Guidance for Employers implementing a redundancy selection process in the wake of COVID-19

How we work is changing. And with that, employers now face the challenge of adapting to these changes and fast.

While staff are beginning to come to terms with the prospect of returning to the office, given the obligation on employers to provide a safe place of work, an immediate return to work for all staff is unlikely. Indeed, given the number of employees currently working from home, certain employers are also in the process of considering restructuring the operation of its business to increase efficiencies and reduce costs. This unfortunately raises the possibility of redundancy.

This article provides guidance for employers on some of the key considerations when implementing redundancies and in particular, outlines how to ensure a redundancy selection process is conducted in a fair and objective manner.

When does a selection process apply?

A selection process will apply where an employee is selected from a group or “pool” of employees for potential redundancy. The pool of employees will usually occupy the same or similar role as each other, will be performing similar tasks/duties and/or working in the same department. In order to reduce the risk of employees claiming they have been unfairly selected for redundancy, the employer will need to carefully consider the selection criteria applied to avoid any inference that the selection process was bias or that the outcome was in some way predetermined.

Potential selection criteria

For many companies, and in the absence of specifically agreed selection procedures, where there are two or more employees engaged in similar roles, the employer may decide to implement a ‘selection matrix’. The selection matrix comprises of a range of objective criteria in order to fairly select employees for redundancy. Adopting a selection matrix rather than basing the decision on a single criterion exclusively can be advantageous where certain criteria adversely impact specific employees over others due to issues outside of their control. As the assessment is not based on a single criterion, having a number of criteria demonstrates that this factor was not the sole reason for selecting that employee for redundancy.

As a general rule, the more subjective the criteria, the greater the risk of challenge. This is because redundancy by its nature is impersonal, so when selecting employees for redundancy, it is essential that the selection is made on a fair and objective basis. As such, selection criteria such as reliability, customer rapport, attitude towards others,[1] ambition/drive, can often be characterised as subjective and as a result, it is generally advised that such criteria are avoided where possible.

Employers may wish to consider the following criteria:

• Qualifications/training: This should involve consideration of qualifications or training relevant to the role being made redundant. Where there are no qualifications or training required or relevant to the role at hand, this criterion should not be used. 
  
  
• Attendance Record: Thismay be more relevant to certain positions than others. Employers should exercise caution when applying this criterion to avoid penalising employees for availing of leave such as sick leave or maternity leave where an employee may pursue a claim under the Employment Equality Acts 1998 on the grounds of disability, gender or family status.
  
  
• Length of service: While the “last-in-first-out” (“LIFO”) is often applied by organisations due to its simple application which is based on commencement date of employee/their length of service, it may result in the organisation losing employees with the relevant skills and know-how required. In addition, where this results in a large number of younger employees being selected for redundancy as is often the case, this can result in potential age discrimination claims. As such, LIFO may be relevant as part of a wider range of selection criteria, but it is advised that this should not be used as the sole method and the employer must be able to justify its use.

• Skills: this refers to the skills required for the role. Employers may also consider the ability of employees to deal with change and pick up new skills. The assessment of skills should ensure that the employer has clearly identified the full range of skills that are required for the job role in order to allow a fair assessment to be taken.
  
  
• Experience/specific relevant experience: This refers to experience required for the job role, rather than wider organisational experience. Previous experience gained in another job role which is appropriate to the current role may also be assessed.
  
  
• Performance standards: Depending on the particular role,performancemay include an assessment of certain targets achieved by the employee or alternatively marks from performance reviews or appraisals can be used in the selection process. It is important to ensure that these appraisals have been carried out consistently across all employees in the redundancy pool and the assessment is based on objective measures. In addition, where employees have contrasting service or long periods of absence, it’s important to consider a fair time frame over which performance will be assessed.

• Disciplinary: This criterion should include disciplinary warnings that are currently active and should not include expired warnings or outstanding and unproven disciplinary actions. It is important that disciplinary rules have been applied consistently and all records are up to date. When applying this criterion, points are usually deducted for warnings or any relevant sanctions.

After selecting the criteria, the employer will consider the employees in the ‘pool’ and carefully rate/score them against each of the criteria using objective data only. The scores should be reviewed with the employee and revised accordingly where there is objective data for doing so. For example, an employee may have a relevant qualification that the employer did not know about, and this could be included for scoring purposes. It is important that scores are supported by accurate records.

The Employer will be required to consult and inform employees appropriately during the redundancy process. As part of this, the employees should be notified of the criteria matrix used for redundancy, the significant implications of the matrix and provided with the opportunity to examine, query or object to the matrix.

It should be noted that a redundancy will be deemed automatically unfair where the selection of the employee resulted wholly or mainly from any of the discriminatory grounds.[2] In addition, where the company has a policy (agreed with a trade union or otherwise) which sets out the relevant selection criteria to be applied, it must have a rationale which justifies departing from this policy in certain instances to avoid the redundancy being deemed unfair.

The potential cost of getting it wrong

Where an employee claims that s/he was unfairly selected for redundancy, the onus is placed on the employer to prove that the redundancy situation was genuine and that the criteria chosen, and the ratings/scores given to the employee were applied objectively. Otherwise, a failure to do so may render the dismissal unfair and result in a claim under the Unfair Dismissals Acts 1977-2015 (the “UDA”).

While the UDA does not impose a statutory obligation on an employer to consult with employees, it is clear from the decisions of the Workplace Relations Commission that there is a duty to consult encompassed in the overall duty to act reasonably. A reasonable employer should therefore:

• Give as much advanced warning as possible of a proposed redundancy;
• Set out in writing the objective selection criteria applied;
• Apply the selection criteria consistently; and
• Consult and explore alternatives to the redundancies.

Redress under the UDA includes re-instatement, re-engagement or compensation for the actual financial loss attributable to the dismissal up to a maximum of 104 weeks’ remuneration.

Conclusion

It is undoubtable that COVID-19 has increased the need for employers to consider cost saving measures. Restructuring and reorganising the way in which work is performed is imperative for businesses hoping to succeed during this time. Whether this includes changes to work processes, developing new technology, products or services, a degree of change to the workforce and in some instances, redundancy will arise as a result.

While the redundancy process is impersonal, it can feel quite the opposite for the employees involved and often results in significant hardship, particularly during this difficult and uncertain time. Employers are advised to ensure that selection criteria are considered carefully and applied objectively, taking into account the role and circumstances of the employees involved.

Our Employment & Corporate Immigration Team has specialist experience in advising employers on redundancies and any legal disputes which may arise during this process. We are available to discuss any issues that may arise for you as a result of your evolving obligations as an employer during this time of uncertainty. For further information, please contact Bláthnaid Evans or Sheila Spokes, +353 1 639 3000 or visit www.leman.ie.