Redundancy is always a sensitive issue – understandably.
As a small business owner, it may seem like your worst-case scenario and – if even the whisper of the threat approaches – you may feel saying what you know upfront early on is best for everyone.
Proceed with caution. Maybe only do so if you’re absolutely certain of the ground ahead?
Remember, every communication may be open to scrutiny and could return to haunt you.
That seems to be the lesson from this case recently highlighted in an ICAEW Legal Alert, and entitled ‘Case Law: Employer who promised employees the right to apply for voluntary redundancy breached contract by making them compulsorily redundant instead’.
Here’s how that case unfolded. At the end of 2013, the account goes, an employer posted information on the business intranet under the title ‘Voluntary Redundancy (VR) Information and guidance for employees’, says the Legal Alert.
The notice said that the employer ‘intended to offer a generous voluntary redundancy package during 2014/15 to ‘affected’ employees’, and these ‘would be contacted and invited to apply’.
In September 2014, however, some staff were told they wouldn’t be offered this, but were instead ‘to be made compulsorily redundant from the end of April 2015’.
So says the Legal Alert.
‘They claimed damages on the basis that the employer was in breach of contract by not allowing them to apply for voluntary redundancy.’
But was the notice on the intranet contractually binding?
The employer came up with a number of arguments against this interpretation – listed in the Legal Alert.
But the Employment Appeal Tribunal (EAT) came down on the side of the employees.
The Legal Alert also summarises its arguments.
Among other things, it says the employees felt that ‘the employer had told them they could apply for voluntary redundancy, and then told them they could not. That was a breach of contract. It was irrelevant that there was no ‘policy’.’
Also, that the employer ‘had not said there was any restriction on the right to apply’.
On balance, the EAT ruled in their favour – and you may want to bear this case in mind if ever approaching the risk of redundancies in your own business.
Something you communicate today may impact on something you impose tomorrow.
Here’s the Legal Alert recommendation:
‘Employers should take care what they say to employees about their rights leading up to possible redundancies, or risk making contractual promises that they are then bound to deliver to those employees.’