Unnatural selection

Rob Smith gives advice about the procedure that employers should follow and their obligations when selecting employees for redundancy.

Even if an employer can show that the redundancy was genuine (as Richard Arthur explained in the previous feature), the dismissal will still be unfair unless they can also show that they followed a fair selection procedure.

Warning and consultation

Although it is just common sense for employers to notify their workforce and their representatives that they intend to make redundancies, the courts have had to repeatedly make clear that it is also a legal obligation.

The House of Lords spelt out those responsibilities in Polkey -v- A E Dayton Services Ltdwhen it said that: “in the case of redundancy, the employer will normally not act reasonably unless he warns and consults any employees affected or their representatives, adopts a fair decision which [employees] to select for redundancy and takes such steps as may be reasonable to minimise a redundancy by redeployment within his own organization.”

In Mugford -v- Midland Bank the Employment Appeal Tribunal (EAT) said that, if the employer has not consulted with either the trade union or the employee, the dismissal will normally be unfair unless the tribunal decides that consultation would have been a futile exercise.

When employers are planning to dismiss 20 or more employees they are also required to consult collectively under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992.

The pool of employees

Employers must also ensure that the pool of employees to whom the selection criteria apply is fairly defined. If the wrong group is selected, the dismissals may be unfair even if the selection criteria used are fair. Tribunals usually consider the following factors:

• job descriptions
• the extent to which employees' jobs are interchangeable
• whether other employees are doing the same work on different shifts or in other parts of the business
• whether the union (or employee representatives) agreed the selection pool
• any evidence that suggests that a pool was a sham and defined purely for the purposes of weeding out a particular employee (such as a union rep).

The way in which the pool is defined can make a significant difference to the employees who may be selected for redundancy. For example, if the pool is restricted to one particular shift or part of the business, then only those employees will be at risk. However, this may be unfair if there are other workers on a different shift doing the same job.

The selection criteria

Once the pool has been decided, the employer must adopt a fair method of selecting the employees to be made redundant. Traditionally, many used the “Last in First Out” approach but are now much more likely to use a range of selection criteria.

In some cases the employer may have agreed the selection criteria with the union or workforce representatives, although a failure to do so will not render the dismissals unfair. However, the employer would still have to show that there was a logical basis for using a particular criteria and that they have consulted properly in the event of a dispute.

In Williams -v- Compair Maxam Ltd the EAT stated that the employer should “seek to establish criteria for selection which so far as possible do not depend solely upon the opinion of the person making the selection but can be objectively checked against such things as attendance record, efficiency at the job, experience or length of service.” In reality it can often be difficult for unions to challenge even quite subjective criteria.

Common criteria include:

Performance and ability – An assessment of an employee’s performance, skills, quality, flexibility and other similar categories are potentially fair provided that the criteria are clearly and reasonably defined and the assessment has been objective. Criteria based on “attitude” or the extent to which the employee is a “team player” are too subjective and could render the criteria unfair if the employer puts a lot of store by them or fails to consult fully on their use.

Absence record – Although a seemingly objective criterion, employers should investigate the reasons for any poor attendance and ensure that their records are accurately and fairly maintained. The period over which they assess attendance records should also be reasonable. Employees may also be able to make a DDA claim if they have a disability that resulted in their being off work a lot, as a result of which they were disadvantaged by the redundancy selection criteria.

Disciplinary Record – Employers can include employees’ disciplinary records in the selection criteria, as long as the period of time they rely on is representative of all affected employees.

Length of Service – Following the introduction of the 2006 age discrimination regulations many employers have stopped using length of service as a criterion. However, in the recent case of Rolls Royce -v- UNITE (weekly LELR 94) the court ruled that it was not unlawful in those particular circumstances.

Applying the criteria

Having decided on the pool of employees and the selection criteria, employers then have to apply the criteria fairly, although tribunals are often reluctant to overturn the employer’s decision in the absence of persuasive evidence that the process was flawed.

In particular, tribunals will not examine in detail the way in which the employer applied the criteria. In Eaton Ltd -v- King, the Scottish EAT stated that it was sufficient for the employer to have set up a good system for selection and to have administered it fairly. It also confirmed that the tribunal did not require the managers who conducted the assessment to give evidence at the tribunal hearing.

Nor can employees just disagree with their score under a particular criterion. Tribunals will not re-score employees for the simple reason that their supervisors and managers are better placed to do this. Tribunals will therefore only “look behind the scores” if the employee can establish evidence of bias, manipulation or some other fundamental flaw that rendered the entire selection unfair.

Individual consultation

To apply the criteria fairly, employers must consult with their employees individually about their selection. In Mugford the EAT confirmed that collective consultation with the union does not mean that employers can avoid individual consultation. Employees should also be consulted to inform them that they are at risk of redundancy, allow them the chance to challenge their selection and highlight any flaws in the process.

There has been debate about what information employees should be given and, in particular, whether they have the right to see the scores of other employees. In Alexander -v- Brigden Enterprises Ltd the EAT confirmed that under the statutory disputes resolution procedures, employers must:

• comply with step 2 of the procedure
• set out why there is a redundancy situation and why the employee is being selected
• provide the selection criteria and any assessment of the employee but not the assessments of other employees.

Employers must also allow employees to appeal against dismissal due to selection for redundancy. Despite the repeal of the statutory disputes resolution procedures in April 2009, this process is unlikely to change.

Pursuing a tribunal claim

If someone thinks they have been unfairly selected for redundancy they can lodge a tribunal claim within three months of the date the redundancy took effect.

If successful, they may be awarded compensation but if they have already received a redundancy payment, they will not receive a basic award. In addition, the tribunal will offset any contractual redundancy pay in excess of the statutory minimum against any loss of earnings.

If the tribunal decides that the dismissal was unfair on procedural grounds then, unless the employer can show that the error would have made no difference to the outcome, they will make an award of compensation. However, it will then make an assessment of the percentage chance that the employee would not have been dismissed had a fair procedure been followed (a Polkey deduction) and reduce the compensation accordingly.

It is worth noting, though, that in Evans -v- Capio Healthcare (UK) Ltd the EAT confirmed that major procedural defects are likely to render the dismissal “substantively unfair”, in which case no Polkey deduction will be made.

Conclusion

With the number of redundancies continuing to increase, there is likely to be a rise in the number of claims to employment tribunals. Unfair selection for redundancy cases are not easy to win and much will depend on identifying a flaw in the procedures adopted by the employer. More than ever, it is vital for union representatives to insist on proper consultation over those procedures and ensure that employers apply the procedure fairly.