Thursday, 24 February 2011

Fair and unfair redundancy dismissal

Making staff redundant does not really represent a pleasant occurrence for employees, but for employers as well; an employer triggers this process when the organization is experiencing particularly severe economic hardships and more in general when this has failed to effectually face the competition.

From the legal viewpoint, managing the process is everything but straightforward in that for employers the risk of falling into a series of pitfalls is rather high. The procedure becomes even trickier when employers have to decide whom to make redundant amongst a number of different individuals, especially whether some new jobs are created within the business as a result of an internal reorganization.
 A recent case discussed before the Employment Appeal Tribunal (EAT) in London (Morgan v The Welsh Rugby Union UKEAT/0314/10/LA) can definitely provide employers valuable insights and suggestions on how to manage the process.

The case was brought before the Court of Appeal by a rugby team coach manager, who claimed of having been unfairly dismissed after having applied for a new position created within the Welsh Rugby Union as a result of an internal reorganization, which implied the positions of Elite Coach Manager and Community Coach Manager to disappear and a new senior role to be created. Both the incumbent Elite and Community Coach Managers applied for the new post, but since the role could be filled just by one person the unsuccessful applicant should have necessarily been made redundant. As the employer had also received an external application for that post, there would have been indeed chances that both of the internal candidates might have been made redundant.

The job was finally offered to one of the internal candidates, but the other, that is to say the claimant, decided to bring the case in front of the Employment Tribunal complaining that the selection process had been unfair. After his claim was rejected by the ET, Mr Morgan brought the case before the Employment Appeal Tribunal, which rejecting the claim of unfair dismissal essentially upheld the ET decision. The Tribunal recognized that there had actually been some differences between the claimant and his colleague selection process structure; notwithstanding, this deemed that by and large both procedures had actually been objective and fair.

The events which gave rise to this case can be identified and summarized as follows:
1. A reorganization planned by the Respondent caused the suppression of two positions existing within the organization and the creation of a new senior position;
2. The job holders of the suppressed positions applied both for the new role;
3. One of them should have necessarily been unsuccessful and consequently made redundant;
4. Despite the Respondent had prepared a job description and an interview plan linked to a scoring system, this not completely stuck to these during the selection process.
The Claimant did not indeed bring the case before the Court by reason of having been dismissed for redundancy, but rather in that this considered the selection process executed by the Respondent as lacking of objectivity and fairness, which accounted for his dismissal to be in his viewpoint unfair. The most relevant aspect of this case, on which is based Mr Morgan’s claim, relates hence to the mechanism of the selection procedure, or rather, to the different selection approach adopted by the employer for the different candidates.

The Committee in charge of the selection process was exclusively formed by senior officials: the Chairman, the Head of the Finance Committee, the Head of Game Policy Committee and a coach who could not take part to the selection activities.

For the new senior position were formulated both a job description and the person specification. Amongst the qualifications required to fill the post was indicated that the person should have been "qualified to at least WRU Level 4 or equivalent" and should have had "an established reputation of developing elite coaches within the field of coach education."

As for the selection process, applicants were told that the interview would have included a 10-15 minutes presentation on a specific coaching subject and a number of preset interview questions. A scoring system was also set out.

As the matter of fact, however, the committee not only did not respect the interview questionnaire system, but did not stuck to the job description which had been prepared either, on account of these not being prescriptive.

Despite the job description listed amongst the requirements needed to properly fill the post a qualification to WRU Level 4, the appointed person had a WRU qualification at level 3, whilst the Claimant, with a WRU qualification at level 5, was basically exceeding this specific requirement. Yet, whereas the Claimant had substantial recent experience of training elite coaches, the appointed person did not have any such experience at all.

To explain his vision and plan for the role, the Claimant gave his presentation respecting the 10-15 minutes time formally allowed by the panel, whereas the selected person gave a presentation lasting considerably longer than expected, insofar as there was no time left to ask him the standard interview questions prepared by the committee. In the end, the panel decided not to give individuals any score for the presentation and the questionnaire; it would have been indeed virtually impossible since the selected candidate did not adhere to the interview plan, and decided to assign both candidates an overall score. In conclusion, the committee decided to appoint for the new post Mr Schropfer in that during his presentation this showed to have very clear ideas about how to carry out the required tasks.

According to the Claimant’s representative whether the Respondent would have performed a structured comparison between the Claimant and his colleague’s skills and abilities, the Claimant would have clearly emerged as the best fit. The decision to appoint the other candidate was hence inappropriate in that the Respondent: a) did not adhere by any means to the content of the job description, b) overlooked the different level of experience, c) made the final decision in the absence of an expert coach, d) allowed one of the candidates to considerably exceed the time limit set for the presentation and e) did not even consider the scoring system it had arranged for the interview.

The Tribunal concluded, by contrast, that the Respondent did not neglect the experience of the candidates. Despite the claimant had “on paper” the required coaching experience and qualifications, the selection procedure implemented by the employer was not purely paper based. Nonetheless, the appointed candidate seemed to impress by majority the committee during his presentation.

This decision may be actually considered dubious in that Mr Morgan not only had the qualifications but also the elite training experience which the appointed person did not actually have. Eventually, it was just on paper, or “on slides”, that Mr Schropfer showed his vision of how to carry out the new role and yield results.

The Tribunal also claimed that from Mr Schropfer curriculum vitae it clearly emerged that this fulfilled the criteria listed in the job description and that the Respondent was “in a very good position” to assess whether this was suitable for the new role and acted reasonably when interviewed this. In the absence of any evidence of bias, capriciousness or partiality, the Tribunal concluded that the appointment of the selected candidate was reasonable and fair, and that it not caused any detriment or prejudice to the Claimant.

