UK Employment Law Coffee Break: 'Heat of the moment' resignations, redundancy consultation and our latest employment update webinar

Our latest employment update webinar

Last week we hosted an employment law update, as part of our In-house Lawyer programme, in which we looked at the impact of an ageing workforce, HR data issues for employers and what's on the horizon in employment law. If you missed the webinar, you can view the recording.

When is a 'heat of the moment' resignation effective?

The Employment Appeal Tribunal (EAT) has recently considered whether an employee's resignation given in the heat of the moment should stand, precluding them from bringing an unfair dismissal claim.

The employee resigned from his employment "in the heat of the moment" during an altercation with his line manager. In a subsequent conversation, it had been recognised by his employer that he wished to continue in employment, but his line manager decided she no longer wanted to work with him and he was asked to confirm his resignation in writing. The employee said he would confirm his resignation, but instead sought formally to retract it. The employer refused to accept the retraction and treated his employment as terminating on one month’s notice; the employee worked out his notice period, while pursuing an internal grievance about what had happened (which was not upheld).

In the Employment Tribunal (ET), the employee claimed that, in law, he had not resigned as the situation fell within the “special circumstances exception” and that he had been unfairly and wrongfully dismissed. His employer argued that he had resigned and the ET agreed.

Resignations in the heat of the moment

On appeal, the EAT took a helpful look at when a resignation in the heat of the moment will stand and set out the following principles:

• There is no such thing as the "special circumstances exception"; the same rules apply in all cases where notice of dismissal or resignation is given in the employment context.
• A notice of resignation or dismissal once given cannot unilaterally be retracted. The giver of the notice cannot change their mind unless the other party agrees.
• The words of dismissal or resignation must be construed objectively in all the circumstances of the case.
• The subjective uncommunicated intention of the speaking party are not relevant; the subjective understanding of the recipient is relevant, but not determinative.
• It must be apparent to the reasonable bystander in the position of the recipient of the words that: the speaker used words that constitute words of immediate dismissal or resignation or immediate notice of dismissal or resignation – it is not sufficient if the party merely expresses an intention to dismiss or resign in future; and, the dismissal or resignation was "seriously meant", or "really intended" or "conscious and rational" and the speaker of the words appeared genuinely to intend to resign and also to be "in their right mind" when doing so.
• The words must reasonably appear to have been "really intended" at the time they are said.
• Evidence as to what happened afterwards is admissible insofar as it is relevant and casts light, objectively, on whether the resignation/dismissal was "really intended" at the time.
• The difference between a case where resignation/dismissal was not "really intended" at the time and one where there has been an impermissible change of mind is likely to be a fine one. It is a question of fact for the tribunal in each case which side of the line the case falls.
• The same rules apply to written words of resignation/dismissal as to spoken words.

In this instance, the EAT disagreed with the ET's findings and referred the case to a new ET to be reconsidered.

What does this mean for employers?

When considering a heat of the moment resignation, employers should carefully consider the EAT's guidance to ensure that the employee really intended to resign and was "in their right mind" when doing so.

Where an employee disputes the validity of their heat of the moment resignation, but their employer insists it stands, an employee with two years' service will have the right to claim unfair dismissal, and in certain circumstances, those without two years' service may be able to bring a claim.

Discrimination claims may also arise where the alleged resignation results, for example, from a disagreement relating to flexible working arrangements for childcare, maternity leave, caring for a disabled relative, or taking time off for a religious holiday.

Employers should carefully document the circumstances of the resignation and understand the background circumstances before allowing employment to terminate; the impact of any mental health difficulties, disability or neurodivergence should also be carefully considered.

EAT rules that employers should consider consultation with the workforce at the formative stage on redundancies

The EAT has handed down a decision providing a helpful reminder for employers conducting redundancies that the statutory provisions provide the "keystone" to their legal obligations in adopting a fair process, supported by guidelines in the case law authorities, which should be considered in the context of the modern world of work and, often nowadays, an international backdrop.

Here, the claimant was employed by a UK subsidiary of a US parent company. A need for a reduction in headcount in the UK company was identified at the end of May 2020. The claimant's UK manager was provided with a scoring matrix from the US parent; each employee in the claimant's team was then scored against 17 subjective criteria with the claimant coming bottom. A decision was then made on 18 June 2020 to make two redundancies from the claimant's team.

A timetable for a redundancy process was set on 19 June 2020 with the claimant attending an initial consultation meeting on 30 June at which he was informed of the requirement for redundancies, he was at risk of redundancy but that he could ask questions and suggest alternative approaches to the reduction in demand. A 14 day consultation period followed which involved a further consultation meeting on 8 July before his redundancy was confirmed on 14 July.

At all times, the claimant was unaware of his selection scores and also those of the rest of the team. The claimant's redundancy was confirmed on appeal (although by this stage he had been provided with his scores).

