Today's EAT review from Eversheds concerns the case of Alan Coffey v Redlough Landscapes Limited, a redundancy case.

Legislation: Unfair Dismissals Acts, 1977 to 2007

Jurisdictions/Subject Matter: Unfair dismissal, redundancy, fair procedures


Facts

Since 2007, the claimant worked as a landscape manager in the respondent’s company, which provided a landscape service in grounds and maintenance, development works and sports ground construction. He was generally office based and he was one of two landscape managers in the company.


Respondent's Evidence

A director of the respondent company, LL, gave evidence before the Tribunal. He provided details of the financial downturn the company was experiencing, notably a reduction in turnover from €2.5 million in 2008 to €1.3 million in 2011. In his evidence, the director informed the Tribunal that staff were aware of the downturn and the company was forced to introduce cost saving measures. In December 2009/January 2010, both landscape managers were placed on a three day week in order to reduce costs. It became clear that both landscape managers' roles were becoming surplus to requirements and so they were both made redundant. At a meeting on 5 November 2010, the claimant was informed of his redundancy and this was confirmed in writing on 8 November 2010. His employment terminated on 16 December 2010. LL gave evidence that the work of both landscape managers was subsumed by other employees. LL further stated that the company has a grievance and disciplinary procedure and the claimant did not make a complaint under this procedure in relation to his redundancy.

In the course of giving evidence before the Tribunal, the director stated that, in an effort to invigorate and increase sales, a decision was made in a meeting on 25 December 2010 to seek the services of a business development manager. The position was publically advertised on 4 January 2011. Following two rounds of interviews which included the submission of business plans, the position was filled by AO’R in March 2011. The position was a senior role with an annual salary of €50,000 plus a sales bonus. The new employee spends the majority of his time out of the office meeting customers as the role is not office based. LL stated that the appointment of AO’R has had a very positive outcome on the business leading to increased turnover and profit.

LL accepted that he had no formal discussion with the claimant in relation to his redundancy prior to the decision to make his position redundant. He stated to the Tribunal that he would have had informal discussions with the claimant. He also stated that, as the claimant was on a 3 day week, the alarm bells were there. He could not recall for the Tribunal if he informed the claimant at the meeting on 5 November 2010 that he had the right to appeal the decision to make him redundant.

LL accepted that on 5 November 2010, the company secured all confidential information and the claimant was locked out of his computer. He did state however that the claimant had other work to do.

At the time the decision was made to make the claimant’s position redundant, no decision had been made to instigate a role of business development manager. LL said that that decision was made on 25 December 2010.

AO’R, the new business development manager, also gave evidence before the Tribunal. He said that he began working with the respondent in March 2011 following a successful interview process. He is employed as a business development manager and his role is sales driven. He said that he is provided with a company car and spends 80% of his working time on the road meeting customers. He has been responsible for the company expanding to Northern Ireland and the UK and he gave evidence that, since his appointment with the company, there has been a substantial increase in company turnover.


Claimant's Evidence 

The claimant gave evidence of his qualifications and employment history. He stated that his role with the respondent company went from being a sales, marketing and estimating role to being responsible for maintenance contracts. Towards the end of his first year, he also started to develop the domestic aspect of the business. He stated that he engaged the services of an outside consultant and together they devised a strategic sales and marketing plan for the company. This plan was opened to the Tribunal. He also made contact and built up a relationship with a UK company which resulted in the respondent company securing four jobs. He also engaged the services of an internationally acclaimed garden designer to promote the respondent company at trade fairs and this brought in business for the respondent company.

He accepted that the turnover in the company was declining in 2009/2010 and on 11 January 2010 he was placed on a 3 day week. He stated that he continued working on a 3 day week until 8 November 2010 when he discovered that he did not have access to his computer files. He called to LL’s office to see if there was a computer problem and told LL that he could not access his files. He told the Tribunal that LL chuckled and told him that he had access to the files but that the claimant did not. He found this to be a humiliating experience. He was subsequently called to a meeting by LL along with the other landscape manager and both were told that they were being made redundant. He gave evidence that no alternatives such as reduced pay or job sharing were offered to him by the respondent. He accepted that he was being made redundant on legitimate grounds and did not utilise the company’s grievance process. He was not invited to utilise the grievance procedure. He gave evidence that he had longer service than the other landscape manager.

