Jonathan Bacon clarifies the wide discretion that employers can exercise when deciding what selection criteria to adopt when making employees redundant
Before making an employee redundant, employers have to decide who should be in the “pool” (in other words, who is at risk of redundancy) and then select them fairly and objectively.
Who should be in the pool?
When deciding who should be in the pool, employers should take into account the type of work that is ceasing or diminishing, the type of work employees are doing, how much the jobs overlap and whether they are interchangeable. Employers should also seek to agree the selection pool with the relevant union or employee representatives in the workplace.
An employer who employs staff in more than one place should also consider whether to limit the pool so that it only includes employees at one site. In some cases this has been found to be unfair, even when that site was closing completely, but in others it has not.
There are, in other words, no fixed rules about how the pool should be defined (or even that there should be a pool). The important thing is that the employer genuinely applies their mind as to the pool for redundancy, consults appropriately and comes to a reasonable decision based on the facts of the particular case.
How big should the pool be?
There is no requirement that the pool should only contain employees doing the same or similar work. Employers often try to keep it as narrow as possible to avoid damaging staff morale, although employees usually want it to be wider to reduce the risk of being selected for redundancy.
In some cases, tribunals have found that the pool was defined so narrowly that it was outside the range of reasonable responses. However, each case is dependent on its own facts, so tribunals have found that it was fair to create a pool with only one employee in it.
For instance, in Wrexham Golf Co Ltd -v- Ingham (weekly LELR 289), Mr Ingham had been employed as a bar steward at the club for a number of years. Although he was one of 11 club employees, he was the only person to be made redundant.
The tribunal found that his dismissal was unfair because the club had not acted “within the range of reasonable responses” open to it. The Employment Appeal Tribunal overturned that decision, however, holding that the question for the tribunal was simply to consider whether it was reasonable for the club not to consider a wider pool.
To bump or not to bump?
“Bumping” is the term used to describe a situation when an employee whose role is no longer required is redeployed into the job of another employee. That person is then made redundant even though their job is still required.
Although bumping is not always appropriate, employers should bear the possibility in mind because, if they fail to do so, the resulting dismissal may be unfair. For instance, the dismissal of a senior employee was found to be unfair because the employer failed to consider making a more junior employee redundant instead.
Who should be selected from the pool?
Once the employer has decided on a pool for selection, the next stage is to select the employees who are to be made redundant. Again, it is important for employers to carefully consider the criteria they want to use and consult with the union or employee representatives about it.
Employers should follow the established procedure for selection, if there is one, unless there are good reasons for not doing so.
In order to be reasonable, redundancy selection criteria should, as far as possible, be clearly defined, objective and capable of independent verification. However, tribunals can only interfere with the employer's choice if no reasonable employer would have used the criteria in that particular way.
In other words, the question is not whether the employer could have acted more fairly, but whether the choices made were within the range of conduct that a reasonable employer could have adopted.
Employers usually score employees against a range of different criteria, but there is no rule requiring them to do so. If they choose to select solely on the basis of only one or two criteria, they just need to be able to justify that decision.
Potentially fair selection criteria include performance, skills and qualifications, length of service and disciplinary and sickness records. Employers may attach weightings to the criteria to reflect their relative importance, but again these need to be justified.
The period over which a criterion is assessed should not be arbitrary and should be sufficiently long to satisfy a tribunal that it put all employees on a reasonably level playing field. In particular, the tribunal needs to be convinced that a reasonable employer would have chosen that period of time.
It is often appropriate for more than one manager to carry out the scoring, but if that is not possible the selection process should at least involve a manager who knows the individuals concerned.
Provided the selection criteria are objective, a tribunal will not subject them to minute scrutiny. Employers have a wide discretion in their choice of criteria and the manner in which they are applied and dismissals are rarely found to be unfair on this basis.
Were the criteria too subjective?
Criteria that are too subjective are likely to be unfair. For instance, criteria such as “attitude”, “commitment” or “suitability” are risky because the scores may be influenced by a manager’s personal feelings about individual employees, or by discrimination.
There have been a few cases in which subjective selection criteria have been found to be fair, but they must be applied in an objective manner. So, for example, in one case "company values" was accepted by the tribunal as a valid criterion. Subjective criteria can be more easily justified where the selection process involves an employee applying for a different job.
In that case it may be easier for an employer to fairly dismiss employees who do not meet the criteria for the new role."
How should the criteria be applied?
Even if the selection criteria are objective, the dismissal will be unfair if they have been applied unfairly. This does not mean, however, that tribunals get involved with looking in detail at how the individual scores were arrived at (they are not permitted to substitute their own scores for those of the employer), but focus instead on whether there was a good system in place for assessing employees against the criteria.
Unfairness can arise where there is glaring inconsistency, bad faith, incompetence or obvious unreasonableness in the scoring process. For instance a tribunal in one case held that it was unfair for an employer to treat an authorised half hour visit to a doctor as a day's absence.
In another case, giving an employee half the available points for attendance when his record was almost perfect was also unfair. These cases are, however, the exception rather than the rule. In most cases a tribunal will focus on the system of assessment and if this is considered robust, it will not look closely at the scores.
Part of the requirement of having a good system in place is to allow employees to be consulted about their scores. Employers should therefore explain how they were arrived at and the employee should have a chance to challenge the decision. If the employer does that, they are more likely to be able to persuade a tribunal that the scores were fairly applied.
Can the selection be discriminatory?
Employers also need to be very careful that their selection process does not discriminate against any individuals or groups who are protected by the Equality Act 2010. So, for example, selection for redundancy based solely on length of service (last in first out) may well involve unlawful discrimination based on age. However using length of service as one of a number of criteria has been found to be lawful because its use was justified.
Employers also need to be careful not to select employees on the basis that they are part-time or fixed-term as this may indirectly discriminate against women.
They also need to take account of maternity absences in scoring processes, although this is not always straightforward. In Eversheds -v- De Belin, (weekly LELR 220) for instance, the employer was found to have over-compensated by awarding a woman on maternity absence the maximum score for a particular criterion which resulted in a male employee being discriminated against.
The duty to make reasonable adjustments also applies when employers operate their selection criteria so, for example, they should consider ignoring some or all of a disabled employee’s absences when scoring for attendance.