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Unfair Redundancy: Competent Selection?

Redundancy is becoming more and more commonin the current climate. Whilst a number of recent Employment Tribunal decisions have made it a lot more difficult for employees to challenge redundancy selection, in Mental Healthcare (UK) Ltd v Biluanthe Employment Appeal Tribunal was critical of an employer who selected employees for redundancy on the basis of a series of competency tests normally used in the context of recruitment. In a redundancy case, an Employment Tribunal must consider whether the decision to dismiss an employee was reasonable in the circumstances. In order for a redundancy dismissal to be fair an employer must:

  1. Warn and consult employees or their representatives about the proposed redundancies.
  2. Adopt a fair basis on which to select for redundancy. An employer must identify an appropriate pool from which to select potentially redundant employees and must select against proper criteria, which should, as far as possible, be objective and capable of independent verification.
  3. An employer must consider suitable alternative employment. An employer must search for and, if it is available, offer suitable alternative employment within its organisation.

In theBiluancase the employee was a nurse at a residential hospital. The hospital management identified a need to close one of its wards, resulting in 19 redundancies. It decided to treat the pool for redundancy as all the nursing staff at the hospital. 58 staff were placed at risk and told that they will be subjected to a 30 day consultation period. The selection process involved consideration of three criteria: a competency assessment and consideration of disciplinary records and sickness absence records. These were weighted so that the competency assessment was given more importance than the other criteria. Due to this scoring system, the competency assessment proved decisive in most cases. This led to some very surprising results with the acting manager of the hospital admitting that some good workers were selected for redundancy. Biluanand other employees brought successful unfair dismissal claims and the hospital appealed. The Employment Appeal Tribunal found that whilst the hospital had clearly taken a lot of trouble in constructing the selection procedure, it had been a mistake to choose an elaborate and HR driven method which deprived it of the benefit of input from managers and others who actually knew the staff in question. The EAT was critical of the “blind faith in process” which had in this case led to the employer losing touch with common sense and fairness. This is one of the rare recent cases where an Employment Tribunal has been prepared to take a robust view in favour of the employee. The employer argued that the Employment Tribunal had substituted its view for that of the employer when deciding the appropriateness of the selection criteria. The EAT was not persuaded by this argument. This is a reminder to employees that it is always worth challenging selection criteria adopted by an employer when considering whether a dismissal for redundancy is unfair. What we will say however, is that challenging selection criteria can be difficult. TheBiluancase is unusual precisely because of the unusual selection criteria that were used.