As for the committee composition, albeit the Tribunal considered regrettable that no coaching expert was participating in the selection process, this acknowledged that the committee was composed of extremely competent members with proven experience of senior appointments. The absence of a member with coaching expertise was, according to the Tribunal, a circumstance which affected both candidates equally, without any specific prejudice to the Claimant.

The Tribunal was satisfied that the Respondent had developed a fair interview process and, albeit the committee did not strictly adhere to it, deemed by majority the interview process as fair. The Court considered that the circumstance the committee did not operate the scoring system it had devised and allowed one of the candidates to give a presentation lasting longer than scheduled could not be regarded as having caused any prejudice to the Claimant. The selection process was thus objective and could be judged neither capricious nor favoring one of the candidates.

In conclusion, the Tribunal by majority deemed the selection process rigorous and appropriate. The question for the Court was whether this met at least some criteria of fairness and the Tribunal finally found that it did. The overall length of the interviews was broadly the same, each lasting about one hour and notes of the interviews were recorded by the panel members on the interview assessment sheets and questionnaires. Despite differently from originally planned, a scoring system, which the Tribunal judged fair and objective, was adopted. The employer management met sufficient criteria of fairness as to render the process fair and reasonable so that the Tribunal did not accept the Claimant's submission and dismissed his claim of unfair dismissal.

The final judgment pronounced by the Tribunal may be considered questionable by many HR Professionals. In essence, the Tribunal aim was that to determine whether the process and most of all the final decision made by the committee to appoint Mr Schropfer was fair or otherwise.

The key statutory provision applied by the Tribunal was hence section 98(4) of the Employment Rights Act 1996, which provides for the determination of the question whether the dismissal is fair or unfair (as regards the reasons given by the employer) to be judged on the basis of two different aspects, to wit: a) On whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; b) whether the decision has been made “in accordance with equity and the substantial merits of the case."

The main task of the Tribunal was hence to access whether the Respondent acted reasonably and fairly under the circumstances, rather than to determine whether the selection process had been managed as planned. The Tribunal by majority considered that the Respondent did not have to exactly adhere to the job description and the EAT held that by doing so the Tribunal did not committed any error of law. In the EAT view there is in fact no rule of law requiring that employers must slavishly adhere to job descriptions or person specifications; employers are entitled to interview internal candidates even though they do not exactly meet the job description and are entitled to appoint, at the end of the selection process, the candidate these consider to be the most suitable to fill the role.

This view is, at least in general, debatable. Inasmuch as at times job descriptions are overloaded with requirements which is even impossible that candidates might ever met, once a candidate met all of the requirements listed in a job description, it can be hardly accepted that these become irrelevant. The view of the Tribunal is that when making decision about the most suitable employee to appoint for a new role, a reasonable employer should operate a selection system which has to be objective and capable of enabling this to make decisions which cannot be intended as capricious or arising out of favoritism for one candidate over another on personal grounds.

In Ball v Balfour Kilkpatrick Ltd (EAT/823/95), the Judge said: “that there is no rule of law that selection criteria must be exclusively objective.” Citing a different case, the Judge added that “It is clear on the authority of Akzo Coatings Plc v Thompson and Others [1996] EAT that the touchstone in such a situation is reasonableness rather than the application of either agreed selection criteria for redundancy or the application of objective criteria.” In many court cases, namely: Akzo Coatings v Thompson, Ball v Balfour Kilpatrick and Darlington Memorial Hospital NHS Trust v Edwards & Vincent the Judge reached the conclusion that it is wrong considering similar the criteria used to select a person for redundancy to those used to appoint a person for alternative employment. However, in Ralph Martindale & Co. v Harris (UKEAT/0166/07/MAA), referring to the case Darlington Memorial Hospital NHS Trust v Edwards & Vincent, the Judge held that in any circumstance a selection process must at least meet some criteria of fairness. In this instance, which in many respects could be considered similar to the case Morgan v The Welsh Rugby Union, no job description was actually prepared. The selection process was conducted in an “entirely subjective way” and the interview had no influence on the final decision, which was made by just one person. The Tribunal hence found that “the process adopted was not reasonable, and that in consequence the claimant was unfairly dismissed.” Once again, the main point is fairness or unfairness, reasonableness or unreasonableness.

In Ralph Martindale & Co. v Harris emerged that employers, which need to select one or more individuals amongst redundant employees for a new role, have to develop an objective system capable to prevent the possibility that the final decision might be seen as capricious or arising out of favoritism on personal grounds, which was actually what the Court aimed at determining in Morgan v The Welsh Rugby Union.

Another interesting aspect emerged in Ralph Martindale & Co. v Harris; the Tribunal did not consider opening a new role to the entire workforce, when there are redundant employees, an approach to current industrial relations practice typical of a reasonable employer. Despite an employer may consider that none of the redundant employees is qualified or have the required capabilities to properly fill the new role, before opening this to the entire organization workforce this should assess and ensure beforehand that none of the redundant staff is suitable for this.

In Morgan v The Welsh Rugby Union, as stressed several times by the Judge, the decision was made by majority; regrettably, the Tribunal did not set out the views of the other members. It would have been good practice and useful indeed doing this (see, for instance, Anglian Home Improvements v Kelly [2004] IRLR 793). However, this departure from good practice is not and cannot clearly be considered as a good reason for appeal.

Longo, R., (2011), Fair and unfair redundancy dismissal; HR Professionals, [online].