Case update (1): A constructive unfair dismissal case

Summary: Can an employee be constructively dismissed during a redundancy process when an employer seeks to “map” their role into a new role, rather than treat the employee as redundant?

Yes, says the EAT in Argos Limited v Ms K Kuldo available here.

Facts:  Ms Kuldo, the employee, was employed by Argos, the employer, as a Costs Manager when the company was acquired by Sainsbury’s plc. Ms Kuldo’s role was identified as being at risk of redundancy when the finance function was restructured. She and a colleague were pooled together and told they would both be considered for a newly created role of Central Costs Manager. Ms Kuldo was also given information about proposed collective and individual consultation processes, and given a job description for the new role.

The colleague subsequently resigned leaving only Ms Kuldo in the running for the new role and she was advised that she would therefore be “mapped” into it. Mapping was the process adopted by Argos to decide if an existing employee’s role was redundant or whether there was a role in the new structure into which they could transfer. For mapping to take place Argos applied a 70:30 metric – there must be no more than 30% difference between the old and new roles.

Argos were of the view that in this case the two roles were sufficiently similar to map Ms Kuldo into it, and that she was no longer at risk of redundancy. However, Ms Kuldo disagreed, believing the new role to be of lower status, less responsibility and including a change of job content. She believed it to be more than 30% different to her original role. She set this out in writing, including some counter proposals and this was treated as a grievance by Argos.

After both the grievance and an appeal were unsuccessful Ms Kuldo resigned and brought a Tribunal claim of constructive unfair dismissal.

Tribunal decision

The Tribunal upheld Ms Kuldo’s constructive unfair dismissal claim. It decided that the absence of any proper consultation with Ms Kuldo, the failure to assess properly the differences between the two roles and the failure to conduct a proper assessment for Ms Kuldo’s appeal were all breaches of the implied term of trust and confidence entitling Ms Kuldo to resign in response.

Argos appealed.

EAT decision

The EAT allowed the appeal in part. The Tribunal was entitled to find that Ms Kuldo had been dismissed. An employee can show that they have been dismissed if the:

  • employer has committed a breach of contract;
  • breach is sufficiently serious to be repudiatory;
  • employee has resigned in response; and
  • employee has not affirmed the breach of contract (for example by delaying too long before they resign).

In this case the Tribunal had identified breaches of the implied duty of trust and confidence, assessed that they were repudiatory, and found that the employee had resigned in response. That was a conclusion that the Tribunal was entitled to reach on the evidence. However, the Tribunal had assumed that because Ms Kuldo had been dismissed, the dismissal was necessarily unfair. It had not considered the issue of fairness directly as it should have done. That question had to be remitted to the Tribunal, which would also have to consider whether the employee was entitled to a redundancy payment and whether the new role amounted to suitable alternative employment.

Implications:  It is relatively unusual for an employee to resign in a restructuring scenario if they have been offered a role in the new structure on the same terms and conditions. However, this case is a reminder that it is essential for employers to follow fair and reasonable procedures when carrying out redundancies, particularly where an employee’s job content changesThis is the case even when the employer’s intention is that the employee should continue in employment.

In summary, employers who are “mapping” roles must carefully and thoroughly assess the differences between the roles, and follow their own policies and guidance in doing so. They should also take the time to consult with employees, giving them information about the changes in role and taking concerns raised by employees into account in decision making.