2009 has brought with it a surge in the number of employers considering redundancies and unfortunately this looks set to continue for the foreseeable future. To avoid the pitfalls of the redundancy process it is essential for all parties to be aware of their rights and responsibilities. Below is a list of our top ten tips to help employers avoid claims for unfair dismissal or discrimination and to give employees a quick guide to ensuring that their rights have been honoured. If you are affected by redundancy as either an employer or employee and would like to discuss these issues further please contact Alison Stevenson on 01334 477107 to arrange an initial free 30 minute consultation.
A genuine redundancy situation only arises where one of the following applies: (1) there is a closure of the business by which the employee was employed; (2) a closure of the place of business where the employee was employed to work; or (3) where there is a reduced requirement for employees to carry out work of a particular kind. If the redundancy does not fall into one of these categories it is unlikely to be a fair dismissal.
A process which does not consider alternatives to compulsory redundancy is unlikely to be fair. Examples of avoiding the redundancy are restrictions on recruitment, alternative employment, re-training, voluntary early retirement, voluntary redundancy, short-term working, restricting overtime, pay freezes or cuts.
The pool is the group of employees from which redundancies could be made. If an employer dismisses an employee without first considering the question of a pool, the dismissal is likely to be unfair. If an employer applies its mind to the issue of pools and has good reasons for selecting a particular pool then it will be difficult for an employee (or a tribunal) to challenge its choice of pool. Key considerations should be which particular kind of work is disappearing and which employees do the particular kind of work which is disappearing. If there is a clear correlation between the kind of work disappearing and the group of employees doing that work, then the pool is likely to be easy to identify.
The employer must establish a set of selection criteria to apply to the pool to determine who will be made redundant. In order to be reasonable, the criteria must, as far as possible, be both objective and capable of independent verification. This means that the criteria should be measurable, rather than just being based on someone's personal opinion. Potentially fair selection criteria include, performance and ability, length of service, attendance records and disciplinary records. It is acceptable for the employer to attach different weightings to the different criteria provided that such variation can be objectively justified. The employer must avoid any selection criteria that could be construed as discriminatory in any way. Ensure that at least two line managers conduct the scoring, to help ensure scores are objective.
The employer must notify the Secretary of State that it is planning to make collective redundancies at least 30 days before the first dismissal takes effect where it proposes to dismiss 20 to 99 employees within a 90-day period, or at least 90 days before the first dismissal where the employer proposes to dismiss 100 or more employees.
Consultation and good communications with employees are at the heart of the redundancy process. Employers must engage with their employees as early as possible and before any decisions have been taken about who is to be made redundant. The employer should explain the reasons for the potential redundancies, explain how many jobs are at risk of being redundant (making sure it is clear that the redundancies are only a possibility at this stage), ask the employees for suggestions of ways to avoid redundancies, consider asking for volunteers for redundancy and explain the pools and proposed selection criteria (inviting comment from the employees).
Collective consultation under the Trade Unions and Labour Relations (Consolidation) Act 1992 (TULRCA) will only be necessary where 20 or more redundancies are being proposed within a 90-day period. The requirements of collective consultation are set out in statute (section 188, TULRCA) and there are a number of prescribed matters which must be covered. Collective consultation does not eliminate the need to consult with individual employees but it may, depending on the circumstances, make the employer's obligations in this regard less onerous. Since an employer is obliged to act reasonably in all the circumstances, the extent to which it will be required to consult both collectively and at individual level will depend on the facts.
Until 6 April 2009 in circumstances where an employer is proposing to make less than 20 redundancies, the statutory dismissal and disciplinary procedure (SDDP) will apply to each employee whom the employer contemplates dismissing. After 6 April 2009, the SDDP will be repealed and the new ACAS Code which replaces them will not extend to redundancies. A new ACAS Code covering redundancies is expected soon. Despite this change employers will still be bound by the principles of fairness contained in case law. Therefore, both before and after 6 April 2009 a three stage process of individual consultation is the minimum process which should be followed if a person is to be made redundant. A basic outline of those steps are as follows:
There are requirements over and above this contained in case law which we can advise upon if necessary.
Employers should ensure that employees on long-term sick leave or maternity leave are included in the redundancy consultation process. They should be kept informed of the position, receiving the same communications as other employees, as well as being actively involved in the consultation process. Ideally, consultation should happen face-to-face with them. If the employee is unable to have face-to-face meetings, the employer should do its best to consult by other means. In some circumstances, this might entail consulting by phone and/or letter. Failure to consult with absent employees could result in claims of sex discrimination, disability discrimination and/or unfair dismissal. It is also important to remember that any employees on maternity leave have an automatic right to be offered suitable alternative work (where available).
Under section 52 of the Employment Rights Act 1996, an employee who is given notice of dismissal by reason of redundancy has a right to take a reasonable amount of time off with pay during working hours to seek alternative employment or to arrange training for future employment. If an employer unreasonably refuses to allow an employee time off or allows time off, but refuses to pay for it, the employee can apply to the tribunal who can make an award against the employer. To qualify for the right to time off, employees must have been continuously employed for at least two years on the later of the date when notice expired or the date when notice would have expired if the statutory minimum notice due under section 86 of the Employment Rights Act 1996 had been given.
This document does not constitute legal or other advice and is for information purposes only. If you would like further information please contact Alison Stevenson on 01334 477107.