If your employer believes they need to make redundancies, they will need to follow a fair procedure before deciding who to make redundant.
This includes choosing the right criteria by which they can decide which of their staff to make redundant. This article explains the types of criteria your employer should be applying.
Objective v Subjective Criteria
Should your employer use objective or subjective selection criteria?
Objective means relying on hard facts that are easy to measure.
Common objective criteria include:
- length of service
- disciplinary record
- skills and qualifications
Subjective means impressions or judgments that may vary from one manager to another. Subjective criteria are often more vague and may include qualities such as:
- company values
These subjective criteria are more difficult to measure.
Ideally, your employer should use objective criteria. However, the commercial reality is that employers can’t always assess an employee against objective criteria. As in area of business development, there’s always room for personal judgment and opinion.
There is no obligation on an employer to use objective criteria. However, employers do have to use reasonable criteria and score people reasonably. This may be easier for your employer to prove if they have applied objective selection criteria.
Clarity of Criteria
In order to score employees properly, the criteria need to be clear. The following criteria are likely to be too nebulous:
It will be difficult for managers to score employees accurately with such vague criteria.
Sometimes, however, an employer can use less specific criteria, provided they also provide a scoring guide which explains what sort of thing managers should be looking for when deciding what score to give.
The matrix method
In simple terms, the matrix method of scoring means scoring the employees against each of the chosen criteria and adding up the scores at the end.
Some employers use a very simple matrix of, perhaps, only 3 criteria. A simple matrix is easy to understand, both for managers doing the scoring and employees at risk of redundancy.
Others use a much more complex matrix. Although this may be more difficult to understand, having more variables can help to ensure the employer selects the best employees to remain.
Having carried out the scoring exercise, your employer can then make a reasonable decision as to who should be made redundant. Although you are entitled to see the scores you have been given, your employer doesn’t have to show you how your colleagues were scored.
Arguably, a reasonable employer should at least let you know the “break point” – that is the scoring you would be expected to achieve in order to avoid redundancy.
Length of service – “Last in First Out”
Last in First Out (“LIFO”) used to be the most common criterion for selecting staff for redundancy. It’s the method with the least room for subjectivity.
However, LIFO has the potential to be unlawful because the last in are generally the youngest, which means an employee may be able to bring an age discrimination claim.
These days, it’s probably fair for employers to use length of service as a ‘tie breaker’ if employees are equal on other criteria. However, it shouldn’t be used as the sole or dominant factor,
Performance and skills
Performance in the job is a perfectly reasonably criterion to use when selecting employees for redundancy.
However, the employer does need to make sure they have clear performance data, such as sales figures or productivity targets. Otherwise, it will be difficult for an employer to justify their decision.
Absence related criteria
Absence records can be used as redundancy selection criteria, provided that the employer does not take account of absences resulting from:
- maternity leave
- parental leave
- time off to care for dependents in an emergency
Employers can include sickness absence but may need to make adjustments for employees who suffer from a disability.
Absence should be measured over a long period, ideally between one and two years.
Cost to the business
Often an employer will want to take the approach of selecting employees for redundancy on the basis of cost saving.
This can work in two ways:
- The employer may want to make redundant those employees who earn the most in order to avoid having to pay their salary in the future
- Alternatively, they may want to dismiss those staff with the the shortest length of service because that will mean lower redundancy payments.
There’s nothing wrong with an employer taking account of cost to the business as a factor in determining who should be made redundant. However, it shouldn’t be the only factor.
Other criteria that employers may want to apply include:
Your employer can include flexibility as long as they can measure it properly and it’s based on real examples.
The flexibility expected from the employee, such as willingness to move to a different workplace, would need to be reasonable.
It’s fine for an employer to take into account an employee’s disciplinary record. However, they shouldn’t include expired warnings.
Part time workers
Your employer should not usually take into account whether an employee is part time.
This is likely to be discrimination against part-time workers, which is in breach of the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000.
Automatically Unfair Reasons
Some criteria are automatically unfair and can’t be justified. These include selecting an employee because they:
- refused to work in a dangerous situation
- was a shop worker and refused to work on Sundays
- rejected a request to work more than 48 hours per week
What happens if your employer doesn’t apply fair selection criteria?
If your employer doesn’t apply fair selection criteria, this may be a ground for you to claim unfair dismissal. Alternatively, if they choose fair criteria but score you irrationally, this may also give rise to a legal claim.
Even if you would prefer to avoid the hassle of an employment tribunal claim, you may be able to persuade your employer to pay you more money by using the threat of an unfair dismissal claim as leverage in negotiating a settlement agreement.
There are a number of reasons why a settlement agreement is usually a better option than an employment tribunal claim.
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