Claims of “sham redundancy” can be common in employment tribunal litigation. Employees selected for redundancy may suspect that a restructuring exercise has been used as a convenient means of removing them.

This is often thought of where workplace relationships have deteriorated, or concerns have previously arisen regarding their performance or conduct. However, as a recent employment tribunal decision demonstrates, proving that a redundancy was a sham rather than a genuine business reorganisation isn’t always guaranteed.

In Russ v Norfolk and Suffolk NHS Foundation Trust, a former senior NHS executive alleged that her redundancy wasn’t genuine and that the Trust had effectively engineered the process to secure her departure. The tribunal ultimately rejected those arguments, finding that the redundancy situation was genuine and that the Claimant’s dismissal was fair.

The decision provides useful guidance on what constitutes a genuine redundancy, why allegations of sham redundancy may fail, and the circumstances in which a redundancy unfair dismissal claim may nevertheless succeed.

If you believe you’ve been selected for redundancy unfairly, contact Redmans Solicitors today. As specialist employment solicitors, we can assess your redundancy, explain your legal rights, and advise you on your options. We can also determine whether you may have a claim, and guide those eligible through the legal process.

To learn more about the services we provide, simply:

• Call us now on 020 3397 3603
• Request a callback by filling out our online form

What Happened in Russ v Norfolk and Suffolk NHS Foundation Trust?

The “Claimant,” Ms Vicky Russ, was employed by Norfolk and Suffolk NHS Foundation Trust, the “Respondent,” in a senior leadership role. During a period of organisational change, the Respondent undertook a restructuring exercise. This involved reviewing management functions and altering its executive arrangements.

As part of that process, the Claimant’s position was identified as being at risk of redundancy. The Respondent concluded that changes to its organisational structure meant that her role was no longer required. Following consultation and consideration of the restructuring proposals, she was therefore dismissed by reason of redundancy.

The Claimant subsequently brought employment tribunal proceedings. Among other complaints, she argued that the redundancy was not genuine. She alleged that the Respondent had effectively used a redundancy exercise to remove her from employment.

Read More: The Bay Tree Welshpool Fined £12k Following Unfair Redundancy

The Claimant’s case centred on the contention that the restructuring exercise had been designed with a predetermined outcome in mind. She argued that the Respondent’s explanation shouldn’t be accepted and that redundancy was being used as a pretext for dismissal.

The tribunal therefore had to consider whether there was a genuine redundancy situation and whether the Respondent had acted reasonably.

Why The Sham Redundancy Claim Failed?

After reviewing the evidence, the tribunal concluded that the Claimant had failed to establish that the redundancy was a sham.

A key factor in the tribunal’s reasoning was the existence of a genuine organisational restructuring exercise. The evidence demonstrated that the Respondent was reviewing its leadership arrangements and making wider changes to its management structure. The tribunal accepted that these changes were driven by legitimate organisational objectives rather than a desire to remove the Claimant personally.

Importantly, the tribunal wasn’t persuaded that the redundancy process had been manufactured solely to facilitate the Claimant’s dismissal. While she believed she’d been unfairly targeted, the tribunal found insufficient evidence to conclude her redundancy was a cover for another motive.

Tribunals often must distinguish between a redundancy exercise that an employee perceives to be unfair and one that’s a sham. The fact that an employee disagrees with a restructuring decision doesn’t necessarily mean that redundancy isn’t legitimate. Employers can reorganise their businesses and remove roles where there’s a legitimate reduction in the need for employees for particular work.

In this case, the tribunal accepted that the Respondent had genuinely decided to alter its structure and the Claimant’s role was affected. The evidence didn’t demonstrate that the outcome had been predetermined. It also didn’t show that the restructuring exercise was merely a façade designed to remove the Claimant.

As a result, the tribunal rejected the allegation of sham redundancy and dismissed the Claimant’s unfair dismissal claim.

What is a Sham Redundancy?

The phrase “sham redundancy” doesn’t appear in the Employment Rights Act. That said, it’s commonly used to describe situations where redundancy isn’t the real reason for dismissal.

Under section 139 of the Employment Rights Act 1996, a redundancy situation exists where an employer’s need for employees to carry out work of a particular kind has ceased or diminished, or is expected to cease or diminish. The law recognises that employers must be able to restructure their organisations, reduce costs and adapt to changing business needs.

Read More: Employee with Anxiety Disorder Wins Disability Discrimination at Work Claim

A sham redundancy arises when the employer claims that redundancy exists but, in reality, the dismissal is motivated by another reason. For example, an employer may seek to remove an employee because of personality clashes, performance concerns, or whistleblowing activities, but present the dismissal as redundancy to reduce legal risk.

Tribunals will look beyond the employer’s stated explanation and examine what was actually happening within the organisation. If the evidence shows that the employee’s role continued substantially unchanged, that a replacement was recruited shortly afterwards, or that the dismissal decision had already been made before consultation began, a tribunal may conclude that redundancy was not the genuine reason for dismissal.

When Can a Redundancy Dismissal be Unfair?

Even where a redundancy situation genuinely exists, a dismissal may still be unfair.

