A guide to redundancy: pooling and selection for redundancy
Part 2 - Pooling and selection for redundancy
In this series of articles for employers, we consider the key elements of a fair redundancy process and some of the pitfalls to avoid along the way. Please see Part 1 of this guide which covers the basics of redundancy and your approach to a fair redundancy process: Wrigleys essential employment guide: the redundancy process (Part 1). Part 1 also covers the basic requirements of collective redundancy consultation where 20 or more dismissals may occur within a 90 day period.
In part two, we cover the key considerations when planning redundancy pools and selection processes.
Planning for selection: do your homework
Before you start planning your pooling and selection process, you should do your homework on what makes a fair process. Helpful general guidance is available from Acas, CIPD and on the gov.uk website. You should also consider taking legal advice in good time before you start.
Look for and become familiar with policies or collective agreements which are relevant to your workforce. These may well include rights and obligations which go above and beyond statutory rights and require you to consult with trade unions. Before making decisions on pooling and selection methods, remember to check whether you already have an agreed procedure to follow.
A redundancy pool is a group of employees from whom individuals will be selected and put at risk of redundancy.
The approach of employment tribunals suggests the following principles:
- Employers should "apply their mind" to the pool and be able to demonstrate that they have done so (in other words have a document setting out the reasons for your choice of pool);
- Employers should consult with employees or their representatives on the proposed pool before selecting from it and make adjustments to it if necessary in response to feedback;
- A tribunal will consider whether the choice of pool was within "the band of reasonable responses" - so there is no right or wrong pool in any particular case, but a spectrum of reasonable choices; and
- When employers consider the appropriate pool, they should focus on the type of work which is reducing and whether other employees are carrying out this kind of work, including at other sites.
In some cases, the decision on which employees to include in the pool will be straight-forward as there will be a clear group of staff who all carry out the kind of work which is ceasing or diminishing.
However, in other cases, this decision will not be so simple. You may have some employees in other teams or roles who sometimes carry out the type of work which is ceasing or diminishing, or are capable of doing so as they have crossover skills. You may have employees doing very similar work at a different location or for a different part of the organisation. Should you extend the pool to include these employees?
Employers at times opt for a narrower pool to try to minimise the impact on morale and staff relations of having a wide pool of employees impacted by potential redundancy. In other circumstances, a wider pool may be chosen to increase the employer's options for the remaining or restructured team.
Case law suggests that in some circumstances, it will be unreasonable for employers not to consider a wider pool including staff from other sites, particularly where these are geographically close and there is a history of joint working. If employees could be realistically expected to work from either site, it is likely to be found to be fair to widen the pool.
A pool of one?
In some cases, there will only be one employee in the pool. This will happen where the type of work which is ceasing or diminishing is carried out by only one person.
In this case, the choice of pool will effectively be a decision to put that person at risk of redundancy. It is therefore very important to consult on the choice of a pool of one before confirming that decision. See our article: Redundancy consultation what should employers consult on and when? for an example of a case where this was a key issue.
If there is a pool of one employee there will be no selection process after consulting on and confirming the pool. You will then need to go on to confirm in writing that the employee is at risk of redundancy and consult with them on ways of avoiding or minimising its impact, including considering alternative roles.
Similarly, if there are no roles remaining after the redundancy process and all employees in the "pool" will be put at risk of redundancy, a selection process will not be applicable.
Tribunals will usually expect employees to be selected from a redundancy pool by the application of fair and non-discriminatory selection criteria. Acas guidance on selection for redundancy includes some useful pointers.
Other methods of selecting for redundancy, such as competitive interview, may be fair in particular circumstances but we recommend that you take legal advice before proposing such a process.
It is important always to consult with employees or their representatives on your proposed selection process before you set it in motion.
Pitfalls in the use of certain selection criteria
There is potential for discrimination and unfairness in using some selection criteria and you should consider changing these or taking steps to mitigate this risk. Examples include:
- Potential for age discrimination in a length of service criterion – this criterion can be used, but should have a lower weighting or be used as tie-breaker.
- If you are also using experience-related criteria, these should relate to exposure to different types of work rather than simply to length of service.
- Potential for discrimination in an absence-related criterion – leave because of disability, pregnancy, maternity and gender reassignment should not be included in absence figures for the purpose of redundancy selection.
- Absences linked to protected characteristics could also impact on appraisal information and achievement of targets – extend the time period for appraisal data where relevant.
- Potential for sex, disability, religion or belief discrimination in team culture related criteria, for example in the context of a drinking / social events related or long hours culture.
- Potential for sex or disability discrimination in criteria related to adaptability and flexibility.
- Potential for unfair dismissal where an expired disciplinary warning is taken into account for redundancy purposes and is the principal reason for dismissal.
Fair application of criteria
Employers should also ensure that the process of applying the chosen criteria and scoring employees is fairly carried out. Scoring should be carried out by more than one person against agreed criteria and employers should take steps to ensure scoring is consistently and rationally applied.
Keep a paper trail
Careful documentation of the selection process will be vital when dealing with any queries arising when consulting with employees about their scores, challenges to scoring decisions raised in an appeal, or when defending an employment tribunal claim.
When to take legal advice
Taking legal advice at the outset of a redundancy process when you are planning redundancy pools and selection processes will help to minimise the risks of having to back-track and change your plans. Waiting to take legal advice until later in the process can lead to difficult employee and trade union relationships, higher costs and greater risks of a claim.
How Wrigleys can help
The employment team at Wrigleys is expert in advising charities, third sector and education sector employers on redundancy policies and undertaking redundancy exercises, including collective redundancy consultations.
Importantly, we work within the wider charities, social economy, and education teams at Wrigleys and so we also have in-depth understanding of how our clients' governance and regulatory obligations impact on employment litigation risks and staff / union relations. Our CSE team can further help to minimise your risks by providing advice on charity law, trustee and director duties and delegation of powers, reporting to the regulator, and reputational risk
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.