Redundancy selection criteria: objective v subjective

26 Jul 2012

As HR managers understand all too well, the need for the criteria used in skills matrices when selecting employees for redundancy to be "objective" has become ingrained.

It is a common complaint raised by employees when challenging their selection that the criteria against which they were judged were too subjective and so were unfair.

The Employment Appeal Tribunal (EAT) recently considered this point in the case of Mitchells of Lancaster (Brewers) Ltd v Tattersall.

In this case the Respondent had a Senior Management Team (SMT) of five, including the Claimant, who was the Property Manager.  In 2010, the Respondent's trading position deteriorated and it developed difficulties with its cash flow.

Four of the five members of the SMT, excluding the Claimant, decided at a meeting that there was a redundancy situation.

The SMT concluded that “if the role of property manager was cut, this would have the least detrimental impact on the business because this was not a role that generated revenue.  Cutting other SMT posts would, in the board’s view, have had a detrimental effect on attempts to improve the respondent’s trading position.  The directors looked at the business skills of each manager and found that, other than [the claimant], they all had the relevant skills to bring in revenue.”

The Claimant was selected for redundancy and dismissed and subsequently brought a claim for unfair dismissal.

The Employment Tribunal concluded that the Claimant's dismissal was unfair, in part because “the criteria by which the Claimant was selected as the candidate for redundancy were unacceptable because they were wholly subjective and based solely on the views of the directors rather than being objective selection criteria”.  Although you may need to squint to see it, the criteria were those set out above by the SMT.

The Respondent appealed against the Employment Tribunal's Judgment, in part, on the basis that the Employment Tribunal was wrong to characterise the criteria used as "unacceptable".

In considering this element of the appeal, the EAT made an observation about the use of selection criteria which is very helpful to employers and, as such, is worth quoting in full:

"The Tribunal in this case also criticised the criteria adopted by the Respondent because they were not “capable of being scored or assessed or moderated in an objective and dispassionate way”. Just because criteria of this sort are matters of judgment, it does not mean that they cannot be assessed in a dispassionate or objective way, although inevitably such criteria involve a degree of judgment, in the sense that opinions can differ, possibly sometimes quite markedly, as to precisely how the criteria are to be applied, and the extent of which they are satisfied, in any particular case. However, that is true of virtually any criterion, other than the most simple criterion, such as length of service or absenteeism record. The concept of a criterion only being valid if it can be “scored or assessed” causes us a little concern, as it could be invoked to limit selection procedures to box-ticking exercises."

The EAT also confirmed the validity of an earlier case, of Samsung Electronics (UK) Limited v Monte-D’Cruz, in which the President of the Employment Appeal Tribunal, The Honourable Mr Justice Underhill commented that ""Subjectivity" is often used in this and similar contexts as a dirty word. But the fact is that not all aspects of the performance or value of an employee lend themselves to objective measurement, and there is no obligation on an employer always to use criteria which are capable of such measurement".

In that case, Justice Underhill also discussed the language used by companies in assessing employees and observed, rather delightfully, that "lawyers must be wary of assuming that terms that look to them like mere management–speak have no meaning to their regular users." He noted that such terms "would not score highly in an essay competition" but that "Tribunals must not allow a disdain for such terminology to lead them into treating such systems as necessarily worthless."

Taking all this into account, the EAT decided that the selection criteria used by the Respondent were not, in all the circumstances, unacceptable and so overruled the Tribunal's Judgment on this part.

Our view:

Given the number of employers who are still being forced to consider making redundancies, this case, as well as the earlier case referred to, are very helpful for employers.

They both give a timely reminder that when it comes to selection criteria, “objective” does not necessarily have to equate to “quantifiable”.

Instead, employers need to demonstrate what the criteria mean, why they have been chosen and that the scorers not only understood the criteria, but that they were also qualified to assess the employees against those criteria.

Assuming that an employer can demonstrate those things, it will be very difficult for an employee to successfully challenge their selection as being unfair.