The Employment Appeal Tribunal’s recent decision in Hendy Group Ltd v Daniel Kennedy [2024] EAT 106 serves as a stark reminder that simply following redundancy procedures isn’t enough – employers must actively help redundant employees find alternative work or risk costly unfair dismissal claims.
Case Background
Daniel Kennedy had worked for Hendy Group Ltd, a well-known car dealership chain, since 2013. After initially working in used car sales and successfully managing a new Kia distributorship, he moved into a new role as a trainer in the company’s Training Academy in 2015. Kennedy valued the regular 9am to 5pm hours this position offered and was content in the role.
However, the pandemic changed everything. In 2020, a genuine redundancy situation arose within the training team, and Kennedy was fairly selected for redundancy. He accepted both the redundancy situation and his selection as fair. The issue wasn’t whether he could be made redundant, but how the process was handled.
Where Hendy Group went wrong
The Employment Tribunal found that Hendy Group failed in their fundamental duty to consider alternative employment for Kennedy. The problems were extensive:
- Lack of support
Rather than actively helping Kennedy find alternative roles within the company, HR simply told him he could apply for positions advertised on the company website – treating him no differently to external candidates. When Kennedy was required to return his laptop a week after being given notice, he lost access to internal emails and the company intranet, making his situation even more difficult.
- Multiple suitable vacancies ignored
During Kennedy’s seven-week notice period, multiple sales positions were available within the group. Despite Kennedy’s 30 years’ experience in motor trade sales and his proven track record (including successfully managing the Kia distributorship), the company made no effort to actively consider him for these roles.
- Active blocking of applications
Most damaging was an email sent by HR on 3 November 2020, stating that because Kennedy hadn’t been successful in one interview (where his motivation was questioned), he would not be considered for any other sales roles within the group.
The Tribunal Judge noted:
“This was the human resources department, which should have been supporting Mr Kennedy in a search for an alternative to dismissal, instead saying that they would not give him any sales role anywhere. This to a man who had spent 35 years selling cars, or training people how to sell cars.”
The Legal Principles
The case reinforces several key legal principles around redundancy:
- Consider alternative employment
Employers have a well-established obligation to look for alternative employment and satisfy themselves that none is available before dismissing for redundancy. This isn’t just about allowing employees to apply for jobs – it requires active consideration and support.
- Reasonableness assessment
The test remains whether the employer acted reasonably in all the circumstances. Here, despite being a large organisation with significant resources, Hendy Group took virtually no positive steps to help Kennedy find alternative work.
- The range of reasonable responses
While employers aren’t required to create jobs or guarantee alternative employment, they must act reasonably. The Tribunal found that no reasonable employer would have adopted Hendy Group’s hands-off approach.
- The financial consequences
Kennedy was awarded £19,566.73 in compensation with no reduction applied. Crucially, the Tribunal refused to make a “Polkey reduction” – a reduction to reflect the chance that dismissal might have occurred anyway even with a fair process.
The Judge concluded that had Hendy Group properly considered alternative employment rather than actively blocking Kennedy’s applications, he would more likely than not have secured another role within the company.
Key takeaways for employers
This case provides several important lessons for employers facing redundancy situations:
- Be proactive, not passive
Simply telling employees they can apply for advertised roles is insufficient. Employers should:
- Actively identify suitable alternative positions
- Discuss options with at-risk employees
- Provide practical support with applications
- Ensure managers across the business know about at risk colleagues so they can consider them for any opportunities
- Don’t write people off
Kennedy’s situation was particularly troubling because his role involved training sales staff, yet he was deemed unsuitable for sales roles. The Judge observed: “someone so good that he trains sales managers is not able to do the job he is training others to do.” Past conversations about preferences shouldn’t prejudice future opportunities when redundancy looms.
- Consider reasonable adjustments
Alternative employment doesn’t have to be identical to the redundant role. Consider:
- Different locations (even if involving travel)
- Roles requiring retraining
- Positions at different levels or pay grades
- Temporary arrangements while searching for permanent alternatives
- Document your efforts
Ensure you can demonstrate what steps were taken to find alternative employment. Keep records of:
- Roles considered and why they were/weren’t suitable
- Discussions with the employee about alternatives
- Support provided during the process
- Decisions made and reasoning behind them
Comment
It’s not enough to follow the letter of the law on consultation and selection – employers must demonstrate genuine efforts to preserve employment relationships where possible.
For businesses in the current economic climate, this serves as a timely reminder that redundancy processes require careful handling. The relatively modest costs of providing proper support and consideration during redundancy pale in comparison to the potential costs of unfair dismissal claims, damaged reputation, and impact on remaining staff morale.
Contact Us
Laura Kearsley is a Partner in our expert Employment Law team. Laura has a strong reputation in all aspects of employment law, including Employment Tribunal litigation, discipline and grievance issues, and unfair and constructive unfair dismissal claims, and has particular experience in developing HR support services for businesses.
Redundancy situations are complex and the legal landscape continues to evolve. If your business is facing potential redundancies, it’s crucial to get expert legal advice early in the process to ensure you meet all your obligations and minimise legal risks.
At Nelsons, our employment law specialists have extensive experience guiding businesses through redundancy processes, from initial planning through to completion. We can help ensure your procedures are legally compliant while maintaining positive employee relations.
For expert advice, contact Laura or another member of the team on 0800 024 1976 or via our online enquiry form.