With the world attempting to get back on its feet following lockdown and the uncertainty resulting from the pandemic, many workplaces are left with no option but to downsize their workforce and are having to make redundancies. When doing so, to avoid the dismissals being challenged as unfair and unlawful, employers need to ensure that they follow the correct procedure
In our previous blogs we have discussed Redundancy more generally and have explored employer’s duty to consider alternative employment. In this blog we focus on how an employer can ensure it follows a fair redundancy process by applying a fair selection criteria.
What are the key elements ensuring a Redundancy is fair?
As an overview, when considering whether an employee has a claim for unfair dismissal, arising out of a redundancy , the following will be relevant:
- Was there a genuine redundancy situation?
- Was the redundancy pool correctly identified?
- Were affected employees given adequate warning and properly consulted?
- Was a fair selection criteria used to determine who should be made redundant?
- Did the employer consider suitable alternative employment as an alternative to dismissal?
- Was a fair procedure been followed, in particular have any groups been disadvantaged/discriminated against?
If a fair process is not followed, employees with two years’ service may be able to sue for unfair dismissal.
What does a fair selection process include?
It is important to consider three phases to the selection process for redundancy:
- The pool for redundancies;
- The selection criteria that will be applied and
- How to apply the selection criteria in a fair and objective manner.
‘The pool’ refers to the group of employees from which the employer will select those who are to be made redundant.
An employer should be able to show that it can justify its decision to place people in the pool as well as justify its decision to exclude people from the pool. As employers can run into problems if they fail to identify the redundancy pool correctly.
If the employer recognises a union, it will usually be expected to discuss the choice of pool with the union.
When deciding on the pool, employers have wide discretion as there are no fixed rules about how the pool should be defined. However, an employer must genuinely apply its mind to the choice of pool. An employer must be able to show that there is a reasonable and non-discriminatory basis in their decision making.
In considering the choice of pool employers must be careful, and should consider the following factors:
- The type of work that is/has reduced or will cease to exist;
- The extent to which employees’ jobs are interchangeable;
- The extent to which employees are doing similar work, including those at other locations;
- Whether the employer has genuinely applied its mind to the composition of the pool;
- Whether selection pool was agreed with the union or employee representatives.
Also, there is nothing inherently unlawful in having a ‘pool’ of one. However, employers must bear in mind that their decision may be closely scrutinised by a Tribunal, and as such, should be prepared to defend the decision.
The Selection Criteria
Employers must ensure that they identify a fair selection criteria and apply it fairly to the employees in the redundancy pool.
The selection criteria should be fair and objective. Selection on subjective grounds may result in the subsequent dismissal being unfair. The most common criteria that are used include:
- Length of service
- Performance and ability
- Disciplinary records
The criteria should be measured by reference to HR records covering things such as performance and attendance. If HR records are not accurate or are patchy, the employer must do its best to assess each of the employees against the criteria it intends to use.
It’s important for more than one manager to be involved in the process, employers should ensure that evidence is retained to demonstrate its reasoning.
The Last in First Out criteria was a popular method used to determine who to make redundant. But in recent years it has fallen from favour and should not be used as a dominant criterion. Such a criteria should be used with caution. If it is used as a dominant or sole criterion, dismissals resulting may be challenged on the grounds of indirect discrimination (because of age or sex).
The Performance and ability criteria carries some risk as well. Employers must choose a clearly define criteria and a system of weighting that relates to skill and knowledge required for its current and future needs. It is important that employers refer to written records, such as appraisals and not just rely on the personal opinion of a particular manager.
When using this criteria, employers should be mindful of the following issues:
- Appraisals may not have been carried out regularly or at all
- Those on maternity leave or sick leave may not have recent appraisal records
- Appraisals may have been carried out by different managers who may not have the same approach
Employers will need to think carefully about what methods to use to fairly and objectively assess the performance and ability of those at risk.
The Attendance record criteria must be used carefully. Employers should check the accuracy of the information it holds and consider the reasons for absences. Employers must consider if there are any absences which can be discounted, these could include:
- Pregnancy related illness, maternity or other family friendly leave;
- Disability related absence – selection for redundancy on grounds of attendance records could amount to disability discrimination and employers should make reasonable adjustments.
The Length of Service criteria should not be used as the only criterion as it could give rise to claims for indirect sex or age discrimination. If it is used as a part of a matrix, it is seen to be objectively justifiable on the grounds of rewarding loyalty, experience and a stable workforce.
Employers have a wide discretion over the criteria they can use. They must ensure that the criteria used are ones which a ‘reasonable employer’ could have agreed upon. It is good practice for employers to consult on the selection criteria and scoring process with those who are at risk of redundancy.
Once the selection criteria has been agreed, employers must score employees against the criteria. As explained above, employers should use objective evidence to justify their decision. Employers should keep a record of how each employee has been scored as well as its notes to explain the scores awarded.
Employers should inform the affected employee of their individual score and how the scores were arrived at.
Employees should be given a chance to challenge the decision and scores given to them.
Employees should review the criteria, the scores awarded and the reasons given for the scoring. If it is believed that the scoring is not correct or objectively applied, employees should seek advice on the possibility of challenging the decisions made.
Our specialist Employment Lawyers have many years’ experience in the law surrounding redundancy. If you require legal advice on how to manage the redundancy process fairly, please call us on 0808 252 5231 or request a call back online at your convenience.