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Rad Kohanzad

Atlantic Chambers

Barrister In Employment And Civil Litigation

Read more about Rad Kohanzad

Legal Insight: How to avoid getting sued when making redundancies

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In today’s financial climate, it is generally not particularly difficult to persuade an employment tribunal that a company needs to make redundancies.

But if an employee challenges the reason for their dismissal, the employer’s reasoning will come under much closer scrutiny than it would in an ordinary unfair dismissal case.
 
This means that, ideally, either a document should be prepared setting out details of the proposed redundancies or such information should be included in board-level or managerial meeting notes and related emails.
 
Having a well thought out rationale for the proposed redundancies while they are still at a tentative stage is also helpful because it provides employees with a contemporaneous justification for the move which, in turn, reduces the chances of a claim being brought against you. 
 
Here is some best practice advice to reduce the likelihood of legal action if making redundancies and, if you are sued, to lessen the probability that you will be found to have behaved unfairly or discriminatorily.
 
Selecting a pool of redundancy candidates
 
There is a fair amount of flexibility in terms of the pool of people that you can select for redundancy and a tribunal will only find a dismissal to be unfair if the pool chosen lies outside what is deemed reasonable.
 
As a result, you should strongly consider including employees who do similar or the same work in the selection pool as well as those staff whose roles are interchangeable with others. There should be a good reason if you do not go down this route because your choice is likely to come under scrutiny. 
 
The dos and don’ts of selection criteria
 
Ensure that your selection criteria reflect the skills and measures that are particularly important to the business. The broad focus of these selection criteria should be performance and related matters such as attendance, productivity and disciplinary records.
 
In addition, assuming that there are sufficient administrative resources, different people should carry out the assessments to those carrying out the redundancy procedure. In approaching the situation in this way, you will make it harder – although not impossible – for employees to allege unfairness, discrimination, victimisation or collusion between the assessor and decision-maker.
 
Ultimately, if you end up in front of a tribunal, you will be obliged to show that you have set up a good system of selection, which has been applied reasonably.
 
Therefore, be sure to use objective selection criteria. Aside from the fact that the law requires you do so, by using objective criteria, employees are less likely to allege that the company is using the redundancy process as a means of removing them because the data and numbers will speak for themselves.
 
To this end, avoid using criterion such as “flexibility”, which could be deemed as indirectly discriminatory towards women and disabled employees.
 
In the same vein, steer clear of using subjective criteria such as ‘attitude to work’ or and ‘commitment’ as they are difficult to measure in objective terms. Instead try to score criteria based on objective evidence. For example, if you intend to use factors such as ‘performance’ for assessment purposes, employ annual or biannual performance reviews as a means of measuring it objectively.
 
However, if a criterion such as ‘skill’ requires an element of subjective assessment but there is no objective evidence against which to evaluate it, ensure that you keep documentary evidence of how any score was determined.
 
Likewise be cautious about using ‘last in first out’ as a selection criterion. Although it is an attractive option, it may well be deemed to be indirectly discriminatory.
 
If you do use it, you will need to objectively be able to justify doing so to a tribunal. Therefore, it would be advisable to seek legal advice on the objective justification point before going down this path. 
 
If using an individual’s disciplinary records as a criterion, best practice would be to err on the side of caution and not take expired warnings into account. If you choose absence as a selection criterion, do not use it as the sole reason and exclude pregnancy and disability-related absences from the mix.
 
Similarly, avoid taking work-related injury absences into account as it will often be upsetting to the particular employee concerned. Moreover, whether it is even fair to use such considerations in the first place will be a question for a tribunal.
 
Assessment periods
 
As a rule of thumb, limiting an assessment period to a year or two would ordinarily be acceptable, thereby ensuring that long-serving employees are not disadvantaged by the use of an arbitrarily short time period. If some staff members were absent for significant periods of time during the designated assessment period, for example, because they were on maternity leave, it will be necessary to think more creatively.
 
To apply the same test to them as everyone else would be to disadvantage them, but to score them artificially could disadvantage or even discriminate against other staff. Therefore, the best thing to do is to devise a different assessment period for such staff, for example, by evaluating them over a period of time totalling 12 months, before and after they went on leave.
 
Apply selection criteria fairly
 
Keep documentary evidence of how you arrived at your scores and only take the selection criteria chosen into consideration. Apply the criteria fairly and objectively and, if a given employee has an unexpectedly high or low score, ask yourself whether it is a fair reflection and try to understand why it occurred.
 
If multiple people are going to do the scoring, they should be fully briefed before doing so and you should review the scores afterwards.
 
At risk letters
 
Even while your plans are still tentative, send all employees in the selection pool an ‘at risk letter’ initiating a consultation period.
 
One thing that is guaranteed to upset staff during a redundancy process is the feeling that their employer has formally decided to make redundancies before the consultation period has started. This situation can lead to consultation meetings being unproductive and an increased likelihood of the employer being sued.
 
Voluntary redundancy
 
Consider asking people if they want to take voluntary redundancy. This approach is often a good way to minimise the number of compulsory redundancies and, therefore, possible tribunal cases.
 
Warnings and consultations
 
Employees who could potentially be made redundant should be given as much warning as possible and, in general terms, the larger the number of proposed redundancies, the longer the consultation period should be. It is recommended that consultation periods range from two weeks to three months, although one week may suffice for very small employers.
 
As a general best practice guide, ensure that you hold a minimum of two consultation meetings, explaining that the employees concerned are at risk of redundancy and what that means. Also explain the scoring criteria and the consultation process.
 
When the scoring is completed, the staff affected should be given the opportunity to challenge their marks and discuss ways of avoiding redundancy as well as any suitable alternative employment options.
 
The guiding principle that permeates best practice at this stage is that the employer’s behaviour should reflect the fact that they do not want make any employees redundant because they value them. Therefore, the idea behind the consultation is that you want to explore every other viable alternative before going down this route.
 
Individual scores
 
If a staff member is selected for redundancy, you should provide them with their own individual assessment, but you are not obliged to provide them with other employees’ scores. This is considered to be sufficient information for them to contest their score through the appeal process.
 
Alternative employment
 
Alternative employment is a matter that often gives rise to litigation. As a result, it is advisable to put together a list of all possible vacancies and distribute it to the selected employees before their final consultation meeting.
 
In doing so, you get round any suggestion that you have failed to offer a suitable alternative job, while also avoiding giving offence by explicitly offering staff posts that are clearly not suitable.
 
Right of appeal
 
Finally, it is necessary to give employees who have been selected for redundancy a right of appeal, but try to ensure that a more senior person than the original decision-maker holds the appeal hearing.
 
While these recommendations cover the basics, if other difficult matters arise during a redundancy process, it may be wise to consult a lawyer.
 
 
Rad Kohanzad is a barrister in employment and civil litigation at Atlantic Chambers.
 
 
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Rad Kohanzad

Barrister In Employment And Civil Litigation

Read more from Rad Kohanzad
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