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Redundancy- when is the "pool for selection" fair?

29th February 2012

With the continuing pressures on businesses, redundancies remain common. It is well established that an essential element of a fair redundancy procedure is the identification and implementation of the correct "pool for selection".

Sometimes employers will correctly identify just one employee at risk of redundancy.Typically this will happen where the employee in question carries out a genuinely unique role. However, sometimes employers can find themselves entering into arguments about the "uniqueness" of a particular role. These arguments are likely to happen when there is a degree of overlap between roles, and when there is a degree of overlap in qualifications or skills.

Generally the Employment Tribunals have been reluctant to examine the logic of the identification of the "pool for selection". But as the number of redundies continues to rise, and the unemployment figures increase, employees dismissed

for reasons of redundancy are increasingly prepared to challenge the process of the redundancy that resulted in the loss of their job.

In view of the current economic situation and the increasing unemployment figures it is important for employers to know how they should approach the identifiaction of a redundancy "pool for selection". In the case of Capita Hartshead Ltd v Byard the Employment Appeal Tribunal has just given an important judgment on the fairness of a "pool for selection". 

The case involved an actuary who no longer had sufficient work for a full time role, as many of the pension schemes she had managed had been wound up. There were three other actuaries in the business. However, the employer decided that Byard was in a "pool for selection" of one-her!The employer claimed that the work the actuaries did was personal in nature and that there was a risk of them losing clients if they were to be moved to a different actuary in the business. The business also argued that there was insufficient work for four actuaries.

The Employment Tribunal found that the risk of the business losing clients because of an internal change of the actuary dealing with their account was "slight". The Employment Tribunal also found that there was no merit in the argument advanced by the employer that the inclusion of the other actuaries in the pool for selection would have made no difference to the outcome. Therefore the Employment Tribunal ruled that the dismissal of Byard was unfair.

On appeal the employer argued that an earlier Employment Appeal Tribunal decision prevented the initial Employment Tribunal from ruling that the employer's identified "pool for selection" was so flawed that the resulting dismissal was unfair. The Employment Appeal Tribunal upheld the decision of the Employment Tribunal in this case. In doing so it set out the principles to be addressed in assessing whether or not the correct redundancy pool for selection has been used. The principles set were as follows:-

1. It is not the function of the Employment Tribunal to decide whether or not they would have thought it fairer to act in some other way; the correct question is to ask whether or not the dismissal lay within the range of conduct that a reasonable employer could have adopted.

2. The reasonable responses test is applicable to the selection of the pool from which the redundancies are to be drawn.

3. There is no legal requirement that a pool for selection should be limited to employees doing the same or similar work. The question of how the pool is to be identified is primarily a matter for the employer to determine and it will be difficult for the employee to challenge it if the employer has genuinely applied its mind to the problem.

4. The Employment Tribunal is entitled to consider and scrutinise carefully the reasoning of the employer to determine if it has actually "genuinely applied its mind" to the issue of who should be in the pool for selection, and

5. Even if the employer has genuinely applied its mind to the issue of the pool for selection, then it will be difficult, but not impossible, for an employee to challenge it.

For employers this case demonstrates that that they need to give careful consideration to the identification of the pool for selection. The employer's thinkng on this should therefore be logical and consistent. Employers should be able to produce some evidence as to how the pool has been identified.

For employees facing the possibility of redundancy this case indicates that there could be a challenge to the fairness of the redudnancy process if the pool for selection that the employer has identified is illogical or unsupportable. The case emphasises the need for employees to raise any challenge within the internal redundancy process, referring to skills, qualifications and any cross over in the work done with employees that have not been included in the pool by the employer.

At Hallett Employment Law Services we can guide you, as an employer or employee, through the redundancy process and advise on the appropriateness of the pool for selection. If you require more help on this issue please do not hesitate to contact us.      


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