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Redundancy Selection Pools and Unfair Dismissal

A recent decision of the Employment Appeal Tribunal in the case of Fulcrum Pharma (Europe) Ltd v Bonassera and another UKEAT/0198/10 has highlighted the importance of employers acting reasonably when establishing the selection pool for a redundancy exercise.

When undertaking any redundancy exercise, one of the first steps for an employer to take in deciding on the selection process to follow is to identify the group of employees from which the redundancies will be selected. This is known as the “pool” for selection.

In general, employers have a reasonable amount of flexibility in determining a selection pool and, if questioned by a Tribunal, need only show that they have applied their minds to the issue and acted for genuine reasons. However, the Fulcrum case demonstrates that this test is not without risk and focuses on the potential risk to employers who do not enter in to genuine consultation with affected employees about the establishment of the pool.
On the facts of the Fulcrum case, an employee who was a senior HR Executive was placed in a “pool” of one. During consultation she argued that a more junior HR Manager should also have been included within the selection pool.

In deciding this case the EAT reviewed the guidance laid down in the earlier EAT decision of Lionel Leventhal Limited v North UKEAT/0265/04 and held that when deciding whether or not a more junior employee should also be included in the redundancy pool consideration needs to be given to a number of factors including:

  • whether or not there is a vacancy;
  • how different the two jobs are;
  • the difference in remuneration between them;
  • the relative length of service of the two employees;
  • the qualifications of the employee in danger of redundancy; and
  • other factors which may apply in a particular case.

Not only does the Fulcrum case highlight the importance of employers properly addressing their mind to pooling decisions, it also demonstrates the importance of acting upon and conscientiously considering questions raised by employees during consultation meetings.

Date: 28.10.10

For more information on this case and on the fair handling of redundancy exercises please contact Paul McGowan paul.mcgowan@collingwoodlegal.com

The information given in this article is up to date at the time of preparation. However, Collingwood Legal can accept no liability or responsibility for any loss incurred as a consequence of actions taken based on this report. We would recommend that you take legal advice. We would be happy to help.

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