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Use of Subjective Criteria did not Render a Dismissal Unfair

It is well established that, when selecting for redundancy, employers should act reasonably, and this will usually include using objective criteria. However, the Employment Appeal Tribunal (“EAT”) has recently recognised that most criteria will involve some degree of judgment, and that will be acceptable.

Mr T was a property manager of a company which was a brewer and owner or manager of hotels and public houses. He was part of the company’s Senior Management Team (“SMT”), together with 4 other employees. In 2010, having recognised the need to cut costs, the company made Mr T redundant. The board of directors selected Mr T’s role as that which was no longer required, having looked at the business skills of each manager who was part of the SMT and coming to the conclusion that cutting any of the other roles, which had the relevant skills to bring in revenue, would have a detrimental effect on attempts to improve the company’s trading position. Mr T brought a claim for unfair dismissal in the employment tribunal.

The tribunal found that Mr T was unfairly dismissed, partly because the criteria used to select him was “wholly subjective and based solely on the views of the directors rather than being objective selection criteria”. The tribunal reduced any compensation Mr T would be awarded by 20% to reflect the chance that, had a fair procedure been followed, he would have been dismissed anyway.

The company appealed the decision, one of the grounds being that the tribunal was wrong to say that the criteria for selection was unacceptable. The EAT agreed, finding that just because the criteria was a matter of judgment, it did not mean that Mr T could not be assessed in a dispassionate or objective way, even though there would inevitably be some degree of judgment involved. The EAT made the point that the only type of criteria that can truly be objective are those such as length of service or absenteeism. The dismissal was still held to be unfair on other grounds but the EAT decided that, as the 20% reduction to Mr T’s compensation was based partly on the decision that the selection criteria was unacceptable, the matter should go back before a tribunal to decide how much the reduction should be increased by to reflect that the decision on criteria had now been overturned.

Employers should not assume that, in light of this decision, it will be open to them to use more subjective criteria when selecting for redundancy. However, it is useful to note that tribunals should recognise that an element of judgment has to be used when selecting for redundancy, although this should be exercised as objectively as possible. Lanyon Bowdler are able to advise on redundancy processes, to include providing guidance on selection criteria as well as drafting any documents that may be required.