An employer has a large degree of discretion in the criteria it adopts to select the individuals who are to be made redundant. In order to meet the requirements of unfair dismissal law, an employer need only ensure that the criteria it uses are reasonable and, as far as possible, capable of objective measurement, and that it consults about them with its appropriate employee representatives.
Criteria that are commonly used include length of service, attendance record, job performance, adaptability and disciplinary record. However, if you use length of service as a selection criterion you risk unlawfully discriminating on grounds of age. It may be easier to meet the test of justification, therefore avoiding unlawful discrimination, where length of service is used only as a 'tie-breaker'. Many employers now use matrices for redundancy selection, scoring employees against several factors. Companies can obtain advice on appropriate selection criteria from their Association.
A company may already have a redundancy procedure or a redundancy agreement with its recognised trade union that lays down certain selection criteria. If that part of the procedure or agreement has been incorporated into employees' contracts of employment and the company decides to use different criteria, the company could face breach of contract claims from individuals who would not have been selected for redundancy had the original criteria been used. Even if the criteria are not contractual, a company could face unfair dismissal claims if it departed from them without good reason for doing so. A company that is considering departing from an established selection procedure should therefore contact its Association for advice.
It is important to note that it is automatically unfair to select an employee for redundancy for certain inadmissible reasons, regardless of the employee's age or length of service. These reasons are listed in full elsewhere in this Guide (automatically unfair reasons for dismissal ). One of the inadmissible reasons, for example, is pregnancy and maternity. It would be automatically unfair to select an employee for redundancy on the basis of her poor attendance record, if she would not have been selected had she not been absent on pregnancy-related sick leave or maternity leave. Pregnancy- and maternity-related absences should therefore not be taken into account in scoring absence in a redundancy selection matrix. Likewise, it would be likely to be unfair to dismiss a woman for redundancy if it was her absence on maternity leave that had led the company to conclude that it did not need her job.
Before finalising its selection criteria, a company should ensure that they are not discriminatory. Selection criteria that discriminate directly or indirectly on the grounds of sex, race, age, religion or sexual orientation are unlawful. If an employee was selected for dismissal for reasons relating to her pregnancy, for example, she could claim direct sex discrimination as well as unfair dismissal. Avoiding discrimination against disabled employees in a redundancy exercise is discussed separately (disabled employees).
Employers are unlikely to choose selection criteria that are directly based on sex, race, age, religion or sexual orientation; indirect discrimination is the greater danger. The concept of indirect discrimination is explained elsewhere in this Guide (indirect discrimination). In essence, it means that a company must be able objectively to justify the use of a selection criterion that puts people of a particular age, sex, race, religion or sexual orientation at a particular disadvantage. For example, using a criterion such as ability to be flexible in hours or place of work is likely to work to the disadvantage of more women in the workforce than men. The company would therefore need to show why it had a business need to retain employees with that degree of flexibility. Using 'last in, first out' might also have a disproportionate impact on women, if the jobs that are being cut have traditionally been seen as 'men's jobs' and the company has recently been successful in attracting women into them. Likewise, a length of service criterion would be likely to have a bigger adverse impact on younger employees than older employees. If it had this effect, then it would need to be justified, which is likely to be very difficult if alternative non-discriminatory criteria are available.
A company that decides to select part-timers for redundancy before full-timers will need to be in a position objectively to justify its decision. Unjustified discrimination against part-timers is not only likely to be indirect discrimination against women but is also expressly outlawed by the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (part-time workers regulations ).
Likewise, the Regulations on fixed-term work make it unlawful to select fixed-term employees for redundancy before permanent employees because of their fixed-term status, unless the employer can objectively justify this (equal treatment principle ). The Government guidance on the Regulations ( Contracts of employment links ) suggests that where fixed-term employees have been brought in specifically to complete particular tasks or to cover for a peak in demand, the employer is likely to be justified in selecting them for redundancy, if this happens at the end of their contracts.
In some circumstances, a company may wish to invite all the employees who are within the redundancy selection pool to apply for the jobs that will remain. If the company adopts this approach, it should bear in mind that the employees who do not apply, or who apply but are not successful, will effectively have been selected for redundancy. It must therefore be confident that it will be able to demonstrate that it has acted reasonably in selecting those employees.
Redundancies can arise where a company decides to cut jobs involving work of one particular kind and create new jobs doing work of a different particular kind, as discussed elsewhere in this Guide ( 'Work of a particular kind' ). In these circumstances, the company is effectively making all the employees in the old jobs redundant, and so it is, in theory, free to fill the new posts as it sees fit. It may decide, for example, to fill the new posts by inviting employees in the old jobs to apply for the new posts, or by external recruitment.
In practice, however, if the company does not offer the new posts to the employees who are being made redundant from the old jobs, it is likely to face claims for unfair dismissal. These can be made on the basis that it would have been reasonable to consider those employees for alternative employment before deciding to dismiss them (considering alternative employment). Therefore, if the company decides not to offer the new jobs to the existing employees, it should be prepared to show why the individuals were not considered suitable for the new posts.