We have discussed in previous blogs when and how a redundancy occurs. When making an employee redundant, you must select the employee by fairly applying objective selection criteria to a pool of employees. The first step there is identifying the pool i.e. the group of employees from which you will select who is to be made redundant.

There are no rules on how a pool should be defined (unless there are collective agreements in place of a trade union, or a customary selection pool usually used by the business) and therefore the employer has a wide measure of flexibility. However it is important that the pool is appropriate. A failure to identify an appropriate pool may lead to the redundancies being deemed unfair.

The ‘golden rule’ is that the employer has to genuinely apply their mind to the pool. If you have done that, and done so fairly, it will be difficult for the employee to challenge the pool. However, some employers will often utilise the pool to avoid including employees that they do not wish to make redundant. This is an entirely inappropriate way to select employees for the pool, and may give rise to a claim for unfair dismissal, on the basis that the outcome of the redundancy selection process was predetermined from the start.

Selecting The Pool

Firstly, you need to think about the work which has ceased or diminished and the employees doing that work.  In general, the pool will usually consist of employees doing the same or similar work. If for example you have three administrators in the same department, carrying out, for example, scheduling work, the pool would usually consist of all 3.

It is also necessary to think about the reality of the employees work rather than keeping a focus on job descriptions or titles. For example in Hendybanks City Print Ltd v. Fairbanks and others a printing company was making redundancies in its finishing department. It only selected a narrow pool of employees who worked on a particular piece of machinery. The reality was that those employees were the most experienced members of the department and that they spent no more than a third of the time on that machine. The rest of their work was the same work as the other employees who had not been pooled. In that case the Tribunal held that the pool was unreasonably narrow, and should have included the other employees as well.

Singular Pool

There may be in any redundancy exercise several different pools. For example if you are trying to reduce your head count by 10%, you would usually make redundancies in several departments rather than identifying one department which makes up 10% of your workforce and making them all redundant.

In the case of Contract Bottling Limited v. Cave and another the employer put all administrative staff into the same pool regardless of their current function. The pool was made up of 10 employees with various skills and from different departments from accounts to warehouse management. The employer decided that these employees should be compared to a single redundancy selection matrix with a view to dismissing four-staff. The employer would then keep the others whatever their function had been and retrain as necessary for the roles that remained. The Tribunal held that the redundancy was unfair for a variety of reasons, but also commented that the selection pool was ‘rather surprising’. The main issue with a pool of this kind is that it is difficult to see how you can have a single redundancy selection criteria to compare against a variety of different roles. For example, if you have employees from accounts and warehouse management, and you are identifying them on a matrix that compares their ability to use Sage, it cannot be fairly applied because the warehouse manager has no requirement to use Sage accounting software, will score badly through no fault of their own.

Pools of one

Sometimes employees work in a role that is unique and it may be fair to have a pool of only one employee selected for potential redundancy, although that will mean the redundancy is more or less inevitable if no alternatives can be identified during the process. For example if you had an employee who was posted abroad from your UK business, and you subsequently decided to outsource the work in that country, it may be permissible to pool only your employee who was working out of the country.

Case law also goes to show that it is permissible for an employer to select a pool that is the same size as the number of redundancies, but you need to be very careful doing this as the Tribunal will look at such decisions very carefully. If it is held that others ought to have been included in the pool, it may be determined that the redundancy was contrived, and that the process was unfair.

Factors to consider when identifying the pool

As above, the starting point is usually what work has ceased or diminished. You then need to consider which employees perform that work. There are, however, other relevant factors such as:-

• Whether other employees are doing similar work, and this may require a consideration of employees at other locations;

• Whether employees have jobs which are interchangeable; and

• Whether you need to consider ‘bumping’.

Bumping

Bumping is a term that often employers are unaware of. It is the process of moving a potentially redundant employee (we will call them ‘A’) into another role and making the employee currently performing that role (we will call them ‘B’) redundant. This is still a redundancy for B even if B’s work had not ceased or diminished.

Generally there is no requirement for an employer to consider bumping but in some circumstances it may be unreasonable not to do so. These cases are highly specific and often occur where you have a highly skilled or senior employee whose role has been made redundant, and the Tribunal concludes they should be offered the role of a more junior employee and that junior employee made redundant instead. Only by applying your mind to the pool will it become apparent whether bumping is something that may need to be considered.

Often, the employees themselves will raise the possibility of bumping as part of the consultation process. If the employee does, they usually advise the employer to give it serious consideration, and to explain succinctly and objectively if it is not to be considered. However, bumping is not only to be considered if the employee raises it themselves.

The takeaway here is simply that you need to give genuine and fair consideration to the pool. This includes thinking about all of your staff and what their roles are, whether they are similar to each other or whether there are similarities in the work or interchangeable skills which might make it appropriate for the employee to be included in the pool. I would also recommend recording your decision making process as to how the pool has been arrived at should you require it later in the event of a challenge.

If you require assistance with identifying a pool for redundancy, or any other matter relating to redundancies, please do not hesitate to contact Arvin Sandhu on 01494 521 301.