The Government guidance and restrictions are constantly under review at the moment which is impacting the way in which employers will be running their business. We understand that, due to the great uncertainty at the moment, employers may be considering redundancies now or in the near future once the Government’s furlough scheme comes to end. We have therefore updated our redundancy blog series which was originally released last year with some useful tips and guidance on how to carry out a redundancy consultation process.
In Part 1 of our series of blogs we looked at when a redundancy situation might arise and gave an overview of both individual consultation (where there are fewer than 20 proposed redundancies) and collective consultation (where there are 20 or more proposed redundancies). Employers may now be wondering how employees at risk from redundancy should be selected and the focus of Part 2 is to explain how employers do this using a fair system which does not discriminate against any groups or individuals.
A selection pool is a group of employees from which those that will be placed at risk of redundancy are selected from. Selection pools are not necessary where redundancies arise as a result of the closure of the whole business. Where employers are proposing redundancies as a result of either requiring fewer employees to work of a particular kind or closure of a site then they will need to consider creating selection pools. A failure to do so may result in the subsequent dismissals being deemed unfair.
There are no set rules on how a selection pool should be created. Employers have some flexibility as to how they decide the pool – there is no one size fits all approach – provided they take steps to ensure fairness. However, employers will have to show that they thought about the scope of the pool, for example, is it only those employees in the roles affected that form the selection pool or is the pool widened to include any employees in roles which are similar or interchangeable to the roles affected? In the case of collective redundancies where trade union or employee representatives are involved additional measures may need to be taken around agreeing the pool.
Example: Bedrock Bakery employs 20 employees at its site in Dundee. They are considering proposals to make the bread-bakers in the business redundant due to a reduced demand. However, other bakers in the cake and pastry departments have bread making skills having either been previously trained on bread making or worked in the bread department from time to time to cover holidays. Bedrock Bakery needs to carefully consider whether the pool should be made up of only bread-bakers or all bakers across the various departments on the basis the skills are the same, similar or interchangeable. It is important that Bedrock Bakery looks at the work that its employees actually do and the reality of the situation, rather than just what the employees’ contracts say in theory that they may be required to do. Additionally, if Bedrock Bakery has more than one site then they may wish to look at including those in similar roles in other sites in the selection pool because it may be unfair to only include employees at one site within the pool, even if that site is closing completely.
Employers need to ensure that they use reasonable and objective selection criteria when determining which employees from the pool are provisionally selected for redundancy. Employers have discretion over which criteria to choose with the aim of retaining employees who are most valuable to the business. Common criteria include employees’ performance and ability, length of service, attendance records and disciplinary records. Criteria should be measurable and not subjective or based on opinion. Each employee in the pool is then scored against each of the criteria (a weighting system can be applied) and the employees with the lowest scores are provisionally selected for redundancy.
Employers must also be careful not to avoid discrimination in both selecting and applying the selection criteria, for example, because of an employees’ age, gender or if they have a disability. Importantly, in the current climate ACAS has warned employers not to select employees for redundancy simply because they are shielding due to the Coronavirus pandemic as this could be deemed to be disability or age discrimination.
Example: Bedrock Bakery identifies its most important selection criteria as being the quality of work/bake produced by an employee and attendance records. They feel length of service is less important. Each criterion is scored out of 5 but quality is given a weighting of x3 and attendance is given a weighting of x2. Length of service is given a weighting of x1. Everyone is scored using the most up to date appraisals and attendance records and to ensure that no employee who has been absent for a disability-related reason is discriminated against, they decide to discount all disability-related absences. Adopting this strategy ensures only those employees who do not meet the needs of the business are provisionally selected for redundancy and avoids any potential disability discrimination claim.
Conducting the selection process can be challenging for employers however, if you need any advice about carrying out a redundancy exercise, get in touch with Blackadders’ Employment Team working in Aberdeen, Dundee, Edinburgh, Glasgow, Perth and across Scotland.
Donna Reynolds, Partner
Accredited by the Law Society of Scotland as a Specialist in Employment Law & Discrimination Law
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