Redundancy: Beware the Pool of One

17 Apr 2012

The Claimant was one of four Actuaries employed by the Respondent.  The Employer decided that it was necessary to make one of the Actuaries redundant following the loss of some clients.

The Employer decided to adopt a pool of one containing only the Claimant on the basis that it was mainly her clients that had been lost and it was her workload that had reduced.  It was also felt that there was a risk of losing more clients if they were transferred between the Actuaries. 

At Tribunal, the Claimant argued that all four Actuaries should have been included in the selection pool.  The Tribunal agreed on the basis that the risk of losing clients as a result of reassigning Actuaries was slight and it was unreasonable not to include all four Actuaries in the pool.  The dismissal was found to be unfair.

On appeal, the Employer argued that "the question of how the pool should be defined is primarily a matter for the employer to determine”.  As the Employer had considered the pool, the Tribunal should not have interfered with their decision.

The EAT rejected the Employer’s appeal.  Whilst an Employment Tribunal is not entitled to substitute its own view for that of the employer on the selection pool, it is entitled to examine the employer’s reasoning to see if it genuinely applied its mind to the issue of who should be in the pool. 

When considering a selection pool, it is important for the employer to act reasonably in making its decision.  If a decision on the selection pool is not within the range of reasonable responses, a Tribunal is likely to find the dismissal unfair.  Where the employer has genuinely and reasonably applied its mind to the question, however, it will be difficult for the employee to challenge it.