Common mistakes to avoid when considering redundancies

Over recent weeks we have seen an increase in requests for advice on how to manage redundancies. In this article, we look at common errors that occur in redundancy processes and consider how to avoid them. Getting the process wrong can result in costly claims for unfair dismissal.

Is it a genuine redundancy situation?

Redundancy has a legal definition and it arises only if there is a business closure, a workplace closure or there is a diminished need for an employee to undertake work of a particular type. A redundancy situation does not arise simply because an organisation is looking to cut costs. So, if you want to remove an individual to reduce salary costs it will not be a genuine redundancy situation if there is still a requirement for the work to be undertaken. To make an employee redundant based on cost-cutting alone (without the diminished need for the work) would be an unfair dismissal.

Inadequate consultation

Meaningful consultation is a key requirement in a redundancy procedure. It is always best to start the consultation at the earliest stage possible and grant employees an opportunity to shape the decisions on how to proceed. Giving employees the opportunity to provide input on elements such as the pool to be put “at risk,” selection criteria, and ways to minimise the impact of redundancy will show a meaningful process has occurred.

Use of subjective selection criteria

The choice of selection criteria will demonstrate the fairness and objectivity of a redundancy process. Criteria should avoid subjectivity, be objectively measurable and not discriminate against a member of the selection pool.  

The accepted selection criteria are:

• Job performance
• Skills
• Targets
• Qualifications, training & experience
• Absence record (excluding absences relating to pregnancy, maternity or disability)
• Timekeeping
• Disciplinary record

Unacceptable selection criteria include:

• Attitude
• Buy-in to company values
• “Someone who would keep the company viable” (the wording of criteria used by an employer who lost a tribunal claim) 

Unfair selection

Employers must note that although you may have chosen objective selection criteria they still need to be applied fairly. 

A tribunal judge has previously found that an employer who used an informal warning for unacceptable performance to give low marking to an employee’s scores under multiple five criteria in use had made an “obvious error in the application of the procedure.”  

Another unfair application of selection criteria would be to give an employee a low score for their performance when concerns about their performance have never been raised with the individual before. 

Tribunals have found such practices to be unacceptable.  

Failure to consider alternative roles

Another area not to be missed during the consultation is the need to inform employees who are at risk of redundancy of reasonable alternatives to dismissal. Especially, there is a duty for employers to inform those at risk of suitable vacancies in the organisation.  

It is important to check across the whole organisation on any current vacancies and not just in your immediate team or work location. You should ask managers (and your HR team if applicable) across the whole business to keep you informed on whether they have new vacancies or anticipate future vacancies. 

It will undermine your defence at tribunal if a claimant can show that other parts of your business were actively recruiting but they were not made aware of the suitable alternatives.

Gavin Parrott, Employment Law and HR Advisor

Source https://www.personneltoday.com/hr/redundancy-errors-businesses-must-avoid/