Many successful redundancy unfair dismissal claims don’t involve allegations of sham redundancy at all. Instead, they focus on defects in the employer’s redundancy process. A genuine redundancy situation is only one part of the legal test. Employers must also demonstrate that they acted reasonably in treating redundancy as a sufficient reason for dismissal.

The fairness of a redundancy process is assessed by considering all the circumstances of the case, including the extent of consultation, the selection process adopted and the steps taken to avoid dismissal.

Failure to Conduct Meaningful Consultation

Consultation remains one of the most important aspects of any fair redundancy process.

Employees should be informed that they are at risk of redundancy at an early stage and provided with sufficient information to understand the reasons behind the proposal. They should then be given a genuine opportunity to comment on the proposals, challenge assumptions and suggest alternatives.

A consultation exercise won’t be considered meaningful if the employer has already decided the outcome before discussions begin. Tribunals regularly criticise employers who treat consultation as a procedural formality rather than a genuine attempt to engage with affected employees.

Where consultation is inadequate, a redundancy dismissal may be unfair even if the underlying redundancy situation is genuine.

Unfair Selection Criteria

Where multiple employees perform similar roles, employers will usually need to identify a redundancy pool and apply selection criteria to determine who will be dismissed.

Selection criteria should be objective, transparent, and consistently applied. Problems can arise where employers rely heavily on subjective assessments or manipulate scoring systems to produce a desired outcome.

If an employee can show that scoring was inaccurate, inconsistent or influenced by irrelevant considerations, a tribunal may conclude that the dismissal was unfair.

Failure to Consider Alternative Employment

Employers are generally expected to explore suitable alternative employment before dismissing an employee for redundancy.

This obligation is particularly significant in large organisations where vacancies may exist elsewhere in the business. Employees should be informed about relevant opportunities and given a genuine chance to apply for them.

A failure to consider redeployment opportunities can undermine the fairness of the entire redundancy process. Even where a role genuinely disappears, dismissal may not be justified if suitable alternatives were available but ignored.

Discrimination During a Redundancy Exercise

Redundancy exercises can also create significant discrimination risks.

Selection criteria that appear neutral may disproportionately disadvantage employees with protected characteristics under the Equality Act 2010. Attendance-related criteria, for example, may disadvantage disabled employees who have taken disability-related absences. Similarly, performance assessments may be affected by maternity leave, caring responsibilities or other protected factors.

In some cases, an employee may have both an unfair dismissal claim and a discrimination claim arising from the same redundancy exercise.

Understanding the Risk of Redundancy

Being informed that you are at risk of redundancy can be an unsettling experience, but it’s important to remember that being placed at risk doesn’t necessarily mean dismissal is inevitable.

The purpose of the consultation process is to allow employers and employees to discuss the proposed changes before any final decision is made. During this period, employees should seek clarification about the reasons for the proposed redundancies, the composition of any redundancy pool and the availability of alternative roles.

Employees should also pay close attention to whether the consultation appears genuine. If the employer seems unwilling to consider alternatives or appears to have reached a final decision before discussions have taken place, this may indicate problems with the fairness of the process.

How Can Employees Protect Their Rights from a Sham Redundancy?

Employees who believe they are facing an unfair redundancy should engage actively with the process from the outset.

It’s often advisable to request copies of selection scores, consultation documents and any information explaining how decisions are being made. Keeping detailed records of meetings and correspondence can also prove invaluable if a dispute later arises.

Read More: Rejection Sensitivity: Unfairly Dismissed Lidl Worker Wins £45k

Where an employee believes that scoring has been applied incorrectly or that the redundancy rationale is flawed, those concerns should be raised during consultation. Tribunals often consider whether employees took the opportunity to challenge perceived shortcomings at the time.

Employees should also carefully consider any alternative roles offered by the employer. A refusal to accept a suitable alternative position can have consequences for redundancy pay entitlements and may weaken arguments that dismissal could have been avoided.

Finally, legal advice should be sought when there are concerns that redundancy is being used as a pretext for another motive, when discrimination issues arise, or when there are serious procedural flaws in the redundancy process.

Sham Redundancy: Our Final Thoughts

The decision in Russ v Norfolk and Suffolk NHS Foundation Trust demonstrates the difficulties employees can face in establishing that a redundancy was a sham. Although the Claimant believed that the restructuring exercise had been used to engineer her departure, the tribunal concluded that the Respondent had undertaken a genuine reorganisation and that redundancy was the true reason for dismissal.

The case serves as a reminder that employers can restructure their organisations where there’s a legitimate business need. However, it also highlights the importance of following a fair redundancy process. A genuine redundancy situation won’t automatically protect an employer from liability. This is especially the case if consultation is inadequate, selection criteria are unfair or alternative employment opportunities are overlooked.

For employees, the decision underlines the importance of understanding their rights during a redundancy exercise. While proving sham redundancy can be challenging, employment tribunals will scrutinise redundancy dismissals carefully. They will also intervene where employers use restructuring exercises to disguise another reason for dismissal.

Get Help with Redmans

If you’ve been subjected to a sham redundancy to disguise the real reason for your dismissal, contact Redmans Solicitors. Our team of specialist employment solicitors is here to help. Following a consultation, we can assess your circumstances, explain your legal rights, and discuss whether you could bring a claim.

It only takes a moment to get started; simply:

• Call us on 020 3397 3603
• Request a callback via our online form