Our Employment Appeal Tribunal case of the week this week (in fairness, there haven’t been many released this week) is Mental Health Care (UK) Ltd v Biluan & Anor – a case concerning the fairness of a redundancy dismissal and whether the employer used fair criteria in assessing their staff, as there were concerns as to why the staff’s experience hadn’t been used as one of the criteria
Summary: The Employment Appeal Tribunal upheld the Employment Tribunal’s ruling that the dismissal of the Claimants was unfair, principally because the criteria that had been used to assess the employees’ capabilities was based on a recruitment exercise and didn’t take into account their past experience; the employer hadn’t consulted with the employees’ managers as to their views on the potential redundancy candidates; and that the process hadn’t been reviewed even though severe criticism had been made of it because of the fact that some “very good workers” had been selected.
The facts in Mental Health Care (UK) Ltd v Biluan & Anor
In late 2010 Mental Health Care (UK) Ltd decided that redundancies needed to be made because the Dinorben ward at the Plas Coch hospital was being closed. 19 redundancies were required and all the staff who worked in the Dinorben ward were placed in the redunancy pool and put at risk of redundancy. The selection criteria used were drawn up with reference to three criteria: a competency assessment (which accounted for 60% of the score); the staff’s disciplinary record (20%); and their sickness asbsence (also 20%). The work experience of the staff were not taken into account and their present and former managers were not consulted on their views on the staff (which is normal in such redundancy situations). This led to two staff who were described as “very good workers” (Mr Makati and Ms Biluan) being selected for redundancy. However, although the redundancy process was criticised for its failure to take experience or the managers’ views into account, the Respondent failed to revisit the process to determine whether it was unfair or not. Mr Makati and Ms Biluan were subsequently made redundant and made claims to the Employment Tribunal for unfair dismissal and discrimination. They were successful in the Employment Tribunal in their unfair dismissal claim and the Respondent appealed on the grounds that the selection criteria used was fair, the way those criteria were applied were fair, there was proper consultation, and the appeal process was fair. The primary reason for the challenging of these issues was that the Employment Tribunal had “substituted” its own views for that of the employer (which is an error of law).
The law relating to redundancy dismissals
Employers have a duty not to unfairly dismiss (qualifying) employees under the Employment Rights Act 1996. Under the ERA 1996 the employer must identify one of three reasons for making the redundancy and must make a reasonable decision to dismiss (based on a fair and adequate procedure) employees.
In order to make a fair decision to dismiss for redundancy an employer must generally do the following things (as identified in the Employment Tribunal judgment):
- Identify a reason for the dismissal
- Create the correct pool for redundancy
- Draw up fair selection criteria
- Apply the selection criteria fairly
- Consult adequately and properly with the employees
- Determine whether there were any suitable alternative vacancies for the employees
- Give the dismissed employees a fair appeal process
- Make a decision to dismiss that was within the reasonable range of responses; and
- Act reasonably in treating the decision to dismiss as a fair and proportionate one in the circumstances
If an employer fails to satisfy the above an employee has a good chance in succeeding in a claim for unfair dismissal.
The Employment Appeal Tribunal’s decision in Mental Health Care (UK) Ltd v Biluan & Anor
The Employment Appeal Tribunal held that the Employment Tribunal’s decision was not based on an error of law – they had not substituted their own views for that of the employer and the Tribunal’s decision was not a perverse one in the circumstances. However, the Tribunal was subject to slight criticism due to its failure to address certain points in its judgment (such as the substitution issue) and to summarise the relevant law on unfair dismissal.
Our employment solicitors’ thoughts on Mental Health Care (UK) Ltd v Biluan & Anor
Chris Hadrill, an employment law solicitor at Redmans, stated that “employers have a great deal of discretion in choosing whether to make redunancies and which staff to make redundant. However, this decision demonstrates that they should also take care to formulate the selection criteria for their staff fairly and that they should also listen to and respond to criticism of the procedure, if there is such.