The Employment Appeal Tribunal (EAT) has recently concluded that an employer’s failure to look for alternative employment meant that a redundancy dismissal was unfair, and that no Polkey reduction to compensation should be made (Hendy Group Ltd v Kennedy 2024 EAT 106).  This is an important reminder to employers that considering alternatives to redundancy for at risk employees really is more than a tick-box exercise.  We discuss the case and employer obligations in more detail below. 

The Background

Mr Kennedy was employed by Hendy from 2013 in various roles.  He had 30 years of experience in the motor trade, specifically in sales, before taking on a training role.

In 2020, a redundancy situation arose, and Mr Kennedy was selected for redundancy.  He accepted there was a genuine redundancy situation and that he was fairly selected but claimed that his dismissal was unfair because his employer had not adequately, appropriately or fairly considered the possibility of him continuing to work for Hendy in a different role.

Mr Hendy was told he could apply for posts listed on Hendy’s intranet.  However, he was not in work during the relevant period, no post was suggested for him to apply for, and the HR department took no steps to assist him.  Formal notice of his redundancy made no reference to the possibility of help to find another role during his notice period, and a week after being given his notice of dismissal, Mr Kennedy was required to return his laptop, thereby limiting his access to the intranet for internal job vacancies.  During the 7-week gap between Mr Kennedy being notice and his dismissal, there were multiple sales jobs available with Hendy.  Mr Kennedy saw the roles advertised externally and applied for several, including roles as sales manager at various dealerships.  He was interviewed for one position but was unsuccessful. HR did not inform the hiring managers that Mr Kennedy was at risk of redundancy, nor did they assist him in the applications.  In fact in some cases, his applications were negatively impacted by feedback from the previous unsuccessful interview.

On Mr Kennedy’s last day of employment, he received an email (which had been sent to his internal email address a few days earlier dated 9^th November 2020, but which he did not have access to), stating that his applications for other roles would not be progressed, citing concerns about his motivations for applying for sales roles.

The Tribunal held that Hendy had failed in its obligation to Mr Kennedy to seek to avoid dismissal, that he was unfairly dismissed and ordered Hendy to pay compensation.

The appeal to the EAT

Hendy appealed to the EAT on the basis that the Tribunal had applied the incorrect test when considering whether Hendy had properly considered alternative employment, had substituted its own view in respect of the dismissal rather than considering whether it was within the range of reasonable responses and had erred in law by failing to properly consider whether a Polkey reduction should have been made.

The Law

It is a well known principle that for a dismissal to be fair, there must be a potentially fair reason for dismissal, and that the employer must act reasonably in reaching the decision to dismiss.  In redundancy cases, this extends to a duty to take reasonable steps to find alternative employment for those individuals at risk.

Under the Polkey principles (Polkey v A E Dayton Services Ltd 1987), a Tribunal might reduce compensation to reflect the possibility that the person may still have been dismissed notwithstanding any unfair flaw in the dismissal process.

The Employment Tribunal’s decision and the tests to be applied

The EAT held that the initial Tribunal had applied the correct test, and that Hendy had not done enough in terms of alternative employment.  Mr Kennedy was told he could apply for jobs on the website to which the public at large had access, HR communicated with him by an email address that he did not have access to, and it did not tell recruiting managers that he was at risk of redundancy.  There was no evidence of other steps being taken, which another reasonable employer might have done, such as speaking to employees about their interests, assisting in finding roles or encouraging conversations about different roles.

The EAT noted that the duty on the employer to consider alternative employment had to be considered within the context of the size and administrative resources of the employer. Hendy was a large organisation with relatively large resources, and there were a number of vacancies in a short period of time for which Mr Kennedy was (on paper at the very least) suitable to be considered for.

The EAT also rejected an argument that compensation should be reduced (following Polkey), stating that the Tribunal had been permitted to conclude that, had Mr Kennedy not been unfairly blocked and had Hendy properly considered alternative employment, he would have secured alternative employment.

So what should employers take away from this case?

This case shows that to satisfy the duty to look for alternative employment in redundancy scenarios, it is vital that more is done than simply telling employees that they can apply for open vacancies in the same way as external candidates. 

The duty is to make reasonable efforts to look for alternative employment, will depend on the size and resources of the employer.  Our tips for this include:

-        Proactively reach out to impacted staff to offer support when looking at alternative roles; ask them about their preferences and previous experiences/skills (they may have hidden skills that mean they could be ideal for a role they may not be automatically considered suitable for), suggest roles that they may be interested in.  This should play a key part of the individual consultation process;

-        Don’t assume that an employee will not want to be considered for particular roles due to location/pay;

-        Ensure that at risk employees have access to up to date information regarding internal vacancies.  Consider sending updated lists throughout a redundancy consultation process.

-        Ensure that the application and selection process is clearly communicated;

-        Check in with at risk employees, to see if they have made any applications during the relevant period; if not, try to find out why that is and address any concerns;

-        When facing redundancy processes, consider ring-fencing vacancies for a period of time for those at risk of redundancy before advertising more widely (both internally and externally);

-        Consider whether it is appropriate (and a reasonable use of company resources) to offer outplacement support, with CV/application processes and interview skills;

-        Make recruiting managers aware that the applicant is facing a redundancy situation; encourage them not to discount an individual purely because they are only applying for the role in light of the redundancy situation;

-        Make use of trial periods for new roles to enable an extended period to assess suitability;

-        Ensure that communication with employees is in a format/address to which they have access; and

-        Remember that the duty to consider alternative employment continues throughout the employee’s notice period (i.e. even after an employer has confirmed that their role is being made redundant). 

The same principles may apply in other scenarios, for example, if a third party client has asked for an employee to be removed from their site/project.

Every scenario is likely to be different, please approach us if you require support with your obligations in any redundancy consultation process.

To read the full EAT Judgment, please see: https://assets.publishing.service.gov.uk/media/6842fca75e925395728060eb/Hendy_Group_Ltd_v_Daniel_Kennedy__2024__EAT_106.pdf

We are happy to assist with any other questions you might have. For more information please contact Kim Knox on KKnox@ortolan.com