Redundancy Selection
Changing market conditions and the introduction of new technology mean that there is a steady stream of redundancies even if new jobs are being created in other businesses. When faced with the need to make redundancies, there are often a number of employees undertaking fairly similar work all of whom could potentially be made redundant. The business has to determine which employees will be made redundant and which will be retained.
The traditional method of redundancy selection has been ‘last in, first out' and the effect of this simple system is that those with the shortest service are made redundant and those with the longest service are retained. This method of selection is still acceptable and is regarded by the Employment Tribunal as fair. However, it has become unpopular because the effect of applying ‘last in, first out' can mean that some of the most capable employees with the best employment records are selected for redundancy. In addition, since the introduction of the Employment Equality (Age) Regulations 2006 it has been suggested that selection on a ‘last in, first out’ basis could potentially discriminate against younger employees.
As an alternative, most companies will now determine selection for redundancy by means of a performance matrix under which all employees who could potentially face redundancy are scored under various criteria. These criteria will traditionally include assessment of various competencies along with assessment of attendance/sickness records and disciplinary records. The consequence of this method of selection is that those selected for redundancy will be those employees with the least good employment records.
The performance-based selection system is made more attractive to businesses since it is regarded as basically valid by the Employment Tribunal provided that there is a proper system in place and it has been implemented in good faith. The Employment Tribunal will be very reluctant to interfere with the employer's judgements about the scores given to individual employees since it is simply not practicable to do so for all employees. In most cases, it will be very difficult for employees to succeed in claims for unfair dismissal on the basis that the scores given to them under the performance matrix were unjustified.
From the point of view of employees, the demise of ‘last in, first out' has meant that redundancy has become a very different experience. Instead of being experienced as ‘an act of god' many employees now regard redundancy as representing a personal attack on their performance and will leave their jobs with some bad feeling. However, the difficulties that arise for employees have not stopped businesses taking the view that redundancy selection on performance based criteria is the best way of ensuring the future viability of the business.
October 2008
This article gives a general overview only and the legal position at the time of writing this article. It cannot be relied upon in any particular case. Specific legal advice must always be considered to include consideration as to whether the legal position contained in this article has changed since going to print. For further information and advice, please contact Paul Archer or Lauren Harkin on 01793 527141 or alternatively by email on Paul.Archer@lemon-co.co.uk or Lauren.Harkin@lemon-co.co.uk.
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<p><strong><a href="http://www.lemon-co.co.uk/article_redundancy-selection.php">Redundancy Selection</a></strong><br />
Changing market conditions and the introduction of new technology mean that there is a steady stream of redundancies even if new jobs are being created in other businesses....</p>
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