Redundancy and the ‘pool of one’

Employers should beware applying a single criterion for redundancy selection, warn Hannah Netherton and Aisleen Pugh

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In Mogane v (1) Bradford Teaching Hospitals NHS Foundation Trust & (2) Karen Regan (2022) the Employment Appeal Tribunal (EAT) ruled that an employee who was selected for redundancy based on when her fixed-term contract was up for renewal was unfairly dismissed. The employer was found to have taken a decision to select for redundancy based on a single criterion, which inevitably created a selection ‘pool of one’. This undermined the fairness of the consultation process.

The claimant was one of two Band 6 nurses who were employed by the trust on fixed-term contracts to carry out similar roles. The second nurse’s fixed-term contract was due to expire after the claimant’s contract. 

A redundancy situation arose because of financial difficulties that required a reduction in staff. The claimant was invited to a meeting and informed about the trust’s financial difficulties. The trust then decided that, because the claimant’s fixed term contract was set to expire first, she would be made redundant. This meant that the expiry date of the claimant’s fixed-term contract was the sole criterion applied and she was placed in a pool of one. Consultation then began but only once that decision had been made. No suitable alternative employment was found for the claimant and she was ultimately dismissed by reason of redundancy. 

The claimant brought a number of employment-related claims, including for unfair dismissal, against her employer. The unfair dismissal claim was initially dismissed by the employment tribunal, but this decision was later overturned by the EAT.   

The EAT found that, once the decision had been taken by the trust that the employee whose contract was up for renewal first should be the person placed at risk of redundancy, it was inevitable that the claimant would be placed in a pool of one and the consultation process that followed was meaningless. The trust’s decision to apply a single criterion for selection resulted in the fait accompli of the claimant being dismissed, which was procedurally unfair. 

It is well established that, for a redundancy dismissal to be fair, consultation must take place at a formative stage of the redundancy process when it can be meaningful and genuine. The EAT found that this did not happen here. The claimant was not given an opportunity to put forward her views and potentially affect the outcome of the process.  

The EAT also considered that the trust’s approach to selection was contrary to the implied term of mutual trust and confidence because it was arbitrary and not fair as between employees. 

Before selecting an employee for redundancy, an employer must decide on the appropriate selection pool. Employers have a wide discretion over the selection pool, and a pool of one can be fair. However, where a narrow pool, and in particular a pool of one, is chosen it is more likely to be challenged by employees. It is particularly important for employers to be able to demonstrate that a fair procedure was followed to reduce the risk of unfair dismissal claims succeeding. 

Where a selection pool could naturally include more than one person, choosing a selection criterion that will inevitably lead to a pool of one is more likely to fall outside the band of reasonable responses. 

A decision to apply a single criterion for redundancy selection is unusual. Tribunals will expect to see contemporaneous evidence that such a decision has been given careful consideration by an employer. A more conventional, and less risky, approach would be to adopt a range of objective selection criteria such as performance and ability and length of service. The way in which the employer communicates the process to the individual during consultation is also key to successful risk management.

Hannah Netherton is a partner and Aisleen Pugh a professional support lawyer at CMS