Redundancy criteria – is it possible to be too fair ?

Employers often are concerned and confused during the troubling process and decision that staff must be made redundant. Many employers are now more aware that an exercise of simply approaching selection for redundancy on the basis of “last in first out” would rarely, if ever, be considered sufficient legally, however logical it may appear. Employers

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Employers often are concerned and confused during the troubling process and decision that staff must be made redundant. Many employers are now more aware that an exercise of simply approaching selection for redundancy on the basis of “last in first out” would rarely, if ever, be considered sufficient legally, however logical it may appear.

Employers also need to be aware of the importance of getting it right procedurally, to ensure that potentially impacted staff are alerted in the right way, genuine consultation should take place and there should be a right of appeal after selection and dismissal.

Returning to the process for choosing staff and given the risk not only of a potential unfair dismissal claim but perhaps also, in some circumstances a form of discrimination claim, some employers go out of their way to create a paperwork trail and to use objective criteria.

Unfortunately, a Court of appeal decision from earlier this year suggests that this kind of approach may also constitute unfair dismissal.

Objective criteria not necessarily fair redundancy criteria

In the case of Mental Health Care (UK) Ltd v Biluan and another the Defendant hospital management identified a need to close one of its wards, which would result in 19 redundancies out of the 58 nursing and support staff and it was decided that they would go into the pool for selection.

With a view to being scrupulously fair, 3 criteria were chosen to decide which 19 staff should be made redundant :-

  • competency tests;
  • disciplinary record;
  • sickness absence record.

Weighting some redundancy criteria above others

The selection criteria were weighted, giving the competency assessment more importance. The competency assessment involved three elements: a written test, an individual interview and a group exercise, which took the form of an observed discussion of a hypothetical scenario presented to the employees.

The competency assessment was normally used by the hospital for the purpose of recruitment and, in this instance, was carried out by a team of HR staff, led by the Group HR Director. Crucially, none of the HR team had any experience of working with the individuals who were being assessed and they did not obtain assessments from managers who had worked with them. Nor did they consult any past appraisals, taking the view that there was insufficient reliable material on which a fair assessment of past or current performance could be based.

The competency test was the deciding factor in most of the redundancy decisions notwithstanding that the Hospital admitted that it had created some very surprising results. The acting manager of the hospital admitted at the initial Employment Tribunal hearing that some good workers were consequently selected for redundancy.

The claimants brought successful unfair dismissal claims against the hospital arising out of their selection for redundancy. The hospital appealed to the EAT which upheld the unfair dismissal ruling from the Tribunal as being correct.

Put simply, the criteria adopted by the employer in this case were too objective and were unreasonable because they had failed to take into account at all any input from managers who had actually worked with the people at risk, some of whom were longstanding employees. The upshot and practical take away from this case is that it remains good practice to utilise more than a single criteria for deciding which staff will have to be made redundant, but an overly objective approach, however well intentioned, can lead to the methodology being outside the “range of reasonable responses” required of an employer.The case also highlights the fact that whilst it is open to employers to weight some criteria more than others, care and thought is required so as not to create a situation where 1 factor tends to prove decisive.

If you are an employer or an employee dealing with a  redundancy issue, get in touch with Daniel Blake to discuss any questions or concerns you may have.

See also here on our site for more on topic.

Employment law • Uncategorized

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