The use of capability tests in redundancy selection – time to reflect?

In Mental Health Care (UK) Ltd –v- Biluan and another, the EAT has held that the employer acted unreasonably when it used a series of competency tests normally used for recruitment to select employees for redundancy.

The Claimants were employed as a nurse and a support worker respectively by Mental Health Care at a residential hospital. Mental Health Care recognised a need to close one of its wards which would result in 19 employees being made redundant. It identified the pool as the nursing and support staff at the hospital and 58 employees were placed at risk of redundancy.  They then commenced consultation.

As part of the consultation, a selection process was undertaken which included a competency test and the consideration of the sickness absence and disciplinary record of each of the employees. The weighting of this process was such that the competency tests carried greater weight than the other criteria. The competency test used included a written test, individual interview and group exercise and was normally used for the recruitment of employees. The competency tests were carried out by the HR staff, none of whom had experience of working with the employees and they did not obtain assessments from the employees’ managers.  It appeared that this was because they considered there to be insufficient reliable material on which a fair assessment of past or current performance could be based. Whilst Mental Health Care admitted that the tests produced some surprising results with many good employees selected for redundancy, they proceeded to make those employees redundant. The Claimants were made redundant and brought claims for unfair dismissal.

In the first instance the Tribunal held that the Claimants had been unfairly dismissed. Mental Health Care appealed to the EAT. The EAT stated that it was unusual for an employer conducting a redundancy selection exercise on the basis of competence to base its decision entirely on competency tests without any reference to past appraisals or the views of the employees managers. The EAT confirmed that it agreed with the Tribunal’s findings that there had been confusion and a lack of consistency in the way the selection criteria had been applied and there had been some anomalies in the scoring system.

The EAT considered that it had been incorrect for Mental Health Care to choose an elaborate and HR driven method which deprived it of the benefit of input from managers and others who actually knew the staff at risk. The EAT considered that when surprising results were produced these should have been questioned rather than followed and in doing the latter, Mental Health Care had put a “blind faith in process” which had led to them losing touch with common sense and fairness. The EAT dismissed the appeal.

This case highlights the importance not only of ensuring that redundancy selection processes are carried out correctly and fairly with reference to performance but also that appraisals and performance assessments are carried out frequently to ensure this historical information is available for consideration.  It also indicates the importance of the views and assessments of line managers and that these should be taken into account in the selection process.

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