Employment Update: Redundancy

03 December 2008

Employment Group

Redundancy selection criteria and process must be fair.

Acknowledging that a redundancy situation may arise without the employer being in any way at fault, the law provides that redundancy may constitute a fair reason for dismissal. However, the redundancy process must be handled fairly for this to be the case.

In the recent case of E-ZEC Medical Transport v Gregory the EAT has reviewed the issues that can make a potentially fair redundancy dismissal unfair.

A downturn in business meant that job cuts had to be made. Of a pool of 14 employees, three had to be made redundant. The employer informed the employees of this, but failed to consult with them in any way before their line manager and a senior HR manager drew up two lists that they then used as the criteria for selection for redundancy. The claimant was called to a meeting where she was told that she had one of the three lowest scores. Three days later she was made redundant. She made an internal appeal against dismissal which was heard by a manager who had been nominated as appeals officer. He reviewed the paperwork and dismissed her appeal. She made a successful claim of unfair dismissal to the employment tribunal and that decision has now been supported by the EAT.

The employer had not consulted with the workforce before announcing the impending redundancies. Nor had it consulted about the selection criteria to be used. The criteria used by the HR manager – length of service, absence record, disciplinary record – were all matters capable of objective justification. However, the criteria used by the line manager – commitment, attitude, and team working – were all more subjective. He had used no records or objective evidence in arriving at his scores. He had made no record supporting his scoring. Furthermore, at the appeal stage, the appeals officer had not spoken to him to establish how the scoring had been determined before deciding to uphold his decision.

For all these reasons the dismissal was unfair. The claimant was entitled to compensation for unfair dismissal as well as her statutory redundancy payment.~

Points to note -

  • Employers should be aware of the five principles (set out in Williams v Compair Maxam Ltd) that will decide whether an individual redundancy is fair – there must be as much advance warning as possible; prior consultation with any trade union; selection criteria that can be objectively justified; the selection criteria must be operated fairly; and the employer must always consider whether it can offer alternative employment instead of redundancy.

  • It is not a tribunal’s job to subject any marking process to microscopic analysis (nor is any employee entitled to see another employee’s marks) but a tribunal does need to be given enough information to satisfy themselves that a fair system of selection was in operation. In this case, it did not help the employer that the line manager did not give evidence himself at the tribunal and there was no ‘paper trail’ to show how he had come to his decisions.

  • Any employer who is forced for economic reasons to make redundancies will not want to make the process more unpleasant or expensive than necessary. We shall be happy to advise on procedures that will assist your management team and will also minimise the risk of tribunal claims.