The decision in the case Exol Lubricants v Birch highlights the danger for employers of labelling a dismissal as redundancy when it does not meet the statutory definition.
Redundancy
A ‘place of work redundancy’ occurs when an employer stops, or intends to stop, carrying on a business in the place where the employee was employed. What constitutes an employee’s place of work for this purpose is determined both by the terms of the employee’s contract and the facts of the case prior to the dismissal.
Facts
The two claimants in this case were employed as delivery drivers using HGVs. They lived in Manchester but the depot they had to attend to load up was situated in Wednesbury, over 70 miles away. Their contracts stipulated that their place of employment was in the area of the depot.
The employer agreed to provide the drivers with secure overnight parking for their HGVs near their homes in order to cut down the costs to them of commuting each day. The employees would drive from their homes to the parking area each day, and they were paid for the journey to and from their homes which was treated as part of their working day. It was accepted by both employer and employees that this arrangement had become a term of their employment contracts. All the other HGVs were parked overnight actually at the depot.
When the employer decided it could no longer afford to pay for the secure overnight parking, it notified the two drivers that it was terminating the arrangement. Having failed to agree a compromise solution, the employer then decided to dismiss the employees, initially on the grounds of ‘some other substantial reason’ (SOSR) but in the event the reason given was redundancy. The drivers claimed this was an unfair dismissal.
Tribunal
The employer argued that this was a redundancy on the basis that the claimants' place of work was Manchester rather than Wednesbury and, as the company no longer wished the claimants to keep their lorries here, its requirement for lorry driving in Manchester had diminished and it was no longer carrying on a business there. The employment tribunal rejected this argument on the basis that the claimants' place of work was not Manchester but Wednesbury because that was where their working day began and ended. The tribunal decided the drivers had been unfairly dismissed.
EAT
The Employment Appeal Tribunal upheld the tribunal's decision. It noted that for employees with no fixed place where they carry out their duties (such as lorry drivers), it is important to consider two issues when determining their place of work:
- the provisions in the employment contract on their place of work
- any connection the employee may have with a depot, head office or something similar.
- their working day began and ended
- they had to take their lorries every day to be loaded
- their instructions came from and where they reported to.
To suggest their place of work was a car park somewhere in Manchester was not correct, and consequently their dismissals were not because of redundancy.
Comment
This case illustrates the importance of employers giving full consideration as to whether redundancy is the most appropriate grounds for a dismissal. Here the employer tried to justify the dismissals on grounds of redundancy and lost. However, the EAT pointed out that the outcome might have been different had the employer dismissed the drivers for ‘some other substantial reason’. It is worth keeping in mind that the use of SOSR for a dismissal may be more appropriate in some cases, particularly where employees refuse to accept a change to their terms and conditions.
Charlotte Hall is an associate at Hogan Lovells
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