Getting it right
Getting it rightOn 1 Dec 2001 in Personnel Today Previous Article Next Article Related posts:No related photos. Comments are closed. Employersmaking redundancies face far more risks than ever before, thanks to changes tothe unfair dismissal law. Christopher Mordue explains the practical andprocedural steps that will help employers protect themselves against suchliabilitiesUnfairdismissal claims are a constant hazard for employers. But in the currenteconomic climate, as employers in all sectors shed jobs at a higher rate,vulnerability to unfair dismissal claims is correspondingly increased. Sincethe last recession, the unfair dismissal regime has been transformed. Thequalifying period for bringing a claim has been reduced to one year. Manyfixed-term contracts no longer have valid waivers of the right to claim unfairdismissal if the contract is not renewed. The stakes are higher too, with thecurrent maximum award set at £51,700. While this maximum is rarely reached,awards are likely to increase to reflect the reduced availability ofalternative work. Fairnessis assessed by considering whether the process adopted by the employer, and thedecision to dismiss an employee through redundancy, lies within the range ofactions of a “reasonable” employer. The House of Lords has summarisedthe employer’s obligation as to “warn and consult affected employees ortheir representatives, adopt a fair basis on which to select for redundancy andtake such steps as may be reasonable to avoid or minimise redundancy byredeployment within their own organisation.” Thefirst critical stage in making redundancies is to choose the pool from whichredundancies will be made. Employers have a wide discretion here – a tribunalcan only deem the pool unfair if it was one which no reasonable employer wouldhave chosen. But if the pool is not reasonable, the dismissal will almostcertainly be unfair. There is a natural tendency for employers to define thepool narrowly, confining it to particular job descriptions, departments,business units or contracts, to avoid the need to apply selection criteria.This approach will not always be reasonable. Employersshould consider whether there are other employees, outside their proposed pool,who carry out similar types of work or have similar or interchangeable skills.What will happen to the work of the redundant employees? If it will be absorbedby another group of employees, that may indicate the need for a wider selectionpool. Similar employees, in other departments or working on other projects orcontracts, should only be excluded from the pool on strong commercial orpractical grounds, for example, because they have other essential skills,knowledge or customer relationships not shared with those in the selectionpool.Choosingobjective criteriaWhereselection for redundancy is required, the employer must use selection criteriawhich are as objective as possible. Typically, the criteria will includematters which are purely objective, such as length of service, attendancerecords and disciplinary records. However, the employer will wish to retainthose employees who can contribute most to the future needs of the business.The factors just mentioned would not, on their own, achieve this. It istherefore usual to use other criteria, such as skills, knowledge, expertise andexperience. Other common criteria include performance, attitude and flexibility.Some of these factors begin to introduce subjective measurements – that is, amanager’s own personal opinion of the employee or their work attributes.Subjectivity cannot necessarily be eliminated altogether, but the greater thelevel of subjectivity, the more likely that the criteria will beunreasonable. Howcan such factors be taken into account without an unreasonable level ofsubjectivity? The key is not so much the labels used, but how they are scored.”Performance” or “flexibility” on their own mean nothing.Each criteria should be broken down into an exhaustive list of specificmeasurements against which each employee is assessed. This prevents managersfrom applying their own definitions to these terms or taking different factorsinto account for different employees in the same pool. In the case ofblue-collar workers there may be existing data from which “quantity”and “quality” of outputs, “efficiency” and”accuracy” and so on, can be judged. For managers and otherwhite-collar staff, such data may not exist. Skills and experience may still betaken into account, but performance and other “output” based criteriashould only be used if they can be scored against details.Subjectivitycan also be reduced by avoiding “open” measurements which ask assessorsto make their own judgements. Instead, specific performance measurements shouldbe identified which are capable of a yes or no answer. If rating systems (forexample, scores from one to five) are used, managers must be given detailedguidance as to what each point on the scale means so the scope for personalinterpretation is removed. Selectioncriteria should also be applied consistently, and managers should be directedto specific sources of information which should be taken into account for eachemployee. Assessors should also be required to provide supporting evidence orcomments for each score they award. This can be very important in consultation,and ensures that there is a contemporaneous record of the assessor’s thoughtprocess. AvoidingdiscriminationWhenchoosing selection criteria, it is important to consider the risk ofdiscrimination claims. For example, pregnancy- and maternity-related absencesshould not be taken into account when attendance is assessed. If flexibility isused, this should not include matters such as an ability to work longer hours,work weekends or travel – factors which could disadvantage those with childcareor other domestic responsibilities and lead to claims of indirectdiscrimination. Even considering the range of tasks which employees canundertake may disadvantage part-time employees whose hours, or a commercialneed for continuity of input, restrict them from these tasks. Particularcare must be taken to avoid discrimination against disabled employees under theDisability Discrimination Act. The most obvious example is where a managerfails to discount disability-related absences from assessments of attendance.But disabled employees may also be disadvantaged in measurements of the qualityor quantity of their work, or criteria such as flexibility and performance.Employers should consider what adjustments they need to make to the selectioncriteria or their application to avoid discrimination or else ensure thatdifferential treatment is supported by justification. It is recommended thatspecific legal or HR advice is obtained before selection criteria are used, toidentify and resolve potential issues of discrimination. Theessence of individual consultation (see box for a suggestion of how this couldwork) is that at each stage the employee is aware of the process envisaged andthe reasons for their selection for redundancy, and has an appropriateopportunity at each stage to make comments or representations. Employers should also note that they must continuethe process of consultation, for example regarding alternative employment,during the notice period. It may be unreasonable to make payments in lieu ofnotice as this could deprive the employee of an opportunity to be consideredfor alternative employment arising during what would have been the noticeperiod. Onlyif no such opportunities are foreseen or the employee is not interested inpursuing these should you make a Pilon. Nor should employers assume employeesare not interested in working at other sites or for other group companies – theemployee should be left to decide the range of alternative employment to beexplored. In the case of women on maternity leave or disabled employees specialcare should be taken to offer suitable alternative employment where it exists,to avoid claims for discrimination or automatic unfair dismissal.Inlarge scale redundancies, combining offers of enhanced redundancy terms withcompromise agreements may be unwieldy. Employers may not wish to open up manydifferent negotiations with a wide range of legal advisers. If there is a tradeunion, it can provide the statutory advice for these purposes. Alternatively,the employer could suggest one or two firms to employees, while leaving themfree to find their own advice – otherwise the independence of the designatedfirms may be questioned. Individualconsultation – an outline–Each individual in the pool is advised of the reasons for the redundancies andalternatives to redundancy explored.–Individuals are advised of the selection criteria and their comments invited.They should also be advised of the process and timetable for making theassessment.–In particular employees are asked to provide any relevant information beforethe criteria are applied.–Assessments are carried out, preferably by more than one manager. These arereviewed by HR or a senior manager to check consistency of approach and thatcriteria are being properly applied.–A league table of employees in the pool is produced.–Potentially redundant employees are invited to a series of further meetings atwhich their assessment is reviewed in detail. The assessing managers should bepresent. Each score under the selection criteria should be explained andreference made to any supporting evidence taken into account. The employeeshould have time to reflect on the assessment and then raise any questions orobjections. These should be considered by management and a detailed responseprovided.–Alternative employment opportunities are then explored. The details of theredundancy package should be explained.–After allowing a suitable period for finding alternative employment, theemployer can give notice of dismissal. Employees may be given an opportunity toappeal against their selection.