The claimant's unfair dismissal claim was dismissed by the ET; while it was accepted that the claimant knew nothing about his scores until after his dismissal, it concluded that the appeal process was carried out conscientiously and the claimant had been unable to demonstrate that he should have been ranked more highly in the scoring process.

The claimant appealed to the EAT arguing that the ET had failed to consider the issue of consultation and a lack of discussion at "a formative stage" made the dismissal unfair. The EAT agreed finding that "the absence of meaningful consultation at a stage when employees have the potential to impact on the decision is indicative of an unfair process. Without an explanation as to why omitting the workforce level of consultation would be reasonable in these particular circumstances, the ET has not provided sufficient reasons to explain its decision". In the EAT's judgment, on the facts, there was no good reason for this consultation not to take place.

Reasonableness in redundancy situations should reflect 'good industrial relations practice'

The EAT noted that the applicable statutory provisions for adopting a fair process for unfair dismissal purposes require employers to act within the band of reasonableness which will be those that "follow good industrial relations practice". However, the substance of what amounts to good practice will "vary widely depending on the type of employment, workforce and the specific circumstances giving rise to the redundancy situation". A key element though is that a reasonable employer will "seek to minimise the impact of a redundancy situation by limiting numbers, mitigating the effect on individuals or avoiding dismissal by engaging in consultation".

Case law authorities provide supporting guidance for employers in this respect but the EAT noted that "the nature of employment has changed radically since the 1980s when some of the leading cases were decided" and two matters of "particular significance" are "the reduction in trade union membership (outside the public sector) in the workplace" and "the growth in employment where there is an international element in the corporate structure".

Reduction in trade union membership

Case law authorities are clear that where trade union representatives are in place, they should "normally" be consulted at the formative stages of any decisions on redundancy selection processes. Statute also provides that for all organisations (including those without trade union representatives), formal collective consultation should take place with appropriate representatives (which may be specially elected employee representatives) when more than 20 redundancies are proposed in a 90 day period.

The EAT noted that it was less clear if consultation should take place at the formative stages of any decision on redundancy selection processes where the workforce is unrepresented or the statutory collective consultation rules are not triggered. However, while it noted that "the purpose of collective consultation is actually a reflection of good industrial relations… and that such consultation should generally occur at the formative stage of a process", "that might better be described as general workforce consultation rather than 'collective'". The importance is the purpose of consultation at that stage and not the label attached to it – "that stage of consultation could take many forms, it is not for this tribunal to be prescriptive".

International organisations

The EAT also noted that when considering good industrial relations practice in the UK, the approach taken "will vary significantly between nations". Here, the tool for selection, using entirely subjective criteria had come initially from the US. However, "if it is considered to be reasonable for the employer to use American selection criteria solely because the organisation is a global one, this would not reflect a recognition of good industrial relations in the UK."

The EAT noted that this too is where the question of consultation at the workforce level is of significance; where discussions take place at an early stage at workforce level, those difference of good practice would potential emerge and could be taken account of.

Correcting mistakes on appeal

In reaching its conclusion the EAT noted that while an internal redundancy appeal could correct a missing aspect of the individual consultation process, it could not repair the gap of consultation at the formative stage.

The EAT noted that there was nothing in the ET decision to indicate that there were "good reasons" in this case not to discuss the method of selection applied at a workforce level of consultation, noting in particular "the fact that the numbers to be dismissed were not settled until a major part of the process of section had concluded".  

What does this mean for employers?

The decision has led to some speculation that a formal process of collective consultation may now be required at the formative stage of any redundancy process, regardless of the number of redundancies proposed or whether or there are trade union representatives in place. However, the EAT decision emphasises that what is reasonable is very much an issue to be considered on the facts and the consultation that may be required might be better described as a general workforce consultation and which as referred to above, could take many forms; the important factor is for there to be an "opportunity to have input from the workforce. That is an opportunity to propose other means by which the employer could minimise the impact of a redundancy situation".

Employers should note the EAT's recognition that the nature of employment has "changed radically since the 1980s" when the leading cases were decided and which impacts on what would now be considered good industrial relations practice.

For example, many employers now have staff forums and consideration should be given to their mandate and whether it would be appropriate to involve the body at an early stage in the proposals even where the statutory collective consultation rules do not apply. Indeed, it is commonplace in the UK for employers who are considering making redundancies from a pool of employees to make some form of announcement, usually via a team meeting or other group communication, to confirm that a redundancy process is being considered and what that will entail, before inviting individual "at risk" employees to individual consultation meetings. As part of this process, typically employers will often provide a point of contact to whom any questions and concerns can be addressed.

It is also good practice for employers to share with "at risk" employees the selection criteria and how they have been scored so that this can be considered at individual consultation meetings. In this case, there was never any opportunity to discuss the prospects of a different approach to any aspect of the redundancy process chosen by the respondent; the selection criteria, scoring and number of redundancies had all be determined before the claimant was even aware that redundancies were in prospect.

International employers should also note the EAT's comments around the use of methods found to have been "effective" in one jurisdiction and which are then replicated across jurisdictions.