What is redundancy pooling?
A redundancy pool is a group of employees considered to be ‘at risk’ of redundancy, from which redundant staff will be selected. A redundancy pool is not relevant in smaller businesses if only one employee performing a unique role is being made redundant. For more information, read How to make someone redundant in a small business.
Each pool typically includes employees who currently perform the same or similar roles or employees with the same or similar skills in other roles. You may need a few redundancy pools for different business divisions or areas (eg marketing, sales or IT).
Redundancy pooling is not usually relevant where there is no need to select between employees performing a similar role (ie where a particular role will no longer exist, with no replacement, or an entire workplace will shut). This will mostly be the case for small or micro-businesses, where employees perform their roles individually.
Choosing the suitable redundancy pools has a subjective element and there is no single right approach but the employer must act reasonably and take care to avoid illegal discrimination.
How do I select between employees within a pool?
After choosing the pools, the employer must decide how to select between employees within that pool. It's usually best to create a selection matrix/score sheet to grade and compare the skills, experience and performance of the pooled employees. Employers must ensure that all employee information is processed under their Data protection policy and Employee privacy notice. For more information, read Data protection and employees.
In choosing the criteria, try and think about the workplace attributes and skills that are necessary for the business to succeed in the future and the specific requirements of the remaining roles.
The best criteria to use are those that are capable of being objectively measured and supported by evidence. Where it's necessary to use subjective criteria, consider having more than one person perform the grading.
Selection criteria may include things like:
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attendance record
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disciplinary record
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skills or experience
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appraisal ratings
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relevant qualifications
Make sure the grading is performed fairly and consistently, based on reliable information.
Take care to avoid discriminating in choosing or applying selection criteria. For example, absence due to maternity leave or disability should not be taken into account.
Consulting over pooling and selection
Some workplaces have a custom arrangement or an agreed procedure for redundancy pooling and/or selection. If this exists then you should stick to it or have a good reason for departing (and if there is an agreed procedure then any changes should be agreed upon).
Once you have carried out pooling and have a proposal for the selection process, you should consult with all at-risk employees or their representatives (eg a trade union representative) over that proposal before performing the selection exercise. Consider using a Redundancy consultation letter for this purpose.
During early stages (eg while pooling which employees of those eligible for redundancy are at risk of redundancy), employers should be careful not to apply criteria, or a single criterion, in a way that leads to a redundancy pool of one person. This would effectively select an individual for redundancy without giving them a chance to engage in meaningful consultation first (ie consultation in which the employee has a chance of influencing the outcome of the redundancy process).
Consult with an open mind and be willing to change the methods if valid points are raised. After you have applied the selection criteria and have provisionally identified employees for redundancy, you will need to consult further with them including their selection and the scores they received, which you will need to show them. You do not normally need to show selected employees the scores that other employees received. If there is a compelling reason to do this then make the scores anonymous (as far as practicable).
In practice, the redundancy pooling and selection exercise is the aspect of redundancy most likely to go wrong or to be challenged. Special additional rules apply where 20 or more employees will be redundant and you should Ask a lawyer for advice in this case.
Appeal
You should consider setting up an appeal process for employees who feel they have been unfairly selected. This can reduce the chances of someone making a claim against you to an Employment Tribunal.
You should set out the appeal process and how an employee can appeal in your redundancy plans. The appeal process may involve meeting the employee and listening to their concerns or asking them to write a letter explaining they disagree with your decision. For more information, read Appealing decisions made by employers.
