Subjective criteria may be permissible in redundancy selection in certain circumstances, according to the Employment Appeal Tribunal (EAT).
In the case of Mitchells of Lancaster (Brewers) Ltd v Tattersall, Mr Tattersall was selected for redundancy when the company hit serious financial difficulties. Mr Tattersall was one of a senior management team of five. As senior property manager, the company decided he should be made redundant as this would have the least detrimental impact on the business and the role was not generating income.
An employment tribunal criticised the company’s subjective selection criteria and ruled Mr Tattersall was unfairly dismissed for a number of reasons, but his compensation award should be reduced by 20% to reflect the chance he would still have been selected for redundancy had a fair procedure been followed.
The company appealed. The EAT agreed Mr Tattersall was unfairly dismissed as the company had not applied the selection criteria in a fair way, but disagreed with the employment tribunal’s criticism of the company’s subjective selection criteria, based on assessing which role could be lost from the management team with the least effect on the business.
The EAT said that just because subjective criteria were matters of judgment, it did not mean they could not be assessed in a dispassionate or objective way. The EAT went on to express concern at the concept a criterion would only be valid if it could be scored or assessed as this could be invoked to limit selection procedures to “box-ticking exercises”.
It was hard to see how it was inappropriate for a relatively small company in serious financial difficulty to apply the criteria used, the EAT added. The 20% reduction was “significantly too small” as the likelihood of Mr Tattersall’s selection was greater based on the criteria used. The case was remitted back to the original tribunal.
This decision confirms that employers are entitled to use subjective criteria in redundancy situations in certain particular circumstances, such as where a smaller company is facing financial difficulty. Employers considering the use of selective criteria in a potential redundancy situation should always discuss such matters with their legal manager beforehand.