![[Basket]](images/basket.png){kind=small}
Your order![[cover image]](images/issue/BK201310.jpg)
Redundancy selection procedures and the law
An important EAT decision, Williams v Compair Maxim [1982] IRLR 83, laid down basic guidelines for a fair redundancy dismissal regardless of the number of staff being made redundant:
• give as much warning as possible of likely redundancies;
• consult representatives on the best way of causing as little hardship as possible to employees;
• draw up agreed selection criteria;
• as far as possible, make sure selection criteria are capable of objective verification (for example, via attendance records) instead of depending on the subjective opinion of the person making the selection;
• carry out the selection exercise fairly, following the agreed criteria;
• consider any representations; and
• offer alternative employment where possible.
Recent cases indicate some relaxation of tribunals’ approach to these guidelines, in particular when an employer claims to be “restructuring”, by eliminating roles, creating new roles and inviting the workforce to apply for them, as opposed to selecting for redundancy without simultaneously creating new jobs. In particular, there seems to be a growing tolerance by some tribunals of the use of vague, subjective, selection criteria, such as “team work” or “adaptability”, as well as HR-driven processes that are difficult to measure effectively, and that increase risks such as line manager favouritism or hidden discrimination.
The trend began in Morgan v Welsh Rugby Union [2011] UKEAT/0314/10. In this case, the EAT suggested that an employer creating a new job in a restructuring exercise is likely to want to focus on a candidate’s ability to perform the new role in the future, rather than on past performance in their former role, and that in these circumstances, it was acceptable for the selection process to look more like a job interview than a consultation meeting, allowing the employer to exercise substantial “judgment” subject to an overriding duty to act “reasonably and fairly”.
In the Morgan case, a redundancy dismissal was judged fair even though the successful candidate for a senior coaching post did not meet the employer’s own person specification for the new role, significantly exceeded the scope of the prepared interview question, and was allowed to deviate from the employer’s selection procedure, exceeding the allotted presentation time and leaving hardly any time for panel questions. Although the two candidates’ scores were very similar, the successful applicant was awarded the job because the panel unanimously preferred his “vision” of coaching development.
The EAT said a selection panel is not obliged to follow its own job description or person specification when trying to fill a new role created in a restructuring, any more than it would be when making an external appointment.
The more senior the role, the less likely a tribunal is to challenge the approach adopted in the Morgan case. For example, it was followed in Samsung Electronics (UK) Limited v Monte-d’Cruz [2012] UKEAT/0039/11. This time, a dismissal following a restructuring was judged fair even though the employer disregarded evidence of the candidate’s past performance from performance appraisals, used “nebulous” selection criteria designed for annual performance appraisals, made no attempt to check that members of the selection panel shared a common understanding of the selection criteria, and filled the post with an external candidate.
In Mitchells of Lancaster Brewers v Tattersall [2012] UKEAT/0605/11, the EAT confirmed that wholly subjective selection criteria are not objectionable just because they involve the employer’s subjective judgment. Commenting on the Compair Maxim guidelines, the EAT in Morgan said: “these are not immutable principles which will stay unaltered forever. Practices and attitudes in industry change with time and new norms of acceptable industrial relations behaviour will emerge…These are not principles of law but standards of behaviour”. However, the concern for unions will be to ensure that standards of fairness, consistency and objectivity are not sacrificed as a result.
Tougher, stricter standards seem to be applied by tribunals where redundancies are carried out through selection from a pool, where the job itself does not change but fewer employees are needed to do it, especially where those at risk do not occupy senior or managerial roles. A good example is Mental Health Care (UK) Limited v Biluan [2012] UKEAT/0248/12/SM, a case involving redundancy dismissals at a hospital. In this case, the EAT criticised the use of “elaborate and HR-driven” selection tests which it said deprived the employer of the benefit of input from managers and others who knew the staff in question. The EAT also suggested that the obvious unreliability of these tests “shed a rather revealing light on the extent to which assessments of the kind carried out in fact correlate with actual experience in the workplace”. Helpfully, the EAT confirmed, in particular, that when making redundancies out of a pool of at-risk employees, it is very likely to be unfair to disregard their past performance. It is worth looking in detail at the facts of this case:
A ward closure led to the need for redundancies at a hospital run by the Castlebeck Group. The employer put the hospital’s entire nursing and support staff of 58 workers into one pool with a view to assessing the performance of each employee and dismissing the lowest scoring.
The number of redundancy dismissals was fixed, “accidentally or otherwise”, at 19 — one below the figure that would have triggered the obligation to consult collectively.
Selection was based on a series of “competency assessment” tests designed for use in recruitment. Since the tests were designed to test new staff, they took no account of past performance.
Three equally weighted tests were spread over three days, made up of a written assessment, an interview with pre-set questions, and a group discussion of a hypothetical scenario. Several different managers were involved.
Despite some attempt at moderation, the tribunal found “confusion and lack of guidance” about the scoring system and the different approaches of individual assessors. Other flaws included employees not receiving their own scores and appeals being heard by the manager described as the “architect of the whole scheme”.
The tribunal observed, in particular, how the “hypothetical scenario” test, in which managers acted as observers unfairly favoured extrovert employees and disadvantaged more “retiring and thoughtful” ones.
The EAT found the dismissals unfair. In particular, they described as very unusual in a redundancy selection process, at least where competence is in question, the practice of making decisions without input from managers who have worked with staff at risk and can judge their qualities, either by asking their manager, or by reviewing past performance appraisals. The EAT said that even if this means a measure of subjective assessment, this is acceptable, as long as the decision-maker guards against risks like favouritism or bias. Disregarding past performance in this case was “grossly unfair”.
The employees’ line manager had been surprised by the outcome of the selection exercise, which led to the loss of some of his best workers. Even so, no attempt was made to re-assess the scores. The EAT concluded that the employer adopted an “elaborate and HR driven method”, which deprived it of the benefit of input from managers and others who knew the staff in question and “which by its very elaborateness was liable to be difficult to apply consistently. A “blind faith in process” had led to the employer “losing touch with common sense and fairness”.
Mental Health Care (UK) Limited v Biluan UKEAT/0248/12/SM