15 May 2013

Redundancy and Poor Performers

Redundancy and Poor Performers

This month we again visit the often complex area of redundancy, this time with a focus on the rather unique recent case of Malekout v Ahmed & Others.

Here Mr Malekout was the long-time manager of a medical practice, who after over a decade of service began to make threats to the effect that he would soon be handing in his resignation. His doctor bosses were concerned that Mr Malekout's departure would leave them without a practice manager and naturally the administrative chaos that this would wreak on their business.

The doctors therefore took the unusual step of hiring an additional practice manager prior to Mr Malekout resigning, Mr Kader. Quite prudent on the part of the doctors you are perhaps thinking, though Mr Malekout then changed his mind and subsequently stayed on at the practice, causing the doctors to be stuck with two individuals doing one job.

Mr Kader proved to have an immediate positive impact at his new employer, substantially outshining the incumbent Mr Malekout in all facets of the job; quite plainly, someone had to go.

A redundancy situation therefore arose wherein on the face of it a consultation took place with both Mr Malekout and Mr Kader, Mr Malekout later being made redundant on the basis of his lesser performance.

Later bringing a claim for unfair dismissal, Mr Malekout argued that the redundancy process was a sham and that no meaningful consultation had taken place whatsoever; that the decision to retain Mr Kader was a pre-meditated and foregone conclusion.

The Employment Tribunal ("ET") agreed that the consultation was a sham, finding that Mr Malekout had been unfairly dismissed, but only on a procedural basis - the failure to properly consult.

The ET did however find that there would have been a redundancy situation in any event and that when that arose Mr Malekout's dismissal would have been "inevitable", given the level to which Mr Kader excelled at the role. With that in mind a 100% reduction was made to Mr Malekout's compensation on the basis that he would have been dismissed in any event, regardless of whether or not the consultation was conducted properly (also known as a 'Polkey' reduction.

This view was upheld when Mr Malekout appealed to the Employment Appeals Tribunal, meaning that while he was deemed to be unfairly dismissed, this was a technical and financially empty victory.

 Conclusion

Reading this an employer may be forgiven for thinking that this could be a sure fire way of getting rid of a problematic employee, by simply hiring a better one and putting the existing employee through a sham consultation - not so.

Here the doctors were seeking to reduce the likely damage to their practice following the threats of resignation from Mr Malekout by bringing in Mr Kader, they did not hire him with a view to dismissing Mr Malekout, simply to replace him once he resigned as he had threatened he was going to do.

This is an interesting one in that it demonstrates there is scope to establish a redundancy where an employer recruits extra staff that turn out to be more capable than the existing ones.

Managing a redundancy situation whether for one or one hundred employees is an area fraught with pitfalls, so as always best practice is to take comprehensive independent legal advice before embarking on the process.