Redundancy selection - Employment Appeal Tribunal
First published in CSR Law Report on 28 March 2012
An Employment Tribunal can scrutinise the decision of an employer as to how the redundancy selection pool is determined.
Ms Byard (B) was employed as an actuary by Capita Hartshead Limited (C) from September 2007 until she was dismissed by reason of redundancy in December 2009.
In May 2009 it became apparent that the number of clients for whom B would act as Scheme Actuary was going to diminish and that she would be working for clients whose assets totalled £6 million rather than £47 million as had previously been the case.
C made attempts to find new work for B but was unsuccessful in doing so. It was C's view that the bulk of the work that had reduced was identifiable with B. B was told that she was at risk of redundancy and that the selection pool would consist of B alone. B disagreed that this was an appropriate selection pool and stated that the pool should consist of four: B, her line manager and two other scheme actuaries.
The Tribunal agreed with B. C appealed to the EAT primarily on the basis of Taymech v Ryan where it was held that the question of how the selection pool should be defined is primarily a matter for the employer to determine.
The EAT upheld the Tribunal's decision. It confirmed that the question of how the pool should be defined is primarily a matter for the employer to determine. It would be difficult, but not impossible, for the employee to challenge it where the employer has genuinely applied his mind to the issue of who should be in the pool from which a person is to be selected for redundancy. In this case the redundancy pool should have included other scheme actuaries because they did similar work, B's performance had not been criticised and the chance of C losing business if the Scheme Actuary was changed was found by the Tribunal to be "slight".
This is a useful case as it provides clear guidance to employers on how to choose the selection pool for redundancies. It is not for the Tribunal to decide whether they thought it would be fairer to have acted in some other way. The question is whether the dismissal lay within the range of conduct a reasonable employer could have adopted and the reasonable response test applies to the selection of the pool from which the redundancies were to be made. There is no legal requirement that a pool should be limited to employees doing the same or similar work. The question of how the pool should be defined is primarily a matter for the employer to determine although the Tribunal is entitled to consider the reasoning of the employer to determine if the employer has genuinely applied his mind to the issue. If the employer has it will be difficult for the employee to challenge this. Employers are well advised to think carefully about how the selection pool will be formulated and to document their thought processes clearly.
Capita Hartshead Limited v Byard
Jennifer Platt, Associate, in our Employment and Pensions Group at Field Fisher Waterhouse LLP