Redundancy, selection criteria and unfair dismissal
An employee with more than two years’ service has the right to claim unfair dismissal in the Employment Tribunal if they are dismissed by their employer. In order to be fair, a dismissal must be for a potentially fair reason, including redundancy, and the procedure must be fair and reasonable.
The employer faced a redundancy situation due to financial circumstances that required a reduction in staff. Mrs M and another employee, both band 6 nurses, were employed on fixed term contracts. Mrs M’s contract was due to expire before that of the other employee. She was made redundant.
Mrs M issued a claim of unfair dismissal in the Employment Tribunal. The Tribunal found that there was a redundancy situation. It noted that the only selection criterion used by the employer was that Mrs M’s fixed-term contract ended before that of her colleague. It found that it was within the band of reasonable responses, where all relevant employees are on short-term contracts, to take a decision based on which is due for renewal. It found the dismissal was fair.
Mrs M appealed to the Employment Appeal Tribunal (EAT). The EAT disagreed with the Tribunal. It found that for a redundancy process to be fair, consultation should occur at a stage when an employee’s comments can be considered and have the potential to affect the outcome. Once the decision had been made that the employee whose contract was due for renewal should be the person dismissed, it immediately identified Mrs M as the person to be dismissed. This identified a pool of one, a decision made before any consultation with Mrs M.
The EAT noted that where the choice of criteria adopted to select for redundancy has the practical result that the selection is made by that decision itself, consultation should take place before that decision is made. Failure to do so is not within the band of reasonable responses. In this case, the decision on the pool and, as a consequence that Mrs M should be dismissed, was taken long before any meetings or consultation took place. The consultation was therefore not at the stage where Mrs M could influence or potentially affect the outcome.
Mrs M had been selected because of the need to renew her contract. That sole criteria resulted in her dismissal being a fait accompli. The Tribunal had not set out why that decision was reasonable in the circumstances. The EAT found that the dismissal was unfair.
A fair redundancy process will generally include:
- warning an employee about the risk of redundancy
- individual consultation
- a fair selection process which will include deciding on a selection pool and objective selection criteria
- consideration of any alternative vacancies, and
- a right of appeal.
This judgment is a reminder to employers that consultation is a fundamental part of a fair redundancy procedure. It should take place at a stage when an employee can, potentially, influence the outcome. Absence of meaningful consultation at a stage when the employee has the potential to impact on the decision can, in some circumstances, lead to an unfair process and a finding of unfair dismissal.
21 October 2022
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