‘Voluntary’ redundancy leads to successful unfair dismissal claim
When contemplating making redundancies it’s pretty common for myHRdept to advise clients to offer voluntary redundancy terms early in the consultation process.
The benefit of the voluntary route is that the employee’s exit from the business is based upon, as the title suggests, the employee volunteering to accept redundancy, usually in exchange for an enhanced package.
Why then did Mrs White in the case of White v HC-One Oval Ltd 2022 decide to sue her employer for unfair dismissal having accepted voluntary redundancy? More importantly, why did she win?
EAT rules employer manipulated Mrs White into accepting voluntary redundancy
Although the initial tribunal ruled that in accepting voluntary terms, Mrs White’s case had little prospect of success, the Employment Appeal Tribunal saw things differently. Mrs White succeeded in convincing the EAT that that her ‘voluntary redundancy’ was in essence a sham – she had only accepted the offer because her employer had misled her, convincing her that her position was more vulnerable than the facts suggested it was.
In accepting her employer’s offer Mrs White believed that she would have been made redundant anyway, but on less favourable terms than those on offer under the voluntary redundancy package.
Put another way, the EAT felt that her employer had manipulated the messaging to ensure that Mrs White accepted voluntary redundancy, presumably (and this is our interpretation) to exit an employee it no longer wanted in the least risky way. Dismissing her for other reasons e.g. performance or conduct, would have been riskier.
Redundancy requires reduction of work or change of location
Redundancy though, requires a cessation or reduction of work, or a change in the location of work. If none of these apply, it’s not a redundancy. In the case of a reduction of work, a fair selection process will determine who will leave. It is entirely possible, in fact often advisable, for employers to offer a voluntary exit option early in the process.
However, it is also commonplace for employers to offer voluntary exit packages when there isn’t a redundancy situation, and this case highlights why that tactic should be approached with caution.
Settlement agreement could have mitigated employer’s risk in this case
The employer here could have protected itself from Mrs White’s unfair dismissal claim had it required her to enter into a settlement agreement. But it didn’t, and Mrs White’s claim against it succeeded.
What are the learning points for employers from this case?
Prior to offering voluntary redundancy:
- Take advice from myHRdept to establish whether a redundancy situation has arisen; if so
- Proceed with a redundancy consultation & consider offering voluntary terms; but if not a redundancy situation
- Risk assess the possibility of a claim and consider requiring a settlement agreement.
Risk factors to be considered:
- Targeting individuals is risky and acas codes suggest employers don’t do this (but many still will);
- Individuals with protected characteristics will increase the risk profile still further.
High risk factors would suggest a higher voluntary redundancy payment tied to a settlement agreement to entice employees to accept voluntary exit packages, while protecting the employer from the possibility of legal action.
HR support from myHRdept
myHRdept routinely support employers with redundancy campaigns – collective and voluntary. We also provide settlement agreements for riskier exits and voluntary exit agreements for lower risk scenarios. All of our retained HR support packages contain a bank of support hours which can be used for these purposes, plus of course to risk assess particular plans of action.