What is the selection criteria for redundancy?

If a company finds itself in an emergency and needs to start letting some of its workers go, it ends up being a difficult situation for everyone involved. Management has to part with valued employees and those made redundant may be worried for their career and what happens next. Redundancy criteria specifies the order in which employees must be laid off to make it fairer for all involved. It is intended to ensure that the selection of employees to be dismissed is based on social criteria.

Why is redundancy criteria important?

Unemployment in the UK is at its lowest since 1975, but despite these figures, there were still close to 100,000 redundancies in the UK in 2018. Hopefully you will never need to lay off any workers, but sometimes things don’t go the way you planned and maybe your company needs to let go of some employees. The criteria is used to help compare employees who are eligible for termination on the basis of their job profile.

Sometimes the methods for deciding redundancies have been agreed upon with a trade union, but if not, the employer may decide themselves how the redundancy selection process should happen. If this is the case, the employer may look at these selection criteria to narrow down the employees and make the decision a little bit easier:

  • Experience
  • Capability
  • Relevant skills and competence
  • Disciplinary records
  • Attendance
  • Appraisal records

None of the following points are allowed to be used as selection criteria:

  • Gender
  • Marital status
  • Race
  • Sexual orientation
  • Religion
  • Disability
  • Age
  • Working contract (e.g. part-time/full-time employee)

Unfair redundancy selection criteria

If employees feel they have been unfairly dismissed, they can make a claim to an Employment Tribunal. They could have a case if they were made redundant because they are:

  • disabled
  • a member of a trade union
  • are doing jury service
  • taking leave (parental leave, family leave, parental leave, etc.)
  • a whistle blower (making the company’s wrongdoings known)
  • taking action on health and safety grounds

This list is not exhaustive, but any employee that feels the reason they were dismissed doesn’t quite cut the mustard, they can send a written appeal to the tribunal and explain what they want out of the situation.

Various methods for the redundancy selection process

If employers are able to choose the redundancy criteria themselves, there are many different methods available so they can choose the best one for their business. Here are some different ways to go about the redundancy selection process.

Voluntary redundancy

Also known as “self-selection”, this is where you ask employees if they would like to volunteer for redundancy, which saves you having to make compulsory redundancies. You would then pay your employees a severance pay, the amount depending on their age, current salary, and the length of time they’ve been at the company, and is usually more than what a compulsory redundancy would pay out. Send out a letter to all eligible employees and see who is interested. If not enough people opt in, compulsory redundancy may still be necessary.

Early retirement

This follows the same principle as voluntary redundancy, where eligible employees are asked if they would like to retire early. Advantages for the worker include being able to change their lifestyle and being able to relax more, which is especially beneficial for health reasons. Disadvantages, on the other hand, could be that they receive less pension as well as having to wait longer to start receiving state pension since it’s normal to get this around your mid-60s.

Last in, first out

This is possibly the easiest out of all the methods although it could seem a little ‘cold’. The newest employees are the first to be dismissed. A downside to this method is that it may mean you have to let a great asset go: there’s no correlation that an employee working that’s worked at the company for a long time is a better worker than a newbie. This could also be perceived as age discrimination if it affects one age group more than the other.

Skills based selection

This selection criteria focuses on the skills that employees bring to the table. By knowing which department is your company’s strongest, you can work out which skills are most sought after and are more likely to help your business thrive. You can work out how important a skill is by imagining what would happen if the department were halved or didn’t even exist. If the result doesn’t bear thinking about, you know this is a highly-valued skill.

A disadvantage of this method is that younger workers may have joined the company after studying for the job and therefore have more skills than older workers, who will then be the first to go. This could be perceived as age discrimination.

Disciplinary records

This would be selecting who to dismiss based on their behaviour. Those with the most warnings or disciplinaries would then be the first to leave. This method rewards those that work the hardest and adhere to company rules, but a negative aspect is that just because someone doesn’t have the best record, it doesn’t mean they’re not a good worker on the whole.

Appraisal records

This methodology entails letting go of employees that aren’t pulling their weight. This way the company doesn’t lose any valuable workers. In order to work out who the best employees are, your company needs to have an evaluation system in place to decide as fairly as possible. The problem here is that performance evaluations aren’t always objective so it’s hard to pit two departments against each other, for example. Plus, what happens if the poorer workers are all in the same team? You can’t just get rid of a whole team at once, which makes this method quite difficult to implement fairly.

Multiple criteria ranking

The most effective way of deciding who to lay off is also the most difficult to implement. You first create a list of factors and give each one points depending on how important you think it is. This formula is then used for each employee so they end up with a certain number of points. Those with the lowest number of points are the ones should then be laid off in that order.

If the length of time an employee has been at the company is an important factor for you, then you could create a points model, which could look something like this:

Amount of time working at the company Number of points
<1 year  
1-5 years 1
6-10 years 2
10+ years 3

Summary: Finding company-specific solutions

What works for one company, may not work for another, so choose the redundancy guidelines that make the most sense for your business. There are advantages and disadvantages for each redundancy selection criteria and you have to be careful since errors made during the layoff process could have serious consequences for an already weakened company.

It’s recommended to decide on the redundancy criteria and have the final version written in the company agreement in order to be able to act quickly in the event of an emergency. Another option is to include the redundancy guidelines in each employee’s contract or to implement the necessary job cuts with individual termination agreements.

Please note the legal disclaimer relating to this article.


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