How do I select the pool for redundancy?

If your business has to make the difficult decision to make redundancies, there is a set process you are required to follow.  This will be a challenging time for both you and your employees as you face an uncertain future, but following this procedure will ensure fairness and reduce the risk of tribunal claims against you.  Our Employment Law team here explains the initial part of that process which is selecting the pool for redundancy, highlighting how you make the selection, how to choose which of those in the pool are to be made redundant and how to avoid potentially discriminatory decisions. 

Choosing which employees to take through the redundancy process

There are certain criteria which you must adhere to in order to decide which employees are selected for the redundancy process. The first step is to identify the ‘pool’ of employees from which you are going to select people for dismissal due to redundancy.

As long as it is clear that you have applied logic to the definition of your pool, the Employment Tribunal (ET) will be fairly relaxed and will only seek to ascertain whether it is clear that it is only those who fall within the definition you have chosen that have been included in the pool.

Usually the pool will be defined in someway by job role and/or geographical area; you may be looking to reduce the head count of employees with the same job role in a certain office, or you are closing a whole office or site and so every person based there is at risk.

If your decision is job role based, the ET will look as to whether you have also included roles with the same or similar duties where there have been interchangeable skills used.  For example, this would be particularly pertinent in sales based roles where the only difference between two sales people is the product or service they are selling.  In this scenario, you may need to include both sales people if the job role you are looking to reduce is the sales team.

Each employer will view things slightly differently and how wide or narrow the pool is will be up to you. You should ensure you have an adequate paper trail which confirms your thought processes behind the redundancy pool as it will help the ET to see that you have complied fairly, that your decision has been made within the range of reasonable responses and it will help with any defence of an unfair dismissal claim.

Can I have just one person in the redundancy selection pool?

Yes you can; this is called a singleton pool. They are often quite common in redundancy situations and may arise where you have only one person who does a particular role or where all the people who do the same role are being made redundant. There will be no need to follow the objective scoring criteria as you are not choosing between employees and are instead making the individual in the pool redundant. You should however still follow a consultation process with the individual involved.

Despite this, there is a risk with singleton pools whereby the employee may view it as being targeted especially if they have protected characteristics.  In order to avoid this situation, you should write a note to the employee explaining why their role is no longer necessary and the reason identified for the potential redundancy.

How do I choose which employees in the pool to make redundant?

Most employers will identify a list of criteria that they assess employees against and then list the employees in order of their scores.  It's usually best for you to create a selection matrix to grade and compare objective criteria, also compiling as much evidence as possible to support your decision.  It is more likely for the ET to find dismissals unfair due to the selection criteria being viewed as unfair. Examples of selection criteria that are objective and can be supported by evidence are:

• attendance records,
• disciplinary records,
• skills or experience,
• relevant qualifications.

When considering the scoring guide to accompany the selection matrix, one example would be if you have disciplinary record as one of your criteria, a note to your managers that says score 5 for a clean record, 4 for a first written warning, score 2 for a final written warning will give a clear indication of how to score against the criteria you have devised.  Those with the lowest scores after the objective scoring criteria exercise has been carried out will be the ones to be selected for redundancy.

Data protection is key during the redundancy process, so you should ensure that all of the information related to each employee is processed in accordance with your Data Protection Policy and employee privacy notice.

How can I avoid discrimination in the redundancy process?

No employer will knowingly base their decision on a discriminatory factor; however this can inadvertently be done.  For example, the ‘Last In First Out’ basis of selection is no longer viewed as a justifiable basis for redundancy amongst ETs as it could be seen as discriminatory on the grounds of age; an employee has to be of a certain age to have been able to have worked for you as long as your longest serving employees. 

Objectivity is the most crucial part of the selection criteria and this will assist you with making non-discriminatory decisions as criteria can easily have an adverse impact on an employee who has a disability or is on maternity leave or other family leave periods.  When employees are being assessed on the basis of performance as recorded in their latest appraisal for example with those who are on maternity leave you need to consider how to adjust their scores to reflect their period of absence.

 As the furlough scheme enters its last month, it is likely that we will see more redundancies in the coming weeks and months, and so it is vital that you consider the options open to you and your employees.  If you are considering making redundancies and are seeking clarification on any issues, you can contact our Employment Law team by calling 023 8071 7717 or emailing employment@warnergoodman.co.uk.  Alternatively, you may be interested in the following articles:

• How do I carry out individual or collective redundancies?
• How do we decide who to put at risk of redundancy?
• Can I re-employ someone I made redundant?
• Can I make a woman on maternity leave redundant?

To receive regular Employment Law updates from the team regarding recent tribunal cases and legislation updates, you can subscribe to our weekly Employment Law Newsletter by completing our subscription form or emailing us at events@warnergoodman.co.uk. 

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.