have followed a rational, carefully considered, and fair process, which takes into account the particular circumstances of the employees that are affected.
A business is entitled to restructure its workforce to make it more efficient. As part of the planning for the restructure, businesses can look to “map” roles across their business. This can be done by reference to function, grade etc. – whichever is most relevant. As a business, you may already have an organisational chart which can help with this process. The mapping process not only helps businesses identify areas where perhaps they are over-resourced, but also where there is a duplication of responsibilities. Where there is a duplication of responsibilities, the “map” can lead to a streamlining exercise taking place e.g. merging 2 roles into 1 newly created role. This is what happened in the Argos case.
Kuldo v Argos Limited
Earlier this year, the Employment Appeal Tribunal considered an appeal from Argos in the case of Kuldo v Argos Limited. In this case, Argos “mapped” Ms Kuldo into a new role, on the basis that the new role was 70% similar to her existing role. However, applying the opposite logic, the Employment Tribunal held that the role could not be “suitable alternative employment”, because it was 30% different to her existing role.
In the Argos case, Ms Kuldo (Group Central Costs Manager) was pooled with another employee, Ms Cropp (Argos Central Costs and Establishment Manager). Having completed its mapping, the proposal was to reduce the 2 roles to 1 newly created role of “Central Costs Manager”. Argos considered that the new role was 70% similar to the roles that were being undertaken by Ms Cropp and Ms Kuldo and so either of these employees could be mapped into the new role. During the consultation process, Ms Cropp resigned. Ms Kuldo was therefore given the “good news” that she had been mapped into the new role of “Central Costs Manager”.
Was it suitable alternative employment?
Ms Kuldo was not satisfied that her role mapped into the new role or that the new role was suitable for her. In particular, she considered that the new role had a lower status, fewer senior responsibilities, and different job content. The Employment Tribunal agreed with the fact that the role was not suitable, however, the EAT found that the Tribunal did not fully analyse the legal framework regarding suitable alternative employment. The issue has accordingly been remitted to the Employment Tribunal to reconsider. The EAT directed that Employment Tribunal to the following extract from “Harvey on Industrial Relations and Employment Law”, stating that it is not clear that the Employment Tribunal properly considered this passage when addressing the issue of suitability:
“Under ‘suitability’ one must consider the nature of the employment offered. It is for the tribunal to make an objective assessment of the job offered (Carron Co v Robertson (1967) 2 ITR 484, Ct of Sess). It is not, however, an entirely objective test, in that the question is not whether the employment is suitable in relation to that sort of employee, but whether it is suitable in relation to that particular employee. It comes really to asking whether the job matches the person: does it suit their skills, aptitudes and experience. The whole of the job must be considered, not only the tasks to be performed, but the terms of employment, especially wages and hours, and the responsibility and status involved. The location may also be relevant, because, as wryly observed by Lord Ordinary Eassie, ‘commuting is not generally regarded as a joy’ (Laing v Thistle Hotels plc 2003 SLT 37, Ct of Sess). No one single factor is decisive; all must be considered as a package. Was it, in all the circumstances, a reasonable offer for that employer to suggest that job to that employee? And the sole criterion by which that is to be judged is ‘suitability’”.
Whilst we await the decision of the Employment Tribunal on the remitted issue of suitability of alternative employment, the EAT’s direction to consider the extract from Harvey above provides useful insight as to how the judiciary will look at this. Relying too heavily on percentages such as those applied in the Argos case can lead to a “square peg in a round hole” scenario, but this will not always be the case and our view is that the EAT were keen to emphasise this by directing the Employment Tribunal to applying a subjective test. In other words, the Employment Tribunal may have reached the correct conclusion on suitability, but went about it in the wrong way. This provides a stark warning to employers. The assessment of suitability needs to be a holistic one which takes into account things like paper-based mapping and metrics, but also the circumstances of the person who will be affected by their application.
If you would like assistance with business planning or restructuring and redundancy exercises, please contact our employment team.