Redundancy round-up

 

 

PPMA WEBSITE EMPLOYMENT LAW UPDATE August 2011 (2)

 

 

With many public sector organisations having to make significant workforce reductions and implement reorganisation and redundancy programmes, some recent cases on the redundancy selection process make timely reading. These are summarised below:

 

Redundancy selection criteria and disability discrimination

 

There may be occasions when one (or possibly more) of the employees within the redundancy selection pool is disabled. In these circumstances, to what extent should the employer alter the selection criteria to take account of the particular disability? This was the issue considered by the Employment Appeal Tribunal (EAT) in the case of Lancasterv TBWA Manchester.

 

The employee in this case was employed as a Senior Art Director with an advertising and marketing agency. He was disabled in accordance with the Disability Discrimination Act (now the Equality Act), as he suffered from a panic and social anxiety disorder. He was aged 50. In response to economic pressures arising from reductions in client spending, a number of roles were placed at risk of redundancy. This particular employee, along with two other Senior Art Directors, was placed in a pool for selection for redundancy. The three employees were assessed against the chosen selection criteria (about which the employee had not been consulted). He was selected for redundancy having scored the lowest in the assessment process. He raised a grievance concerning his selection and although this was dismissed, all three were scored again. However, he still scored the lowest and, following an unsuccessful internal appeal, was dismissed on redundancy grounds. He brought claims of disability and age discrimination and unfair dismissal.

 

With regard to his disability claim, he contended that some of the selection criteria which required communication skills, had placed him at a substantial disadvantage and these should have been omitted. Alternatively, he contended that all of the criteria should have been replaced by a more objective set of criteria such as attendance and disciplinary record. The Employment Tribunal rejected this claim as neither of the suggested adjustments would have prevented his selection for redundancy and therefore would not have been reasonable. These findings have now been upheld by the EAT.

 

The tribunal also dismissed his claim of age discrimination. He was not selected for redundancy because of his age – the two others in the selection pool were of a similar age (in their late forties) and he had failed to establish that he had suffered less favourable treatment on these grounds. His appeal against this decision was also dismissed by the EAT.

 

With regard to his unfair dismissal claim, although the tribunal found the pool for selection to be reasonable, it also found that the employer had failed to consult him properly or fairly and that only limited efforts were made to find alternative employment for him. However, the tribunal awarded a compensatory award based on only four weeks’ loss of employment as it considered that he would still have been made redundant even if a proper procedure had been followed. His appeal against this award was allowed by the EAT who remitted the case to the tribunal to consider whether the amount should have been greater.

 

 

Redundancy selection following a TUPE transfer

 

It is established case law that, in determining the reasonableness, or otherwise, of an employer’s decision to dismiss an employee, including on grounds of redundancy, it is not for the tribunal to ask themselves whether they would have dismissed the employee or to substitute their own decision for that of the employer. In redundancy dismissal cases it will rarely be appropriate for a tribunal to embark on a detailed scrutiny of the scoring system, or the application of that system by the employer. In the case of First Scottish Searching Services Ltd v McDine & anor, the particular tribunal was considered by the EAT to have fallen into that trap and consequently its finding of unfair dismissal was overturned.  

The employer in this case had acquired the business of two other similar companies and the two claimants had transferred to its employment under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE). Following the transfer the employer embarked on a redundancy exercise, adopting a selection matrix which comprised a mix of objective and subjective criteria. Employees who had been employed by the respondent employer prior to the transfer (the “pre-transfer employees”) were scored against this by managers from within that company. The transferred employees, including the two claimants, were scored by managers who had worked in their original company. Both sets of managers used the same scoring matrix. All of the employees subsequently identified as being at risk of redundancy, including the two claimants, had transferred to the respondent employer. However, none of the “pre-transfer employees” were identified as being at risk.

 

Although it was accepted there was a genuine redundancy situation, the claimants alleged that the selection process was unfair and had been organised to ensure pre transfer employees were retained and transferred employees were not. Their claim of unfair dismissal was upheld by the tribunal who found that the selection process was flawed as there had been no system for moderating the two sets of scores.

 

The employer’s appeal against this decision was upheld by the EAT. The tribunal had not explained what it meant by “moderating” scores, nor were there any findings of the likely outcome if such a system had been adopted. There was no basis for the tribunal’s assumption that moderation would have increased the claimants’ scores, nor was it found that there was any “bad faith” on the part of the employer. The tribunal had erred in concluding that because they had identified a risk in the scoring system, the dismissals were necessarily unfair, and the EAT substituted a finding that the dismissals were fair.

 

Refusal of suitable alternative employment

 

The consideration of alternative employment is an important part of a fair and reasonable redundancy process and can also impact on the employer’s liability to make a redundancy payment. An employee will lose the right to a redundancy payment if they unreasonably refuse an offer of suitable alternative employment. It is for the employer to show that the job offered was suitable and the employee’s refusal of it was unreasonable. Suitability is assessed in relation to the particular employee, as is the reasonableness, or otherwise, of their reasons for rejecting any such offer.

 

This was the issue considered by the EAT in the case of Bird v Stoke-on-Trent Primary Care Trust. In this case, the employee had been dismissed for redundancy but did not receive a redundancy payment on the grounds that she had unreasonably refused offers of suitable alternative posts. Her claim for a redundancy payment was dismissed by an employment tribunal and she appealed against this decision. In determining that one of the posts was suitable for her, the EAT found that the tribunal had failed to take into account two features of the evidence which were relevant to whether the post was suitable for her. As with the TUPE transfer case above, the tribunal was found to have substituted its own view about the reasonableness of her reasons for refusal, rather than considering whether someone in her circumstances could reasonably have taken the view of the post which she did. The case was therefore remitted to a fresh tribunal for rehearing.

 

These cases serve as a useful illustration of how an employer’s actions when effecting redundancies may subsequently be assessed by an employment tribunal and the extent to which a tribunal may interfere with any resulting dismissal. It also serves as a timely reminder of the importance of ensuring a fair and proper process is followed and of keeping full and accurate records at every stage should there be a subsequent challenge.