Keeping it simple in redundancy selection can sometimes be the safest option

The recent case of Mental Health Care (UK) Ltd v Biluan and another has provided useful guidance on how best to go about designing a fair method for selecting who should be put at risk of redundancy.

Mental Health Care ("MHC") operated a small residential hospital for patients with mental health and learning disabilities. The Claimants were employed as a Nurse and a Support Worker.

In late 2010, MHC recognised a need to close one of its wards at the hospital, which resulted in a situation where 19 potential redundancies were required. They identified a redundancy selection pool of 58 employees in total, which comprised of Nurses and Support Workers. During consultation, those in the pool were informed that at risk staff would be selected on the basis of a marked assessment by reference to three criteria, namely a competency assessment, disciplinary record and sickness absence record. The competency assessment was further sub-divided into a risk assessment, an interview and a verbal group assessment. So a straight forward selection process then!

MHC’s above methods of assessing competency were not new to the business however, as they were already used by HR in general recruitment. This meant that the redundancy competency tests were carried out by HR staff, none of whom had any experience of working with the employees and nor did they obtain the input of the employees’ direct managers.

During the redundancy assessment process, the managers of affected staff noted that there were some surprising results with many ‘very good workers’ selected for redundancy. Unsurprisingly then a number of the employees who were later made redundant brought claims for unfair dismissal, which were ultimately successful on the basis that past performance was not taken into account as part of the selection process.

MHC appealed the unfair dismissal finding, but unfortunately for this business the Employment Appeal Tribunal agreed with the original decision. The "EAT" felt that the HR team had used an over-elaborate procedure in which it was difficult to show that it had been consistently applied. The EAT also held that it was highly unusual for an employer to base its redundancy selection process entirely on competency tests without any reference to past appraisals or the views of line managers. Moreover, the EAT considered that when surprising results were produced this should have raised alarm bells and prompted MHC to assess the accuracy of its system, rather than it simply putting its blind faith in the process.

This case demonstrates that when a redundancy selection process is carried out, reference to past performance should be given, as well as appraisals, and it highlights the importance of the views and assessments of line managers.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.