In a redundancy situation, it is really important to implement a fair process in order to avoid unfair dismissal claims.
Part of this activity involves identifying an appropriate redundancy pool and ensuring that the selection criteria used are not tainted by discrimination.
1. Defining a redundancy pool
There are no set rules about how to define a redundancy pool, but employers should always try to make the criteria as narrow as possible in order to limit disruption. The courts tend to view the situation more broadly, however.
Two recent employment appeal tribunal decisions reinforce the importance of taking time to genuinely consider which employees to include in a pool.
Ms Byard worked for Capita Hartshead Ltd as one of four actuaries. But when the number of her clients reduced, the company initiated a redundancy process.
Capita thought that creating a pool of one was reasonable because it was only Byard’s workload that had reduced – scheme actuary appointments are personal and there was a risk of losing clients if they were transferred to a colleague.
Moreover, the firm felt that team morale would suffer if the other actuaries were also put at risk of redundancy. Byard was made redundant on this basis and claimed unfair dismissal.
The court agreed with her. It ruled that the decision to limit the size of the pool to one was not reasonable and the other actuaries should have been included.
Halpin v Sandpiper Books Ltd
Having a pool of one took away much of the value from the consultation period, it said. There was also no evidence to suggest that it was reasonable on Capita’s part to assume that creating a wider pool would have been a useless exercise.
But there can be cases where defining a pool of one is fair. In Halpin v Sandpiper Books Ltd, Mr Halpin was employed at the company’s London office. After it started selling books in China, however, he moved there in a sales management role.
But the company subsequently outsourced the work to local book agents in China and Halpin’s role was put at risk of redundancy. Following a consultation, during which he rejected an offer of alternative part-time work in the UK, he was made redundant.
Halpin claimed unfair dismissal, arguing that other employees with interchangeable skills should have been included in the pool and that no reasonable employer would have limited the pool to those workers whose work had diminished.
The EAT found that it was not unfair for an employer to use a selection pool of one employee when it was ceasing its operations in China and Halpin was the only employee to have been sent there.
Decisions about redundancy pools are a matter for each employer and, in this instance, deciding to create a pool of one was deemed logical.
2. Identifying selection criteria
Having identified a selection pool, the next thing to consider is selection criteria. To start, selection on the basis of protected characteristics is likely to be unlawful unless it can be objectively justified.
For example, employers faced with a situation in which an employee could suffer disadvantage for pregnancy-related reasons should consider whether any ‘special treatment’ to redress the balance is reasonable and proportionate in the circumstances.
If they go too far in favour of the woman, it may result in a male employee suffering discrimination.
The case of De Belin v Eversheds Legal Services Ltd [2010] involved two associates working in the firm’s real estate department in its Leeds office. But in September 2008, ELS decided to reduce its headcount by one.
One of the criterion used measured the length of time between the completion of a piece of work and receipt of payment as at 31 July, 2008. De Belin’s overall score here was 0.5, but Ms Reinholz had been absent on maternity leave at the time and so there was no genuine data in relation to her performance.
Nonetheless, she was awarded the maximum score, even though it was likely that there would either have been a tie or she would have scored less than De Belin. He complained that he had suffered unlawful discrimination.
ELS argued before the EAT that it could not be held to have discriminated against a man if the treatment was something done to protect the interests of an employee on maternity leave.
The EAT disagreed. While employees on maternity leave are entitled to special treatment, this situation could not justify the disproportionate favouring of such women, it said.
The court ruled that there were other less discriminatory ways that the company could have addressed the issue. In consequence, ELS was found guilty of discrimination in the way that it had treated De Belin.
Part-time employees
Another consideration is that, while it is possible to select part-time employees for redundancy, they should not be selected for reasons connected with their part-time status, even if that part-time status is not the only factor.
In Sharma and others v Manchester City Council [2008], Ms Sharma and her colleagues all worked as part-time lecturers for Manchester City Council.
Their contracts allowed the Council to vary the number of hours that they worked, subject to their being guaranteed one-third of the hours that had been worked the previous year. This provision did not appear in the contracts of full-time lecturers.
In order to make savings, the Council reduced the hours of its part-time lecturers. It argued that the reason behind the less favourable treatment was not exclusively due to their part-time status, but rather the fact that their employment contracts made it possible to cut their hours without it being a breach of contract.
Finding for Sharma, the EAT said that The Part Time Workers Regulations 2000 are engaged whenever:
- a part-time employee has been treated less favourably than a comparable full-time employee
- being part-time was one of the material reasons for that less favourable treatment.
This decision means that discrimination need not be the sole, or even the main, factor influencing an employer’s decision. It just needs to be a material factor.
In summary
What this all means, in summary, is that employers must:
- Objectively justify their selection pools, especially if they are narrow
- Avoid selection criteria based on protected characteristics
- Look for proportionate, non-discriminatory solutions where there is a clash of rights
- Not use part-time status as a selection criterion, even if it is only part of their decision.
Kate Russell runs her own HR consultancy and employment law training company, Russell HR Consulting Ltd.
