My previous post in this series based on the CIPD’s guidance explored the importance of a compassionate approach during a redundancy situation. Today’s topic is the redundancy selection process and criteria.
A key consideration in any redundancy process will be the criteria by which staff are pooled, and selected, for redundancy. For the selection process to be fair, it must involve the even-handed application of objective selection criteria to a reasonably constituted pool of employees. The selection criteria and process must not be directly or indirectly discriminatory in any way. Staff should be consulted about the selection criteria and process at an early stage.
In the case of a redundancy process involving furloughed (or previously furloughed) employees, these requirements remain. For furloughed staff, usual employment law and employee rights will apply. These include protection from unfair dismissal and discrimination. So employers must be careful to ensure that selection pools and criteria are fair, objective and reasonable; that they are not directly or indirectly discriminatory; and that staff are consulted about them before they are finalised.
Automatically selecting employees for redundancy purely on the basis that they have been furloughed could be problematic for a number of reasons:
- The question of whether being on furlough would be a fair basis for selection for redundancy will depend on how staff were selected for furlough to begin with, what process and criteria were used, and whether these were fair in the circumstances. The furlough criteria may not remain a fair basis on which to select for redundancy. It is likely that an employer would have to reassess the fairness of pools and selection criteria (and consult staff about this) at the point that redundancies became necessary, to ensure that any ensuing redundancies were not substantively or procedurally unfair.
- If staff have been put on furlough because they have caring responsibilities, or are shielding for health reasons, subsequently pooling and/or selecting these employees for redundancy is likely to constitute indirect discrimination based on sex, disability or age. If the principal reason for furloughing staff is that they have child-care responsibilities or a health condition, or are more vulnerable to Covid-19 because of their age, it will be important for the employer to ensure that they are not placed at greater risk of redundancy by virtue of the fact that they have been furloughed.
- There remains something of a grey area around the question of whether selecting someone for redundancy when they could remain on furlough may result in the ensuing dismissal being unfair. Employers need to consider whether it would be reasonable in the circumstances (taking their financial position into consideration) to wait until the furlough scheme came to an end, and/or the organisation was able to claim decreased staff costs under the scheme, before effecting any redundancies. This assumes that the reason for the redundancy was or is coronavirus. If it was unrelated, this is less likely to apply, but should still be considered.
Employees may argue that it is unfair to implement redundancies when the furlough scheme is available. Employers will allege that they still have to pay NICs, pension, full holiday pay top-ups, and possibly increased payments for hours not worked from February 2021. The main grey area under the last- minute furlough scheme extension is whether employers can claim furlough for employees where it has already been decided that their roles will be redundant later on. This seems to be contrary to the underlying purpose of the furlough scheme, which is to help employers retain their workforce. If employers are merely delaying inevitable redundancies, there is at least a risk that this could be regarded as contrary to the purposes of the scheme.
Employers should therefore bear in mind the duty to explore other alternatives to redundancy and look for suitable alternative employment at all stages of the process. However, it may not be necessarily unfair in all cases to make employees redundant instead of furloughing them. This issue will be covered in my next post in this series, which will contain guidance on redundancy dismissals and payments.
For answers to any redundancy questions you may have, email me or call me on 020 7099 2621.