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1 April 2014
Employers faced with the selection quandary during redundancy programmes have been given a helpful steer by a recent EAT decision. By Rachel Dineley
The decision of the Employment Appeal Tribunal (EAT) last month in Eversheds Legal Services Ltd v De Belin brought welcome clarification to the tricky balance to be struck by employers when making redundancy selections.
It is well-established that it is direct sex discrimination to treat one person less favourably than another because of their sex and, under the Sex Discrimination Act 1975, that no special treatment should be afforded to women in connection with pregnancy or childbirth. This is reflected in the Equality Act 2010.
Such special treatment includes giving women on maternity leave priority in respect of suitable alternative vacancies in a redundancy situation, as reflected in regulations made in 1999. However, the regulations do not go so far as to provide a general entitlement to women on maternity leave to be treated more favourably in a redundancy selection process.
Lock, stock and quarrel
In De Belin a male associate (John de Belin) was put at risk of redundancy in a pool for selection along with a female colleague who was on maternity leave. In determining who should be made redundant, the firm scored the two employees against five criteria, one of which was ’lock-up’. This measured the time between the lawyer completing a piece of client work and the fees being paid in respect of it, with more points awarded for a quick turnaround.
This was measured over a 12-month period for which De Belin received the lowest possible score of 0.5. In contrast, his female colleague had been absent on maternity leave over the period but was awarded the highest possible score of 2 as she was deprived of the chance to show she could have scored the maximum. Since De Belin’s overall score ended up as only 0.5 below hers, this effectively determined his selection for redundancy.
He brought a grievance on the basis that, if her lock-up had been measured effectively, she would also have scored 0.5 and would have had a score lower than his. He maintained that, by artificially inflating her score, the firm had discriminated against him.
De Belin won his direct sex discrimination and unfair dismissal claims before the Employment Tribunal and Eversheds appealed. It was argued on the firm’s behalf that it was obliged to accord the female lawyer the maximum score with regard to lock-up.
On behalf of the female colleague, it was accepted that she would have been treated unlawfully if no arrangements had been put in place to see that she did not lose out in the application of the scoring system through her absence on maternity leave. However, such arrangements should go no further than necessary to achieve that aim, relying on the principle of proportionality.
The president of the EAT, Mr Justice Underhill, accepted that the protection of the special position of employees who are pregnant or on maternity leave may sometimes require them to be accorded more favourable treatment than their colleagues.
However, he went on to accept the submission “that the obligation in question cannot extend to favouring pregnant employees or those on maternity leave beyond what is reasonably necessary to compensate them for the disadvantages occasioned by their condition. It is important not to bring into disrepute the legislation which protects pregnant women and those on maternity leave by giving it a wider scope than is properly required”.
He noted that “the well-tried and familiar proportionality principle seems to us to strike the right balance”.
The EAT went on to make an equally important finding in relation to how compensation should be assessed in De Belin’s case. The tribunal had found that there was insufficient evidence to enable it to carry out a so-called ’Polkey’ exercise, whereby compensation is limited in light of the chance that employment would have terminated at some point in any event. While acknowledging that making an assessment in such a case may not be easy, the EAT emphasised that the tribunal cannot shirk its responsibility because it entails a degree of speculation. The case was remitted to a different tribunal to determine appropriate compensation.
At a time when employers are often engaged in the difficult exercise of determining who should be selected for redundancy, this decision is a valuable reminder of the need to take a balanced approach when catering for those in special positions.
This will become even more complicated when men take additional paternity leave under regulations that came into force last month. They will be placed on a par with pregnant women and those on maternity leave when selected for redundancy.
If there is a suitable alternative vacancy for an employee they will be entitled to be offered it in preference to others, and competition between colleagues may thus increase further. This will make it more important than ever for employers to adopt appropriate selection criteria and apply these in a balanced manner to avoid the risk of undue claims.
Rachel Dineley is an employment partner and head of the diversity and discrimination unit at Beachcroft