In the case of Capita Hartshead Limited v Ms Byard, Ms Byard was employed by Hartshead as an actuary. The number of her clients diminished so she was not left with enough work for a full-time role. This reduction was not due to Ms Byard’s performance but because some of the pension schemes she worked on had been wound up or Hartshead had lost the client. Therefore Ms Byard’s line manager, Mr Pearce, decided that Ms Byard should be placed in a selection pool for redundancy. Mr Pearce did not include the other actuaries at the company because of his view that Hartshead could lose clients if they were transferred to another actuary. Ms Byard complained about the size of the selection pool in consultation meetings with Mr Pearce, arguing that she should have been in a pool of 4 (which included the other actuaries). However the pool was not changed and as a result Ms Byard was selected for redundancy and her employment terminated on the 11th December 2009.
Ms Byard brought a claim of unfair dismissal to an Employment Tribunal. The Employment Tribunal, having found that redundancy was the genuine reason for Ms Byard’s dismissal, then considered whether it was unfair. They held that in fact the risk of Hartshead losing clients if their actuary was changed was ‘slight’ and that Mr Pearce knew of other cases where the actuary had been changed and there had been no damage to the client relationship. Therefore the decision to limit the selection pool to just Ms Byard was unfair. Hartshead appealed.
The EAT rejected their appeal and upheld the Employment Tribunal’s decision. The EAT held that when Tribunal’s assess whether the correct selection pool has been used:
- The Employment Tribunal is obliged to scrutinise carefully the reasoning of the employer to determine if he has ‘genuinely applied’ his mind to the issue of who should be in the pool for consideration of redundancy.
- Where an employer has genuinely applied his mind to this issue, it would be difficult – but not impossible – for an employee to challenge the selection pool.
In this case, because the Employment Tribunal had found that there was only a ‘slight’ risk of losing clients if the work was transferred from one actuary to another, the Employment Tribunal had been entitled to find that Hartshead had not genuinely applied its mind to the issue of who should be in the pool for consideration of redundancy.
This decision does not mean that redundancy selection pools which consist of one employee will always be unfair. However, it does confirm that Employment Tribunals when considering whether an employee’s dismissal is unfair, will scrutinise the employer’s selection pool and their reasons for choosing it. With a selection pool of one, the person to be selected for redundancy has in effect already been selected (unless alternative employment can be found). Therefore, Employment Tribunals are likely to scrutinise such a narrow pool more closely.
Accordingly, it is important that employers carefully consider their redundancy selection pools and record the reasons for their decision. In situations where the pool of employees is not clear (for example there are several jobs with overlapping duties) or the pool is likely to be very small consisting of only one or two employees, employers should consider obtaining legal advice.
Key points of the EAT’s decision:
- Employment Tribunal’s have a duty in redundancy cases to scrutinise the way in which an employer selected the pool.
- The Tribunal’s scrutiny is to determine whether the employer has ‘genuinely applied’ his mind to the selection of the pool.
- Where the employer has ‘genuinely applied’ his mind to the question of who should be in the selection pool, it will be difficult for an employee to challenge it – but not impossible.