Redundancy and the employer's right to organise and run its business

The paper has examined the tension between, on one hand, the business management obligations of employers (particularly those arising from the duties in the Companies Act 1993 applying to directors), and, on the other hand, the rights of employees to be treated fairly and reasonably where their jobs are at risk of being made redundant. The paper has outlined the law of redundancy as it has developed over time, as well as providing an overview of the law of directors’ duties. The paper finds that in recent redundancy cases under s 103A of the ERA, a sea-change has occurred in respect of the nature of the analysis applied by the Courts to the substantive element of an employer’s redundancy decision. The level of scrutiny is now heightened, and in particular employers are required to present detailed financial evidence to justify their actions in terms of s 103A. This new approach, it is argued, makes it more difficult for an employer to run its business in accordance with its management obligations, but at the same time appears to lack any properly-developed policy foundation and is problematic as a matter of statutory interpretation. The paper concludes by suggesting that the Courts should therefore return to their earlier approach to redundancy decisions, which focussed primarily on procedural fairness and applied a test of genuineness to the substantive element. There is ample scope for the good faith requirements in s 4 of the ERA to guide the Courts’ interpretation of s 103A so as to resolve the tension between the competing interests in future redundancy cases