Legal opinion: Can redundancy selection be too objective?

Can redundancy selection ever be too objective? Yes it can, according to the case of Mental Health Care (UK) Ltd v Biluan and another. Solicitor Nikola Southern looks at the implications of the case for employers.

Objective and measurable selection criteria

In the words of the Employment Appeal Tribunal (EAT), which considered this case, the goal of avoiding subjectivity and bias is desirable but can come at too high a price. It has generally been thought that the “fair criteria” against which employees at risk of redundancy are assessed should be as “objective” as possible and preferably measurable, leaving little to subjective choice by managers.

In Mental Health Care (UK), in the absence of (in the employer’s view) sufficient reliable material on which a fair assessment of past or current performance could be based, the employer went to great lengths to come up with a redundancy selection process that it considered entirely objective. The EAT, however, while recognising the trouble that the employer had gone to, criticised the employer for basing its selection of employees for redundancy principally on a series of competency-based tests: a written test; an individual interview; and a group exercise (an observed discussion of a hypothetical scenario presented to employees).

These tests were normally used in the employer’s recruitment processes. Disciplinary records and sickness absence records were considered but given a lower combined weighting than the competency tests. The EAT found that the HR-driven method the employer chose deprived it of the benefit of input from managers and others who actually knew the staff in question. Managers with experience of working with the employees did not take part in the assessment and there was no consultation of past appraisals. This approach led to some surprising results and, in the opinion of the acting manager of the hospital, some good workers being selected for redundancy. The employees won their unfair dismissal claims.

How to select fairly for redundancy

Dismissal for redundancy will not be fair unless the employer has warned and consulted the employee, adopted a fair basis on which to select for redundancy and considered suitable alternative employment.

Recruitment-style assessment centres may be appropriate in some large-scale redundancy exercises – for example, to match vacant roles to potentially redundant employees – but, as we now know, will not generally be acceptable as an alternative to traditional methods of selection. So how should employers go about selecting fairly for redundancy?

• Choose an appropriate pool. It is from this pool that employees must be selected following assessment against certain criteria. For example, an appropriate pool might be the employees who carry out the kind of work which is reducing or who work at a site that is proposed for closure.
• Choose the selection criteria. Skills/qualifications/training, relevant experience, attendance, time keeping, disciplinary record, future potential, flexibility and performance are all potentially fair criteria against which employees can be assessed. The criteria can be weighted to take account of the employer’s current and future needs, but the employer must be able to justify the weightings. Any discriminatory criteria should be avoided.
• Ensure (where possible) that the criteria are reasonably objective and capable of independent verification. The use of criteria that is not capable of objective verification is not fatal to a redundancy selection scheme, but be wary of placing too much weight on such criteria.
• Involve managers with experience of the actual performance of the employees at risk. In Mental Health (UK), the EAT commented that assessments of competence by managers who have worked with the employees in question and are in a position to judge their qualities (either by obtaining their views or by reference to past appraisals) “inevitably carry some risk of prejudice or undue subjectivity, but that is acceptable as long as the decision-takers are aware of the risk and guard against it as far as possible”.
• Involve two managers (or more). Involving more than one manager in the redundancy assessment process to verify results and minimise subjectivity is a good idea. Where records are incomplete or do not exist, this is even more important.
• Take records into account. Appraisals that have been carried out regularly and in a consistent manner across the organisation and other records of performance are key. An employer’s reliance on appraisals will be difficult to challenge, in particular where the employee has agreed with the comments in the appraisal (so remember to get them signed). Up-to-date attendance records may also be important.
• Make a record of the reasoning applied. Remember, the assessment may need to be, to some extent, subjective. Certain roles for which evidence of productivity is not available will require a subjective analysis of the qualities and skills of the person. Employers should not shy away from this where it is necessary.

 

Common sense

As is so often the case with employment law, there is no “one size fits all” approach to redundancy selection. The selection process needs to be tailored to fit the particular circumstances. In this case, the employer was accused of having “blind faith in the process” which had led, in the EAT’s view, to the employer losing touch with common sense and fairness. Employers would be well advised to listen and respond to criticism from employees or managers of their redundancy selection procedures and not to ignore their instincts. If it seems like the selection process has led to an odd outcome, as appeared to be the case in Mental Health (UK), it may not stand up to scrutiny if challenged.

The upshot of this case is that objectivity is not an absolute requirement. As with everything, it is all a question of balance. Striking that balance, however, is often not as easy as it is made out to be.

Nikola Southern is a solicitor at Archon Solicitors

FAQs on redundancy selection from XpertHR

In which redundancy situations will it not be necessary to determine a redundancy selection pool? What is a bumped redundancy? Where a transferee has no need for the employees transferred to it under TUPE, can the selection pool for redundancy include only the transferred employees or must it also include the transferee’s existing workforce?