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6 March 2013

Unfair redundancy selection process

In a recent decision, the Employment Appeal Tribunal (EAT) has criticised an employer for basing its redundancy selection process on competency tests. 

The employer in this case operated a residential hospital for patients with mental health or learning disabilities.  It proposed to close a ward at the hospital, meaning that it needed to make 19 redundancies.

The employer decided to include all nursing and support staff at the hospital in the pool from which the redundant employees would be selected.  The selection process it opted to follow involved three criteria: a competency assessment, disciplinary record and sickness absence record.  The competency assessment was given more weighting than the other factors and was carried out by a team of HR staff.  It followed the same format as competency assessments used by the employer in recruitment, and did not include any assessments from managers who had worked with the staff.

Two members of staff selected for redundancy brought claims for unfair dismissal against their employer, which were upheld by the employment tribunal.  The employer appealed to the EAT.

Decision

The EAT has upheld the tribunal’s decision that the dismissals were unfair.

The EAT considered it very unusual that an employer conducting a redundancy selection exercise on the basis of competence would not have made any reference to past appraisals or taken into account the views of managers, particular since (as the employer admitted) it had produced some “very surprising results”, meaning that some good workers has been selected for redundancy.

The EAT also agreed with the tribunal’s assessment that there had been some anomalies in the scoring system; it had identified confusion and a lack of consistency in the way the selection criteria had been applied.

Comment

The employer had apparently adopted this approach to the selection process as it had taken the view that there was insufficient reliable material on which a fair assessment of past or current performance could be based.  The decision emphasises the importance of involving managers in conducting a redundancy selection exercise and also highlights one of the benefits of having a robust appraisal system in place. 

Whilst the EAT recognised that the employer had taken some trouble to construct the selection procedure, it was critical of its decision to choose an elaborate and HR-driven method which deprived it of the benefit of input from those who actually knew the staff in question.

It may be appropriate to use a competency-based approach in a very large-scale redundancy exercise and particularly when it is necessary to match potentially redundant employees to vacancies or, as a result of restructuring, matching employees to new posts that have been created.  However, it will generally be advisable to involve managers in this exercise.

A copy of the EAT judgment is available here