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EAT finds redundancy selections unfair where the employer relied on recruitment-style competency tests

In Mental Health Care (UK) Ltd v Biluan and another, the EAT has found that an employer acted unreasonably, in a redundancy selection exercise, in relying on competency tests which it normally used in its recruitment process.

Background

In unfair dismissal cases, the question for the Employment Tribunal to consider is, broadly, whether the decision to dismiss the claimant was within the range of reasonable responses that a reasonable employer could have adopted. In redundancy cases, this will involve a consideration of whether:

  • the claimant was warned of potential redundancies;

  • the employer carried out a genuine and thorough consultation exercise;

  • the employer identified appropriate pools from which to select employees for redundancy and selected against objective criteria; and

  • the employer carried out a reasonable search for suitable alternative employment.

Facts

The claimants were employed by Mental Health Care UK ('Mental Health Care'). Their roles were placed at risk of redundancy and the selection process involved three criteria: a competency assessment; the employee's disciplinary record; and their sickness absence record. The competency assessment was given more weight than the other two criteria.

Mental Health Care introduced the competency assessment because it had formed the view that there would not, otherwise, be enough information on which a fair assessment could be carried out. Whilst there was some appraisal documentation, not all appraisals which should have been carried out had been carried out. Further, it had decided against criteria such as team working, flexibility and length of service because it thought that these would be too subjective.

The competency assessment was usually used by Mental Health Care in its recruitment process. It comprised three parts; a written exam, an interview and a group exercise. The employees were assessed by individuals who had not previously worked with them. Mental Health Care did not review any past appraisals or seek input from the managers who worked with them.

The competency tests resulted in some surprising outcomes, and, due to the weighting, were a conclusive factor in most cases. Line managers who knew the employees expressed concern that some employees who were “very good workers” had been selected for redundancy.

The claimants brought unfair dismissal claims.

Decision

The claimants succeeded with their claims both at the Employment Tribunal and at the EAT.

Whilst Mental Health Care regarded the competency assessment as objective and transparent, the EAT criticised it for basing its decision so heavily on the competency assessment without reviewing appraisal documentation or the views of the employees' managers. The EAT agreed with the Tribunal in noting that Mental Health Care had put 'blind faith' in the competency process and had “lost touch with common sense and fairness”, given that the competency assessment had produced results which were surprising. 

Comment

Some may have sympathy for Mental Health Care in this case; it had concluded that its appraisal documentation was lacking and had applied a selection exercise which it considered to be objective, robust and transparent. However, in doing so, it had lost sight of the importance of obtaining input from managers. This case is a useful warning to employers of adopting an overly HR-driven method of selection.

Recruitment-style assessment centres may be appropriate in certain situations where, for example, two employees are placed at risk of redundancy and go 'head to head' for a role in a restructure. However, it will not generally be considered appropriate to use this as an alternative to a normal selection exercise.

For the full text of the case see Related links.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2013. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

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