When an employer decides to make redundancies, they must first identify a pool of employees from which they will select those who will be made redundant. Sometimes, choosing a pool is straightforward; for example, where a specific role is disappearing and only one employee does it. This is commonly referred to as a "pool of one." However, employers must be careful when selecting a pool of one, as it can raise concerns about fairness and potentially lead to claims of unfair dismissal.
One example of a "pool of one" case is Halpin v Sandpiper Books Ltd (EAT/0171/11). In this case, the employee was the only one who worked in China for the company, and the employer decided to outsource its China operation, making the employee redundant. It was clear that there was no one else who could sensibly be selected for redundancy, making this a straightforward "pool of one" case.
However, not all "pool of one" cases are so clear-cut. In Wrexham Golf Co Ltd v Ingham (EAT/0190/12), the golf club employed 12 people, one of whom was the only bar steward. The golf club decided to remove the bar steward role and get others to cover bar duties. The club decided that as the bar steward's role was disappearing, the only employee who did it, Mr Ingham, would be in a pool of one. The club did not consider any other employee for redundancy. The employment tribunal found that the club's failure to consider a wider pool meant the dismissal was unfair. However, the Employment Appeal Tribunal overruled this decision, stating that having a "pool of one" was a reasonable decision.
When using a "pool of one," employers must be cautious not to appear to be targeting an individual employee. Tribunals may view a "pool of one" as a device to target an employee, which can lead to claims of unfair dismissal. While a "pool of one" can be a reasonable decision in some circumstances, it is crucial to ensure that the employee genuinely is a standalone employee. If there is any doubt, a wider pool should be considered to avoid any potential claims of unfair dismissal.
In the event of a redundancy situation, it is essential for employers to understand the legal requirements and take appropriate measures to avoid potential claims of unfair dismissal. However, even when an employer follows all the necessary legal procedures, disputes can still arise. This is where settlement agreements come into play.
A settlement agreement is a legally binding agreement between an employer and an employee that terminates their employment relationship on agreed terms. The agreement typically includes a severance payment in exchange for the employee agreeing not to pursue any legal claims against the employer, such as claims for unfair dismissal or discrimination. Settlement agreements can be an effective way for employers to resolve disputes with employees and avoid the time, cost, and uncertainty of a tribunal hearing.
However, settlement agreements must be entered into voluntarily and with the employee's informed consent. Before offering a settlement agreement, employers must ensure that the employee fully understands the agreement's terms and their legal rights. Employees must also receive independent legal advice on the agreement's terms and the legal implications of signing it. To ensure that the settlement agreement is binding, it must be in writing, and the employee must have at least 21 days to consider the agreement and receive legal advice.
In conclusion, while a "pool of one" can be a reasonable decision in some cases, employers must exercise caution to avoid claims of unfair dismissal. Settlement agreements can be a useful tool for resolving disputes with employees, but employers must ensure that they follow the necessary legal requirements and that employees enter into the agreement voluntarily and with informed consent. If you are an employer facing a redundancy situation or are considering offering a settlement agreement to an employee.
