Employers risk unfair dismissal claims if they follow the wrong procedure
Sometimes managers can appear to think that dismissals for redundancy or poor performance are interchangeable. But the procedures which need to be followed in either case to avoid an employee being able to bring a successful claim for unfair dismissal are very different.
Instances of poor performance often necessitate giving employees formal warnings, providing them with opportunities to improve, setting appropriate targets and putting in support for the employee to attain those targets. The formal warning process can be time consuming, potentially lasting a number of months, and its end results are unpredictable. An employer embarking on a performance improvement process with an employee can never be sure that the desired improvement will be achieved, or whether the procedure will reach a point where the individual’s dismissal will be fair. Employers also cannot predict the extent to which the process will throw up further difficulties because of the pressure it puts on the poor performer, such as the employee lodging a grievance about his or her treatment, or being absent due to stress.
By contrast, a redundancy dismissal can potentially be carried out far more quickly than a performance-based dismissal provided that the employer can put together an appropriate pool for redundancy selection, conducts a reasonable selection process, and consults appropriately about the individual's provisional selection for redundancy, alternative employment and so on. While an employee may still have grounds to challenge the fairness of a redundancy process, the procedure can be perceived, at least by managers, as quicker and easier than a performance dismissal. This is particularly the case where it can be argued that an employee's job functions are sufficiently discrete that the individual’s position does not need to be pooled with other roles. In that situation, the redundancy process is more straightforward as the employer does not need to grapple with such issues as identifying a proper pool for selection, devising justifiable selection criteria, applying those selection criteria to the pool of employees in question, and consulting with individuals about their scores.
Redundancy and poor performance can in certain situations effectively be different sides of the same coin. A manager may take the view that the business can do without the employee’s role and that this looks like a redundancy situation - whereas if the employee were performing his or her role sufficiently well, he or she would be retained. As a result, redundancy can be a tempting prospect for managers who wish to move quickly to address concerns in their area of a business.
However, redundancy is not necessarily a panacea for a specific business problem. A manager who presses for the redundancy of a specific individual, on the basis that the employee’s role can be dispensed with, may be motivated - consciously or subconsciously - by actual or perceived poor performance on the part of that employee. In such circumstances, the employer may face difficulties in persuading an employment tribunal that it was reasonable to take the view that the role was sufficiently discrete that there was no need to pool the employee with colleagues for the purposes of redundancy selection and that redundancy was the true reason for the employee’s removal. Whether or not this is actually the case, a redundancy can come under attack in a tribunal on the basis that it is a sham and a substitute for performance concerns.
Whether an employer is vulnerable to such an attack will depend on how robust and genuine the business case for redundancy is. Are there, for example, reduced levels of that kind of business, efficiency savings that need to be made, loss of clients and so on? An employer’s position can easily be undermined if the redundancy has been constructed and its credibility questioned if communications between managers in emails and the like demonstrate the real reason for the employee’s removal is not actually redundancy but some other reason.
HR professionals should, therefore, test line managers’ redundancy or reorganisation proposals robustly to ensure that the decision will stand up to scrutiny and possible challenge in both the consultation process with employees and in any subsequent legal proceedings.
Charles Wynn-Evans is a partner at Dechert LLP
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