Redundancy — Selecting from the right pool

One of the most difficult tasks for employers in making redundancies is identifying the pool of employees from which it will select employees for redundancy.  Failure to consider the correct pool may render a dismissal unfair and leave employers open to claims for unfair dismissal.

The issue of fair selection arises where a group of employees carries out similar and interchangeable work.  In those circumstances, employees who carry out similar and interchangeable work should be pooled for consideration for redundancy.

One of the key factors in redundancy is that the position is redundant and not the employee.  It is important that an employer does not select certain people over others for redundancy, if the employees carry out similar or interchangeable work.  All of those employees should be included in the “selection pool”.  The procedure for selecting employees for redundancy from that pool must be objectively justifiable, fair and transparent.

Employees may seek to claim that they were unfairly selected for redundancy.  That unfair selection could be as a result of the employer incorrectly identifying the pool for selection for redundancy.

The pool is likely to be easy to identify in circumstances where there is a clear link between the work disappearing and group of employees who do that work.  However identifying the pool becomes more difficult where employees are multi-skilled and do a variety of tasks and are interchangeable with other employees.

Employers should consider the following points when identifying a pool for redundancy: –

• whether there are pre-existing selection criteria in contracts, agreed with unions or habitually used which may be considered a custom and practice;
• the type of work that is disappearing and the employees who carry out that type of work.  The pool should include all employees who carry out work of the kind which is no longer need;
• whether the employees carry out similar or interchangeable work on a day-to-day basis.  The pool should include employees whose jobs are similar to the employees for whom there is a reduced need.
• the extent to which the employees are doing similar work;
• the extent to which the employees jobs are interchangeable;
• in considering whether the employees’ roles are interchangeable, consider whether the employees are capable of doing each others work.  If the type of work that is disappearing is carried out by employee B, and employee A does similar or interchangeable work, consider including A in the same pool as B.  However, if employee B cannot do some of employee’s A role, it may not be appropriate to pool those employees;
• where the work is “low skilled”, the skills are more likely to be regarded as interchangeable;
• consider including employees doing work other than the type of work that is disappearing, where the employees whose work is disappearing could just as easily do that type of work.

There are no definitive rules about how to identify a pool for consideration for redundancy.  It is a balancing act between identifying a wide pool and risking damage to staff morale and identifying a pool which is too narrow which could leave the employer vulnerable to a claim for unfair dismissal as a result of unfair selection for redundancy.  The most important thing for the employer to be able to show is that the choice of pool was reasonable in the circumstances.  A prudent employer should explain the objective justification to the employees as to why they have been included in a particular pool.  If the employee does not object to being included in a particular pool at this juncture, it may assist the employer in defending a claim for unfair selection.