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Developments in redundancy selection
Recent cases suggest that tribunals are likely to take a different approach to procedural fairness in redundancy selection depending on whether the redundancies arise because the employer is creating new jobs in a restructuring, or because employees are being selected for redundancy dismissal from within a pool, to perform existing jobs. In practice, this distinction is rarely clear cut and can lead to artificial results and to employees feeling they are being forced to compete for their own jobs. These cases also illustrate greater tolerance by tribunals of employers who carry out redundancies using vague HR-driven selection criteria.
The leading case is Morgan v Welsh Rugby Union ([2011] UKEAT/0314/10). In this case, the tribunal said that an employer creating a new job in a restructuring is likely to want to focus on a candidate’s ability to perform the new role in the future, rather than his performance in his previous role, and that in these circumstances, it is acceptable for the selection process to look more like a job interview than a consultation meeting and for the employer to be free to exercise substantial “judgment”, subject to an overriding duty to act “reasonably and fairly”.
This trend was followed in Samsung Electronics (UK) Limited v Monte-d’Cruz ([2012] UKEAT0039/11). In this case, a dismissal following a restructuring was found to be fair even though the employer disregarded evidence of the candidate’s past performance from performance appraisals, used “nebulous” selection criteria designed for annual performance appraisal, made no attempt to ensure that members of the selection panel were agreed as to the meaning of the selection criteria and filled the position with an external candidate.
Again, in Mitchells of Lancaster Brewers v Tattersall ([2012] UKEAT/0605/11), the EAT confirmed that “wholly selective” selection criteria are not objectionable just because they involve the employer’s subjective judgment.
But a recent case, Mental Health Care (UK) Limited v Biluan ([2012] UKEAT/0248/12/SM), is more encouraging. This case reminds employers of the need to follow the basic guidance in Williams v Compare Maxim [1982] IRLR 83 (see above), at least when making redundancies out of a pool of employees identified as being at risk. In particular, this case says that it is very likely to be unfair to disregard past performance in these circumstances:
Redundancies were needed because of a ward closure at Plas Coch hospital, run by the Castlebeck Group. The employer decided to make the redundancies out of a selection pool made up of all 58 of the hospital’s nursing and support staff. The number of redundancy dismissals was fixed, “accidentally or otherwise”, at 19 — one below the figure that would have triggered a need for collective consultation.
Selection was based on a series of “competency assessment” tests routinely used by this employer to recruit new joiners which took no account of past performance.
There were three equally weighted tests, spread over three days: 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 a manager described as the “architect of the whole scheme”. The tribunal noted how the “hypothetical scenario” section in particular unfairly favoured extrovert employees and disadvantaged staff who were more “retiring and thoughtful”. Managers acted simply as observers, and one quietly spoken claimant scored particularly badly.
Finding the dismissals unfair, the EAT commented that it is very unusual in a redundancy selection process — at least where competence is in question — to make decisions without first getting 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. 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 expressed surprise at 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 commented how their obvious unreliability “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”.
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