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Redundancy when Director took over the MD’s duties in addition to his own duties

Makbool Javaid, Partner - Simons Muirhead & Burton
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In Berkeley Catering Limited v Jackson, J was the Managing Director (“MD”), taking over that role from Mr Patel, the owner of the company. From around 2017 Mr Patel increased the time that he spent in the business. Patel told J that he intended to take over from her i.e., he was taking control of management decision-making and operations, with the title of CEO, and that the MD role would be redundant. One of the definitions of redundancy in S.139 of the Employment Rights Act 1996 is the fact that the requirements of a business for employees to carry out work of a particular kind have ceased or diminished. An EJ ruled that, as a matter of law and fact, there was no redundancy, i.e., work of a particular kind as MD had not diminished. The role of MD continued with Mr Patel fulfilling it. The EAT disagreed. The question for a tribunal is not whether there has been a diminution in the work requiring to be done. It is the different question of whether there has been a diminution in the number of employees required to do the work. [Safeway Stores Plc v Burrell [1997] ICR 523]. Berkeley arranged its affairs so that Mr Patel, with or without other existing employees, absorbed the work of the MD, whatever his reasons for doing so. There was therefore a diminution in the requirement of the business for employees to carry out work of that kind and accordingly a redundancy situation.

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