Redundancy: not just a numbers game
Employers need to take great care when dismissing an employee – especially where age discrimination may be involved, as a recent case has shown. They must act reasonably and follow statutory procedures, or else they could end up facing a potentially expensive claim for unfair dismissal.
A dismissal is treated as ‘fair’ if it is for any of the following reasons:
Bad conduct or the employee’s inability to do the job, or some other duty as imposed by the employment contract.
Redundancy, which can occur for economic reasons or changes in the business.
Retirement, where the employee has reached retirement age for that employment, or the default retirement age of, for example, 65.
Some other substantial reason, for example, where a temporary post has come to an end.
However, employers must show that they followed the correct procedures:
If dismissal is on the grounds of conduct, employers must use an established disciplinary procedure.
Where an employee is being dismissed because of incompetence or lack of capability, it must be shown that an opportunity to improve was offered.
When redundancy gives rises to dismissal, employers must consult with the employee, or employee representatives. Employees should be selected for redundancy on grounds that do not discriminate against workers. The chosen criteria must be consistently applied and be objective and fair.
Employers must give six months’ notice if dismissal is due to retirement, but employers are also obliged to consider an employee’s request to work beyond retirement age.
Age discrimination may affect the selection of an older worker for redundancy following the judgment in Killa v Electronic Motions Systems Ltd (2008).
59 year-old Mr Killa was selected for redundancy and was immediately dismissed. The Tribunal found that his employer had failed to use objective criteria or a proper selection process to determine which employees were to go, and although there was alternative work available in the company it was not offered to him.
In awarding damages for future loss of earnings, the Tribunal increased them to counter the effect of discrimination against older workers when considering Mr Killa’s chances of gaining future employment.