When is a Redundancy not a Redundancy?

05 February 2015

Maxine Orr, Solicitor, considers the case of Birch & Perrine v. Exol Lubricants highlighting the need to take professional legal advice when altering Contracts of Employment

When is a Redundancy not a Redundancy?

Exol Lubricants Ltd is a manufacturer and distributer of lubricants with its principal depot in Wednesbury.The Company employed two HGV drivers who lived in Manchester, Mr Birch and Mr Perrin.Due to the travelling distance, the Company made available secure parking for their heavy goods vehicles in Stockport which was close to their homes.The drivers would drive to Wednesbury every day and back to Stockport and this was treated as part of their working day for which they were paid.However all deliveries commenced from the depot along with the other drivers whose vehicles were retained there.

The Company decided that for economic reasons it could no longer continue with this arrangement for Mr Birch and Mr Perrin.The Company wrote to both employees in September 2012 and advised that it would like to make a change in their terms and conditions due to the high costs of providing the parking.It confirmed that the parking arrangement would be withdrawn from 31 December 2012 and stated that they would be expected to park their vehicles at the depot in Wednesbury.Further letters were sent and a meeting arranged but ultimately no agreement was reached and the Company sent a letter dated 19th November 2012 terminating their contracts of employment on the grounds of “some other substantial reason”.The employees issued proceedings for unfair dismissal.

At the hearing, the Company argued that the employees had been made redundant because their place of work was Stockport rather than Wednesbury.Given that the Company no longer required them to keep their lorries at Stockport its requirement for lorry driving in Stockport had diminished and the case was therefore within the meaning of redundancy under the Employment Rights Act 1996 as the employer was “ceasing to carry on a business in the place where the employee was employed”.

This was rejected by the Employment Tribunal and by the Employment Appeal Tribunal, it held “there was no redundancy at Wednesbury, where the employees were employed to work, because the job that they did and the need for people to do it remained.Their dismissal was not by reason of redundancy and it was in the circumstances unfair”.It went on to state “had the employer sought to justify the dismissals by reason of Some Other Substantial Reason rather than redundancy, other considerations may have applied, but that was not the reason on which the Company sought to rely”.

It is clear from the judgment that there had been considerable negotiations with the employees in this case to try and reach agreement, including the offer of a van to be retained at home by the employees but this was not agreed to. The employer accepted that to alter an employee’s contact of employment consent was required and it did not have the consent of the employees in this case.

This case is a stark reminder that it is not always possible to argue redundancy in all circumstances where terms and conditions of employment are being altered - even for sound business reasons.Employers wishing to alter terms and conditions should always take professional legal advice.

Maxine Orr is a Partner in Worthingtons Commercial Solicitors Belfast, specialising in employment law.

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