Redundancy and unfair dismissal: your duty to try and find alternative employment

As an employer, are you faced with making redundancies? In the recent case of Hendy Group Ltd v Daniel Kennedy [2024] EAT 106, you must be sure you have made a reasonable effort to identify or support alternative employment to your employee to avoid an unfair dismissal claim. 

The case sets a definitive standard and serves as a stark reminder to employers that the reasons behind a redundancy are not the only factors which determine a fair dismissal. Rather, employers must actively help redundant employees find alternative employment or risk costly unfair dismissal claims.

What are the facts of the case?

The claimant, Daniel Kennedy was a 30-year-veteran in motor sales, and joined Hendy Group (the respondent) in 2013. Mr Kennedy initially started working in used car sales and after successfully managing a new Kia distributorship, he moved into a new role as a trainer in the company’s Training Academy in 2015, enjoying regular hours and strong performance.

However, in 2020 during the COVID-19 pandemic, a genuine redundancy situation arose within the training team, and Mr Kennedy was fairly selected for redundancy. Despite accepting both the redundancy situation and his selection as fair, Mr Kennedy contested how the process was handled and argued that he was not given adequate support in finding alternative employment.

During the process of being made redundant, the respondent’s HR team simply told Mr Kennedy he could apply for positions advertised on the company website, instead of actively suggesting or facilitating suitable internal roles and therefore treated him no differently to external candidates. When Mr Kennedy was required to return his laptop a week after being given notice, his access to internal emails and the company intranet was revoked, severely hampering his applications.

Throughout Mr Kennedy’s seven-week notice period, several sales and sales-manager positions were available within the group for which Mr Kennedy was eminently qualified due to his 30 years’ experience in motor trade sales and his proven track record (including successfully managing the Kia distributorship). However, the respondent made no effort to actively match or consider him for these roles.

However, the most egregious act during the process came from an email sent by the respondent’s HR team on 3 November 2020, stating that due to Mr Kennedy’s perceived lack of motivation in one interview, he would not be considered for any further sales roles within the group - effectively blacklisting him internally.

What does the law say in this matter?

This case reinforces several legal principles surrounding redundancy which employers ought to consider but often neglect, in particular:

Duty to consider alternative employment

Employers have a well-established obligation to look for alternative employment. This does not mean that an employer simply highlights job listings or allows an employee time to look for work, rather an employer must actively seek and meaningfully consider alternative roles. An employer must be satisfied that no alternative work is available before dismissing an employee for redundancy.

Reasonableness

In redundancy cases, the Employment Tribunal (ET) will consider whether the employer acted reasonably in all the circumstances, applying a ‘range of reasonable responses’ test.

What happened at the ET?

The ET found for the claimant and held that the claimant had been unfairly dismissed due to the Respondent not having made a reasonable effort to identify or support alternative employment.

Also, in assessing reasonableness, the ET held that the Respondent’s conduct was not reasonable, as despite being a large organisation with significant resources, the Respondent took virtually no positive steps to help Mr Kennedy find alternative work.

While employers aren’t required to create jobs or guarantee alternative employment, they must act reasonably in seeking alternative work. As such, the ET found that no reasonable employer would have adopted the Respondent’s hands-off approach.

The ET concluded that had the respondent acted reasonably and actively sought alternative employment rather than blocking Mr Kennedy’s applications, he would have likely secured another role within the group.

As a result, Mr Kennedy was awarded £19,566.73 in compensation with no reduction applied. This is because, the ET refused to make a “Polkey reduction”, which is a reduction in compensation to reflect the chance that dismissal might have occurred anyway even with a fair process, which the ET held was not the case here.

The respondent’s appeal was dismissed by the EAT.

What are the learnings for employers?

• Be proactive in seeking alternative employment and do not just refer employees to vacancies. Identify opportunities, facilitate applications, and engage hiring managers.
• Ensure that the employee maintains access to systems where relevant vacancies are advertised until the end of notice to enable genuine redeployment efforts.
• Do not block or discourage applications based on perceived motivation or presumptions, ensuring that you let the employee genuinely compete for roles.
• Keep records of redeployment discussions, job fit analyses, and internal communications.
• Beware of Polkey implications - if poor process causes unemployment, compensation won’t be reduced for redundancy inevitability.