Redundancy Selection Criteria Lessons from the Abbey Business

By: Simon King Click author's name for more of his/her articles

The high-profile Chagger v Abbey National plc & Hopkins (2006) UK legal case demonstrates that selecting an employee for redundancy on the basis of inappropriate and/or wholly subjective redundancy selection criteria can leave the employer exposed to and unable to defend against allegations of discrimination from the employee. Abbey National (the Spanish-owned UK bank soon to be re-branded as Santander, and being part of the Banco Santander Group) terminated Balbinder Chagger's employment in 2006, asserting redundancy as the reason. Mr Chagger was employed as a Trading Risk Controller, reported into Nigel Hopkins, earned around £100,000 per annum and was of Indian origin. The redundancy pool of selection was Mr Chagger and the other Trading Risk Controller, a white female.

Mr Chagger believed the real reason behind his dismissal was race discrimination. The Employment Tribunal that heard the case made a finding of race discrimination and eventually awarded the record £2.8 million compensation. Matters did not end there though; the case was subsequently escalated to the Employment Appeal Tribunal (EAT), and recently has escalated to the Court of Appeal (the 2nd highest court in the UK). The Court of Appeal's website showed the case was heard on 7 and 8 July 2009. According to 11KBW set of chambers, the hearing was limited to the issue of compensation only. That suggested that the wrong of race discrimination committed by Santander Abbey National and Mr Hopkins seemed to have been finalised by the EAT, which upheld the original Employment Tribunal's judgement that Mr Hopkins and Abbey National Santander had discriminated against Mr Chagger on the grounds of race in his dismissal.

The selection of an employee for redundancy must be fair under the general reasonableness test of the Employment Rights Act 1996, meaning that the redundancy selection criteria must be objective and measurable, and must be applied fairly to each employee and to the correct redundancy pool of employees.

The law will, therefore, begin by considering the redundancy pool of employees from which the dismissed employee was selected, because the application of otherwise fair redundancy selection criteria to the incorrect group of employees could affect the fairness of the dismissal. Next, the law will consider the redundancy selection criteria that were applied to select the employee for dismissal, and how they were applied in scoring the employee for selection for dismissal; the redundancy selection criteria and their application must be objective; the application must not reflect the employer's or manager's personal desires or personal opinions.

In the Chagger case, the Employment Tribunal found that Mr Hopkins was personally happy for Mr Chagger's employment to be ended, had planned that Mr Chagger would be the employee that would be scored lower and selected for dismissal, and had used the redundancy process as a vehicle to remove Mr Chagger from his employment; Mr Chagger had been picked upon unfairly.

The Employment Tribunal found that the redundancy selection criteria were un-measurable, or all but un-measurable, and highly subjective. The criteria included 'range of influence', 'empathy', 'self insight' and 'the ability to win hearts and minds'. Mr Hopkins was highly criticised by the Employment Tribunal for the way in which he had applied the redundancy selection criteria to Mr Chagger. As an example, he had marked Mr Chagger down for being self-reliant and getting on with work, an attribute the Employment Tribunal believed that other managers might well consider a valuable asset for an employee in Mr Chagger's highly responsible and highly paid role, and score him more highly for. Also, Mr Hopkins made criticisms of Mr Chagger that had never been made before the redundancy selection exercise; the criticisms were inconsistent with previous appraisals of Mr Chagger. Hence, the Employment Tribunal concluded that the criticisms were either not legitimate or were not serious enough to produce a reduced redundancy score.

Clearly, employers who fail to take proper care in the selection of the specific employees to dismiss through redundancy can find themselves exposed to allegations of unfair dismissal and/or discrimination; inappropriate and wholly subjective redundancy selection criteria contributed to the Employment Tribunal's finding that Mr Hopkins had used the redundancy process to remove Mr Chagger from his employment, and that both Mr Hopkins and Santander Abbey National had discriminated against Mr Chagger on the grounds of race in his dismissal.

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About The Author: Santander Abbey National plc & Hopkins v Chagger (2008) and Compliance Risk Lessons from Abbey National ( Santander )