Katherine Irvine examines a recent Employment Appeal Tribunal decision that highlights the importance of employers properly considering alternative employment opportunities in order for a redundancy dismissal to be fair.
In Hendy Group Ltd v Mr D Kennedy, the Employment Appeal Tribunal (EAT) held that an employee’s dismissal for redundancy was unfair because the employer had failed to consider appropriate alternative employment.
Background
Mr Kennedy was employed from 2013 with Hendy Group Ltd (the employer) in used cars, then from 2015 as a training manager at its Training Academy. In his role, he provided training for all of the employer’s sales teams across its workforce. Mr Kennedy had over 30 years of experience in the motor trade, specifically in car sales.
In 2020, a redundancy situation arose, largely as a result of the Covid pandemic. Following a failure to secure alternative employment, Mr Kennedy was dismissed by reason of redundancy at the end of his notice period. He complained to the Employment Tribunal (ET) that he was unfairly dismissed.
The ET accepted that a genuine redundancy situation had arisen within the training team; and also, that Mr Kennedy was fairly selected for redundancy.
However, the claim focused on the fact that no adequate, appropriate or fair consideration had been given to the possibility of him continuing to work for the employer, albeit in a different role.
The ET, in upholding the claim, found the employer had failed in its fundamental duty to consider alternative employment for Mr Kennedy.
The employer appealed the decision to the EAT in relation to both the unfair dismissal finding and the award of compensation made in respect of financial loss.
Applicable law
An employer must show that the reason for the dismissal was for one of the potentially fair reasons as set out in section 98(1) of the Employment Rights Act 1996 (ERA) – in this case, redundancy.
The question of whether a dismissal is fair or unfair requires consideration of section 98(4) of the (ERA), and must have regard to the reason shown by the employer and:
“(a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and
(b) shall be determined in accordance with equity and the substantial merits of the case.”
Whether the employer acted reasonably involves an examination of whether it took reasonable steps to search for and offer an at-risk employee alternative employment before dismissing them by reason of redundancy.
Decision
The EAT agreed with the ET, upholding the finding of unfair dismissal. It found the employer, a large organisation with adequate resources, had not made reasonable efforts to identify alternative employment or support Mr Kennedy in securing an alternative role.
In particular:
- During his notice period, Mr Kennedy could only see job vacancies in the same way external applicants could. He was asked to return his work laptop a week after he was notified of his dismissal (despite a seven-week period before the dismissal was to take effect) so was unable to access the intranet or internal email.
- He was given no guidance or help to identify what roles might be suitable for him.
- His line manager stated he was unable to help with any roles outside of the Training Academy (and within it there were no vacant roles).
- After Mr Kennedy had unsuccessfully applied for several sales roles (and those being given to individuals either employed within the business and not at risk, or in one case an external candidate), he was told via email that any further application for a sales role would be unsuccessful because of questions regarding his motivation in applying for these roles – therefore, actively blocking him.
- No training was considered to facilitate Mr Kennedy’s successful return to a customer-facing role.
- HR did not tell managers that Mr Kennedy was at risk of redundancy, so they could consider him when determining candidates for available roles.
The EAT found Mr Kennedy did all he could and was proactive in trying to secure alternative employment, but that the employer’s handling of alternative employment was wholly lacking.
The employer‘s appeal against the amount of financial loss awarded by the Tribunal, £19,566.73 for the claimant being out of work for over seven months, also failed.
The EAT found that had the employer acted fairly, Mr Kennedy was likely to have secured another job within the business, so the Polkey deduction sought by the employer was not appropriate. Such percentage deductions (Polkey) are made from a compensatory award in unfair dismissal cases to reflect the likelihood that, even ignoring any procedural unfairness on the part of the employer, a dismissal was likely to have happened anyway.
Comment
Katherine Irvine, Associate in our Employment team, comments:
“This case is a reminder to employers of the importance of considering alternative employment during a redundancy process.
“The employer will be expected to actively and meaningfully explore alternative employment before confirming redundancy. It will not be adequate to simply tell the employee which jobs are available to apply for.
“Consideration of the employee’s previous experience, their transferable skills, and a pro-active not passive approach involving guidance and practical support to the employee to assist them in securing an alternative role are expected. Suitability for posts should be assessed holistically, looking at employee preferences as well as availability of training and support if necessary, and include positions at different locations, levels, or pay grades.
“Managers throughout the business should be made aware of at-risk colleagues so they can be considered for any opportunities that arise.
“The employer in this case also faced difficulty due to its inability to produce a paper-trail demonstrating a structured redeployment process. Employers should ensure they keep detailed records showing vacancies, roles considered and why the business believed they were/were not suitable, written communications and notes of discussions held with employees and decisions made about redeployment opportunities.”
Published 19 August 2025
