Redundancy dismissals - the importance of a fair process

Mark Minns, 22 November 2008

Redundancy is perhaps the most topical area of employment law. Many businesses are suffering from the effects of the current market, and many have to make difficult decisions about the number of employees that they will need in the future.

In the event that an employer identifies that there is a need to reduce headcount, it is essential that proper process is followed. Often those processes involve a need to reduce numbers in a team, or some other group of individuals undertaking comparable roles. In such cases employers often use a set of criteria (a skills matrix) to determine those employees that will remain with the business and those that will be made redundant.

A recent case (E-Zec Medical Transport Service Limited v Gregory) has considered the fairness of the consultation and selection process that led to the redundancy of Ms Gregory.

Ms Gregory was employed as an administrator and ambulance driver by E-Zec Medical Transport Service Limited ("EMTS"). EMTS took a decision that due to a downturn in work they would undertake a process of redundancy consultation. In short, they had a need to reduce headcount. In the process proposed by EMTS Ms Gregory was one of 14 affected employees, 4 of whom were to be made redundant.

As is usual in such cases, EMTS had to decide which of the 14 affected employees would stay, and which would be made redundant. In order to do so EMTS applied a scoring matrix that took into account criteria such as service, absence, sickness days, performance, commitment and team working.

Unfortunately for Ms Gregory, she was identified as being one of the 4 employees out of the 14 that was to be made redundant. Ms Gregory subsequently claimed in the Employment Tribunal that she had been unfairly dismissed due to a flawed selection and consultation process, and also claimed that she had been discriminated against on the grounds of her sex.

Unfortunately for EMTS, the Employment Tribunal found that Ms Gregory had been unfairly dismissed, and the Employment Appeal Tribunal supported this finding. In reaching that conclusion the Employment Tribunal and the Employment Appeal Tribunal identified a number of failings on the part of EMTS, each of which is a useful reminder for any employer undertaking a redundancy process.

In particular:

(i) Ms Gregory was simply told how she would be scored under the scoring criteria. No discussion took place with Ms Gregory as to the method of selection, the criteria to be adopted or the marking process. This was a risky strategy by EMTS as a failure to try and agree scoring criteria prior to a scoring process risks a suggestion that there is a pre-determined outcome. Secondly it also risks a situation where an employee identifies one or more inappropriate or discriminatory criteria having been scored. In such a circumstance the employer would have little option other than to re-score all affected employees with new criteria, thereby delaying the process.

(ii) The scoring criteria used were subjective and incapable of any independent verification. The scoring manager was unable to link his scoring to company documents such as appraisals and had not spoken to other managers about his scores for verification purposes.

(iii) The scoring manager had not made any notes as to the scores that he had awarded. This made it impossible for there to be a determination that the selection criteria used had been fairly applied. In such a situation it is very difficult for the scoring manager to give credible evidence at an Employment Tribunal as to why certain scores were awarded, especially when the hearing may be six months to a year from the date when the scoring process took place.

(iv) Ms Gregory was invited to a series of consultation meetings, the last of which took place on 12th January 2007. That meeting was described as a consultation meeting, but at the end of the meeting Ms Gregory was handed a pre-prepared letter that stated that her employment was to be terminated. This did not sit well with the idea that the meeting was to be a consultation meeting, and gave the clear impression that the outcome was pre-determined.

(v) At the appeal hearing, the person determining the appeal did not speak to the manager that scored Ms Gregory to establish how the scoring was done nor whether there were any notes from the scorer to support the scoring. Despite this Ms Gregory’s appeal to EMTS against her dismissal was dismissed and the consultation process was described in the internal appeal outcome as fair and transparent.

This case provides a salutary lesson for employers that may wish to undertake a redundancy exercise without following due process. Given that compensation in unfair dismissal cases is usually linked to losses of earnings, and that alternative employment is now much harder to find, it seems certain that the amount awarded as compensation in unfair dismissal claims will rise.

That can only be bad news for employers that may be struggling to make ends meet in this climate in the first place.