Where redundancies are to be made from among a group of employees who perform broadly interchangeable roles, the employer should first determine the selection pool.
Choosing an appropriate pool can be one of the most difficult issues to get right. If it is too narrow, this can expose employers to claims of unfair dismissal or possibly discrimination. However, a wide pool is likely to have a more detrimental impact on morale and require more time from management and HR in terms of overseeing the process.
It is often beneficial for employers to keep pools narrow and have as few ‘at risk’ employees as possible. The risk with this approach, however, is that those employees included within the pool may claim that the pool should be wider, as this will usually lower the risk of their being dismissed.
What are the risks?
If an employer dismisses an employee without even considering a selection pool, the dismissal is likely to be unfair. If an employment tribunal claim is brought, the employer could incur significant costs in defending the action and potentially reputational damage if the result is not favourable.
It is common for employees to challenge the employer’s decision about the how the pool is defined when bringing a claim for unfair dismissal, or in the first instance complaining to the employer.
As well as claims for unfair dismissal, those employees ultimately made redundant may have claims for discrimination if, for example, the way in which the pool has been defined can be shown to have an adverse impact on younger, older or part-time employees.
How do employers avoid claims?
Tribunals will not typically interfere with an employer’s decision on the size and make-up of the pool if it can show that it acted within the ‘range of reasonable responses’ in making that decision. Provided an employer can show it has genuinely applied its mind to the pool, it will be usually be more difficult for an employee to challenge that choice.
There are no absolute rules as to how a pool should be devised or how many employees should be included. A sensible starting point is to establish what type of work is ceasing or diminishing and then what each employee actually does on a daily basis, as well as the terms of their contract.
Employers should then consider which employees are doing similar work and which employees' jobs are interchangeable. Employees are more likely to challenge a redundancy dismissal if they can point to other staff, who were not in the pool, with whom their skills are interchangeable. In some circumstances, it may be appropriate for an employer to consider including an employee in the pool who is not doing the kind of work that is in decline if their role could be performed by another employee who is doing such work.
It can be permissible to have a pool of one. This will generally be the case where the employee’s job can be shown to be unique. It might also arise where an employee’s role is restricted to a certain territory.
Choosing a redundancy selection pool is not always a straightforward process. Employers should ensure they are able to justify their decisions to minimise the risk of claims being brought.
Jeremy Coy is an associate in the employment team at Russell-Cooke