When costs have to be cut and losing staff is an obvious solution, the decision on who should be selected for redundancy can be a difficult one. A recent case, involving Mitchells of Lancaster v Tattersall was slightly unusual as it decided that in some cases an employer may be able to rely on subjective redundancy selection criteria.
Selection for redundancy
In this case Mr Tattersall was employed by Mitchells of Lancaster as part of 5 person management team. When the company hit troubled times and decided it needed to reduce the size of the management team, Mr Tattersall, as property manager, was selected for redundancy because he was not in a revenue generating role, nor was it felt that he had the skills to generate revenue.
At the first Tribunal hearing Mr Tattersall’s dismissal was found to be unfair because the selection criteria used were “wholly subjective and based solely on the views of the directors”. However, the Employment Appeal Tribunal disagreed that the selection criteria were inappropriate saying that although the selection criteria did involve a degree of judgment, this did not mean that they were unacceptable. It said that subjective judgments could still be capable of objective and dispassionate assessment, and selection procedures should not be limited to box-ticking exercises.
An unusual case
While this case acknowledges that subjective selection criteria can be used, it may be of limited application. Mitchells of Lancaster was a small company, in severe financial difficulty and the 5 employees in the pool were in senior management positions. It was reasonable on these particular facts to use subjective criteria. When trying to retain managers with the necessary skills to take the business forward, the use of subjective criteria may not make a dismissal unfair. However, in the vast majority of cases, it will still be fairer to use objective criteria.
Fair redundancy procedures
In order to dismiss an employee fairly on grounds of redundancy you first need to establish that a redundancy situation exists. This means that you are winding up your business completely, or ceasing to trade at the place where the employee works (for example you are closing one of your outlets), or you simply need fewer staff – for example you are cutting down the number of area managers from 5 to 3.
To ensure it is not an unfair dismissal it must be made for one of 5 statutory fair reasons and a fair procedure must have been followed.
Redundancy is a ‘fair reason’ for dismissal. In adopting a fair procedure you will be required to warn and consult any affected employees (or their representatives), fairly select for redundancy and seek to avoid or minimise redundancies by redeploying employees within your own organisation.
Selecting fairly who will be made redundant is one of the key aspects of avoiding a successful claim for unfair dismissal.
Example: If you have a team of 10 bar staff and you need to reduce this to 8 you clearly can’t just chose the 2 people who you like the least. A long line of cases has established that it is important to draw up a set of objective selection criteria. So the criteria should not be based on personal opinions and should be measured by reference to supporting data. All those in the pool for redundancy should be scored against these criteria. Commonly used criteria include skills and experience, standard of work, attendance and disciplinary record.
There is no doubt that times are still hard in the hospitality industry and it is a fact of life that operators are continuing to make redundancies. It is essential to handle these carefully so that the additional expense of Tribunal claims can be avoided.
The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.