Failure to follow proper process when carrying out redundancies can result in successful unfair dismissal claims. Unusually, for a redundancy situation, in Argos Ltd v Kuldo the employee's claim was for constructive dismissal as a result of the failures in the procedure.
Ms Kuldo was employed by Argos as a Costs Manager when the company was acquired by Sainsbury's plc. Ms Kuldo's role was identified as being at risk of redundancy when the finance function was restructured. She and a colleague were pooled together and told they would both be considered for a newly created role of Central Costs Manager. She was also given information about proposed collective and individual consultation processes, and given a job description for the new role.
The colleague subsequently resigned leaving only Ms Kuldo in the running for the new role and she was advised that she would therefore be "mapped" into it. Mapping was the process adopted by Argos to decide if an existing employee's role was redundant or whether there was a role in the new structure into which they could transfer. For mapping to take place Argos applied a 70:30 metric - there must be no more than 30% difference between the old and new roles.
Argos were of the view that in this case the two roles were sufficiently similar to map Ms Kuldo into it, and that she was no longer at risk of redundancy. However, Ms Kuldo disagreed believing the new role to be of lower status, less responsibility and including a change of job content. She believed it to be more than 30% different to her original role. She set this out in writing, including some counter proposals and this was treated as a grievance by Argos. After both the grievance and an appeal were unsuccessful she resigned.
An Employment Judge ("EJ") upheld a constructive dismissal claim finding that the new role was significantly different to the old role, and that the Respondent had breached the implied term of trust and confidence when it failed to consult, failed properly to assess the roles, and failed properly to address the Claimant’s grievance and appeal. However, the EJ failed to deal with the two other claims made by Ms Kuldo - wrongful dismissal and redundancy pay. Argos appealed.
The EAT found that the EJ had made a number of errors in dealing with the case. Having found there was a constructive dismissal the EJ should have assessed separately whether the dismissal was fair or not and whether the alternative employment was suitable for Ms Kuldo. The reason for the dismissal should have been determined, as should whether that reason was a potentially fair one and whether the dismissal was reasonable in all of the circumstances. There was no evidence that the tribunal had done this and there had been an error in law to that extent. That error did not though undermine the finding of constructive dismissal. The case was referred back to the employment tribunal to determine whether the constructive dismissal was fair, and for the wrongful dismissal and redundancy pay claims to be heard.
Argos may well be on the back foot in persuading the EJ that the dismissal was fair in circumstances where there has been a fundamental breach of contract. It is essential that employers follow fair and reasonable procedures when carrying out redundancies, even in circumstances such as this when the intention of the employer was that the employee would continue in employment.