The claimant gave evidence that on 16 December 2010, his employment terminated by reason of redundancy. In early January 2011 he became aware of an advertisement by the respondent company seeking to fill the position of Business Development Manager. He had already written a business plan for the company and believed that the job advertised looked like his job. He did not apply for the position as he said that he was not going to go through the humiliation of applying for a position that he was not wanted for by the company. The advertisement contained a salary range of €35,000 - €45,000 and his salary had been €38,000 per year. He accepted that he was predominantly office based during his time working for the respondent company but he estimated that he spent approximately 20% of his time away from the office. He was provided with a reference by the respondent and the Tribunal heard evidence in relation to his efforts to secure alternative employment since the termination of his employment.

Another employee, (FD) also gave evidence before the Tribunal. He was responsible for preparing accounts for audit for the respondent two days per week up until July 2011 when his employment terminated. He told the Tribunal that he worked with both the claimant and AO’R and he believed that there was no difference whatsoever in their roles.

DO’R also gave evidence that he worked as a contracts manager with the respondent company for 22 years. He also said that he worked with the claimant and with AO’R and believed their roles to be exactly the same with a different job title.


Determination and Legal Review 

In the circumstances of the present case, the Tribunal considered the evidence and determined that, with regard to the manner in which the claimant was dismissed, the procedures adopted by the company were unfair. The Tribunal found the redundancy of the claimant was an unfair dismissal and awarded the claimant €22,500, inclusive of his redundancy payment of €5,429.

The Tribunal did not provide a legal analysis of how they reached their decision but the facts of the case provide a clear illustration of the importance of following fair procedures in a redundancy situation.

An employer must act reasonably in taking a decision to dismiss an employee on grounds of redundancy, otherwise they run the risk of an unfair dismissal claim under the Unfair Dismissals Acts 1977 to 2007. Selection for redundancy should be fair, transparent and objective and should follow a redundancy procedure (including some form of notification and consultation). Best practice is typically to engage in a two-stage consultation procedure. This should include an explanation about the business need for restructuring, the selection process and consultation about any suitable alternative employment with the company. Employees should be asked to provide input before a final decision is made. Any input or proposals by employees should be considered and responded to.

From the evidence adduced in the present case, it was clear that there was no prior meaningful discussion with the claimant in relation to the proposed redundancy and there was no consultation procedure at all. In addition, the claimant was not given the opportunity to submit any alternatives to redundancy.

It is also worth noting the importance of a genuine redundancy situation existing if a role is to be made redundant, given that the new Business Development Manager in the case before the Tribunal carried out very similar duties to the claimant.

According to Section 7(2) of the Redundancy Payments Acts 1967 – 2007, there are five legal reasons for redundancy in Ireland:

* Change in purpose or place of business.
* Reduction in requirements of the business.
* Fewer employees required.
* Change in work methods.
* Change in work.

In the case of St Ledger v Frontline Distributors Ireland Limited [1995] ELR 160, the EAT stated that the statutory definition of ‘redundancy’ has two important characteristics - “impersonality” and “change”. The EAT regularly refers to the importance of impersonality: it is the position, and not the employee, that is being made redundant (for example, see Daly v Hanson Industry Limited (UD 719/1986).

In the present case, the fact that the new position of Business Development Manager contained similar duties to the claimant’s position may have had an impact on the outcome of the case. In the case of St Ledger v Frontline Distributors Ireland Limited referred to above, the EAT could not find any difference in the nature of the work carried out by the claimant who was dismissed by reason of redundancy from his role as a warehouse supervisor, and the work carried out by the new employee. The tribunal in that case found that “other work” for the purposes of Section 7(2) has to be work of a different kind, not more or less work of the same kind.


Conclusion

As in all cases where a termination of employment is at issue, whether by reason of redundancy or otherwise, it is essential that fair procedures are followed by the employer. This is particularly important in a redundancy situation and a fair and objective procedure involving notification and consultation with the employee should be followed.