Part three of ‘Seven things to think about when making redundancies’ series
3. Selection criteria
The employer also needs to be able to explain the basis on which the selection for redundancy was made in each particular case. This should not be based on purely subjective factors such as who the employer likes the most, but should as far as possible be based on an objective assessment of the attributes of an employee and how they match the future requirements of the employer.
Last in – first out or LIFO
Traditionally selection for redundancy was based largely if not exclusively on an employee’s length of service. The principle of ‘last in, first out’ – or LIFO – has the advantage of being completely objective with no room for favouritism or subjective opinion. However it has a number of drawbacks.
First of all, the employees with the longest service are not necessarily the best performing or most skilled employees and so placing too much reliance on length of service might result in the employer losing the employees who could actually be the most valuable to the business.
Secondly there is a danger that LIFO could be indirectly discriminatory. For example, many roles that have traditionally been done by men have in more recent years become more accessible to women. That almost inevitably means that women performing those roles will, on average, have shorter service than their male colleagues. Selection based exclusively on length of service could therefore result in women being disproportionately selected for redundancy.
This can also be the case with age where younger employees could, on average, be disproportionately adversely affected and selected for redundancy when compared to older employees. This has the potential for indirect age discrimination.
At the same time there is a general sense that disregarding length of service completely – so that no credit is given to an employee for long and faithful service to the employer – is going too far. It is common therefore for length of service to at least form some part of the selection matrix – perhaps operating as a tie-breaker when other attributes such as skills and performance are equal.
Performance in the job
Performance in the job is a perfectly fair criterion to use when making a selection for redundancy – but it needs to be applied carefully. Ideally there should be an objective basis for selection on this ground such as output, sales figures or a performance appraisal record. Employers should avoid scoring employees simply based on their own perception of the employee’s performance without evidence to back up their assessment.
Attendance is also a criterion that needs to be applied with care. It is perfectly reasonable to seek to retain employees with a reliable attendance record but employers should be prepared to make adjustments in the selection when poor attendance has been caused by an underlying condition that may amount to a disability. Care should also be taken to ensure that it is reasonable to view the employee’s past attendance as a reliable indicator of what will happen in the future.
An employee might have taken a lengthy period of sickness absence in the past year, but if that was the result of suffering an accident then there may be no reason to think that the absence will be repeated in the future. Another employee may have been absent for less time overall, but show a tendency to suffer short-term unexpected periods of illness with no underlying condition. That employee may be much more likely to have poor attendance in the future and so the measurement of sickness absence needs to be sophisticated enough to take these factors into account.
Disciplinary record, qualifications and experience
Other common criteria include disciplinary record, qualifications and experience. These have the advantage of being objective and easy to measure. But they do not always help the employer to choose those employees who are the best match with its future business needs.
Attitude, flexibility, and potential
Often what the employer is most interested in are qualities such as attitude, flexibility, and potential. They can be difficult to measure however, and often involve subjective judgments that can be difficult for the employer to explain. Managers relying on these criteria should be careful to support their assessments with as much objective evidence as possible. For example, an employer scoring an employee low on attitude should be able to point to examples of behaviour on the part of the employee that supports that assessment.
One issue to consider when choosing selection criteria is whether there is any potential for them to operate in a discriminatory way (as with length of service).
An employee’s willingness to work overtime might for example be something that the employer wants to take into account, but there is a clear risk that this could seriously disadvantage those with caring responsibilities (who are more likely to be women). If challenged, the employer would have to work hard to persuade a Tribunal that reliance on such a criterion was proportionate in the circumstances.
For legal advice about making redundancies contact Andrew Masters on 01227 763939 or email email@example.com