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Reduced hours of working can now be a redundancy dismissal

Posted on 27th July 2012
Case law

An Employment Appeal Tribunal (EAT) decision clarifying the statutory definition of redundancy will be welcomed by business owners. The EAT confirmed that it is not necessary to have a reduction in the number of employees carrying out work of a particular kind in order for it to be a true redundancy. Therefore, reducing the amount of work to be done by the same number of employees can give rise to a redundancy situation.

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Packman (t/a Pa​ckman Lucas Associates) v Fauchon UKEAT/0017/12

The facts

The Employment Rights Act 1996 provides that a dismissal shall be for reason of redundancy "if the dismissal is wholly or mainly attributable to the fact that the requirements of that business ... have ceased or diminished".

Ms F worked providing book-keeping services for Packman Lucas Associates. A downturn in business and the implementation of a new accountancy package led to Ms F's working hours being significantly reduced. She refused to work the reduced hours and was consequently dismissed. She was awarded a statutory redundancy payment by the employment tribunal. Packman appealed to the EAT arguing that a decrease in the hours of working did not result in Ms F's redundancy because it retained the same number of employees to do the same type of work.

The decision

The EAT said that a headcount reduction is not required before the statutory definition of redundancy is met. The EAT held that Ms F's employment came to an end for reason of redundancy when she refused to work the reduced hours even though Packman still required her to carry out her book-keeping duties.

The decision does not, however, mean that a reduction in hours will always amount to a redundancy. The question of whether a change in working pattern or reorganisation leads to a redundancy is fact specific.

In practice

With its decision, the EAT has resolved the conflict between existing case law that seemed to assert that a reduction in headcount was required in order for an employee to be redundant.

Our redundancy checklist provides an updated summary of HR best practice for redundancies.

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