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A reduction in headcount is not required for redundancy

Where an employer’s requirement for work of a particular kind has reduced, there can be a redundancy situation even where there is no change in the overall headcount.

In  Packman v Fauchon, Mrs Fauchon had been employed as a book-keeper. As a result of a downturn in business and the introduction of an online accountancy software package, Packman had a reduced need for book-keeping services. Mrs Fauchon was asked to ‘significantly’ reduce her weekly working hours but she refused and was dismissed.

Looking at the wording of section 139 of the Employment Rights Act 1996, the tribunal and the Employment Appeal Tribunal both found that Mrs Fauchon had been dismissed by reason of redundancy and was entitled to a statutory redundancy payment. Section 139 provides that an employee is dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to the fact that the requirements of that business for employees to carry out work of a particular kind have ceased or diminished or are expected to cease or diminish.

Not every reduction in hours will amount to a redundancy and the EAT’s decision does not make it clear how significant the reduction in hours would have to be for it to amount to a redundancy situation.

In reaching its decision, the EAT did not follow the earlier case of Aylward v Glamorgan Holiday Home Ltd, which indicated that there must be a reduction in the number of employees before a dismissal can be by reason of redundancy (a decision which had been criticised as being an incorrect interpretation of the law).

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