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01/05/2012 - Redundancy update - suitable alternative employment

In order to follow a redundancy process fairly, employers must act reasonably and as part of that are required to consider the availability of suitable alternative employment for that employee. If you are in the position of ‘selecting' employees for redundancy from a pool of those at risk, you will use scoring criteria in order to identify which individual will be selected for redundancy redundant, and these criteria should be as objective as possible. When it comes to considering an employee for a suitable alternative employment however, you may have more discretion and can appoint who you consider to be best suited to the role.

In Samsung Electronics (UK) Ltd v Monte D'Cruz, the EAT held that where an employee is at risk of redundancy and is being considered for suitable alternative employment, an employer may use subjective criteria to decide whether the employee is suited to the role.

Mr Monte-D'Cruz was employed by Samsung Electronics as a senior manager. He was told in October 2009 that he was at risk of redundancy due to restructuring within Samsung. His application for a new head of department position was unsuccessful. He then applied for a newly created role, which was very similar in specification to his previous role. Mr Monte-D'Cruz was scored by Samsung on 10 core competencies, such as ‘challenge' and ‘crisis awareness'. Again, he was unsuccessful and an external candidate was appointed instead. Mr Monte-D'Cruz was dismissed by reason of redundancy on 31 January 2010.

Mr Monte-D'Cruz claimed he had been unfairly dismissed and the Employment Tribunal agreed, on the basis that there had been inadequate consultation and the criteria applied in interviewing for the alternative role were unsatisfactory, in particular because they were subjective. Samsung appealed.

The EAT held that consultation had been reasonable and it was permissible for Samsung to use a ‘substantial element of judgment' in assessing which candidate would best perform a new role - there is no obligation on an employer to use only objective criteria. In terms of the core competencies themselves, whilst the terminology used may not be entirely clear to a Tribunal, the EAT said caution should be taken in deciding that the terminology has no meaning to Samsung and others in the same industry. The EAT held that the Employment Tribunal had wrongly substituted its own judgment of Mr Monte-D'Cruz's suitability for the role for Samsung's judgment.

Action Points

• Plan redundancy and restructure processes carefully from the outset
• As part of a fair redundancy process you will be expected to consult with the employee and to consider the availability of suitable alternative employment
• Selection for redundancy should be undertaken fairly by applying criteria which are as objective (and non-discriminatory) as possible, consider also having multiple managers conducting the scoring process
• A Tribunal may accept more ‘subjectivity' in the process of considering those at risk for alternative employment. However, care should still be taken to ensure that the reasons for the decision are non-discriminatory and supported by the documents and papertrail.
  

Authored by:

Catharine Geddes (show profile)

Published by:

Allison Grant (show profile)

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