When employees lost the benefit of free parking near their homes, was this a place of work redundancy?

The Employment Appeal Tribunal have recently decided an interesting case about the redundancy of HGV delivery drivers.

In this case the Appeal Tribunal examined the definition of redundancy and when it can arise.

The Law

The Employment Rights Act 1996 sets out the definition of Redundancy as follows

‘An employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to –

(a) the fact that his employer has ceased or intends to cease –

(i) to carry on the business for the purposes of which the employee was employed by him, or

(ii) to carry on that business in the place where the employee was so employed, or

(b) the fact that the requirements of that business –

(i) for employees to carry out work of a particular kind, or

(ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer,

have ceased or diminished or are expected to cease or diminish.’

This is the starting point for determining if it is a redundancy situation and if not the termination of the employees employment will be unfair or for some other reason.

The Facts

The Employees in this case Mr Birch and Mr Perrin were employed as delivery drivers using HGVs.  They lived in Manchester but their employer, EXOL Lubricants’ (EXOL), depot where they loaded up  was situated in Wednesbury.  Their contracts stipulated that their place of employment was in Wednesbury.

The cost of commuting each day in their transport was high and in order to accommodate them EXOL agreed to make available secure parking for their HGVs in Stockport near their homes.  They would drive from their homes to Wednesbury each day and the journey to and from Stockport was treated as part of their working day for which they were paid.  It was accepted that this arrangement had become a term of their contracts of employment.  All the other HGVs were parked overnight at the depot in Wednesbury.

EXOL decided that it could no longer afford to pay for the secure parking in Stockport and gave notice to Mr Birch and Mr Perrin that it was terminating the arrangement.  No compromise could be reached and so EXOL decided to terminate their employment on the grounds of redundancy on the basis that their place of work was Stockport and as they no longer wished to keep vehicles at Stockport the requirement for lorry drivers there had diminished.

The Employment Tribunal rejected EXOL’s case on the basis that Mr Birch and Mr Perrin’s place of work was not in Stockport but in Wednesbury because that was where their working day began and ended.

As it was not a true redundancy situation EXOL did not have a fair reason for dismissal and therefore Mr Birch and Mr Perrin’s dismissals were unfair.

EXOL appealed.

The Decision

The Employment Appeal Tribunal agreed with the Tribunal on this decision and stated that the test for determining where the employee is employed for redundancy provision is twofold:

• look at what is contained in the contract of employment, and
• consider, depending on the facts of the case, any connection the employee may have with a depot or head office.

In this case their contractual place of work was at Wednesbury and, secondly, they had a close connection with the Wednesbury depot. There was no redundancy situation at Wednesbury because the job and the need for people to do it remained.

EXOL did not put forward an argument for any other potentially fair reason for dismissal and so the decision that the dismissal was unfair remained.

Points to note

In this case it gives a good illustration of what constitutes a redundancy situation and serves as a reminder that in order to be a redundancy dismissal it must fit within the criteria set out by law.

Interestingly had EXOL relied on the reason for dismissal as being ‘some other substantial reason’ (SOSR) they may have succeeded in defending the claim for unfair dismissal. Apparently they had initially asserted this as the reason for ending Mr Birch and Mr Perrin’s employment but then changed their mind.

They also made a late application at the Tribunal Hearing to add SOSR as the potentially fair reason for dismissal but this was refused as they added it too late. This is why it is important to ensure that you cover all possibilities when submitting a defence to a claim in the Employment Tribunal in the first place.

In the event that an employee refused to accept a change to their terms of employment it is usual for an employer to give notice to end the employee’s employment for ‘some other substantial reason’.

You can read the full case and judgement EXOL Lubricants Limited v Birch & Perrin