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Subject To Redundancy

In this month’s newsletter I referred to a case which said that a company can use subjective criteria when recruiting for an alternative position as an alternative to redundancy. However, for the purposes of redundancy selection the criteria should be objective.

But in Mitchells of Lancaster (Brewers) Ltd v Tattersall the EAT was asked to consider whether subjective redundancy selection criteria are bad. The answer is ‘not necessarily’; redundancy selection criteria involving a degree of judgment are none the worse for that. These are the facts. Mr Tattersall was one of five members of the company’s senior management team.

In 2010, the Company’s trading position and cash flow deteriorated and the directors decided they had to make savings. At a board meeting on 15th June, they decided to look at whether redundancies could be made at SMT level. At a further board meeting on 6th July 2010 the board agreed to restructure and discussed each of the five SMT roles.

They concluded that if they cut the role of Mr Tattersall, it would have the least detrimental impact because it was not a role which generated revenue. The company undertook four consultation meetings with Mr Tattersall before making him redundant. His internal appeal was unsuccessful and he complained that he had been unfairly dismissed.

In the first instance the Employment Tribunal found that Mr Tattersall had been unfairly dismissed and said one of the reasons was that the criteria used to select Mr Tattersall for redundancy was “indefensibly subjective”. The company appealed. Whilst the EAT upheld the finding of unfair dismissal, it disagreed with the Tribunal's criticism of the company's subjective selection criteria, based on assessing which role in that team could be lost with the least effect on its business.

The EAT noted that '...just because (subjective) criteria...' '...are matters of judgment, it does not mean that they cannot be assessed in a dispassionate or objective way...', further noting that '...the concept of a criterion only being valid if it can be "scored or assessed" causes us a little concern, as it could be invoked to limit selection procedures to box-ticking exercises...'.

The court went on to say that for a relatively small company in serious financial difficulty, it was hard to see how it was inappropriate for the Respondent to apply the criteria used, holding that those criteria were 'unexceptionable'. So while it’s wise to be as objective as possible, it seems that employers can, in certain circumstances, apply what appear to be subjective criteria in selecting an employee for redundancy. But avoid selection criteria based upon personal opinion.

In this case, the employer did not use criteria such as attendance or disciplinary records; however the employer did assess at board level that, objectively, the redundant role would cause the least detriment to the business.

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