Selection for redundancy

In many unionised workplaces, there will be an agreed procedure for redundancy selection. Redundancy selection procedures are rarely contractual. This means they can be changed without agreement without breaching the employment contract. By contrast, an agreement about enhanced redundancy payments is much more likely to be contractual, meaning that it cannot be changed without agreement.

In Kaur v MG Rover [2005] IRLR 40, the Court of Appeal ruled that a promise in a collective agreement that there were to be “no compulsory redundancies” was “aspirational” only and did not create binding contractual obligations.

An important EAT decision, Williams v Compair Maxim [1982] IRLR 83, laid down some basic guidelines for a fair redundancy dismissal. These guidelines apply to all redundancy dismissals, regardless of how many employees are at risk of redundancy. The guidelines say that employers should:

• give as much warning as possible of likely redundancies;

• consult reps on the best way of causing as little hardship as possible to employees;

• draw up agreed selection criteria;

• as far as possible, make sure chosen criteria can be verified objectively, for example, via attendance records, rather than relying on the subjective opinion of a manager;

• carry out the selection exercise fairly, following the agreed criteria;

• consider any representations; and

• offer alternative employment where possible.

Recent cases have seen some watering down of these guidelines, especially in the context of restructuring, where employers create new jobs, require workers to compete for those new jobs and then declare the unsuccessful applicants redundant.

In Morgan v Welsh Rugby Union [2011] UKEAT/0314/10, the EAT suggested that an employer creating a new job in a restructuring will want to focus on a candidate’s future ability to perform the new job, rather than on their past performance. In these circumstances it is acceptable, said the EAT, for the selection process to look more like a job interview than a redundancy consultation meeting and for the employer to exercise substantial judgment, subject to an overriding duty to act “reasonably and fairly”. Mr Morgan’s dismissal was ruled to be fair despite significant departures from the employer’s own procedure.

The case was followed in Samsung Electronics (UK) Limited v Monte-d’Cruz [2012] UKEAT/0039/11. In this case, a dismissal after a restructuring was found to be fair even though the employer disregarded evidence of past performance available from performance appraisals; used “nebulous” selection criteria designed for an annual performance review; made no attempt to make sure the selection panel shared a common understanding of the selection criteria, and filled the post with an external candidate.

This kind of approach is more likely to be judged by a tribunal to be fair in those cases where the new role demands high levels of discretion and creativity, and/or is high paid.

Stricter standards, more in line with the Compair Maxim guidelines summarised above, have been enforced in cases of redundancy where the job itself does not change but fewer employees are needed to do it, especially if those at risk are not in senior or management roles. A good example is Mental Health Care (UK) Limited v Biluan [2012] UKEAT/0248/12/SM, a case involving unfair redundancy dismissals from a pool of hospital staff on a ward.