REDUNDANCY: HR Bullets - Simplifying employment law for you

Topics

There is a school off thought that says ‘I’m not dismissing the employee, I’m just making him redundant’. Very wrong – you are dismissing him or her, but the reason for dismissal is redundancy.
Contrary to widely held beliefs there is no European Union scheme to pay workers made redundant, nor are there plans for one. Redundancy pay depends entirely on what is in the employment contract and/or the statutory scheme.

An employee is dismissed for redundancy, and may be entitled to redundancy pay, if either of the following occurs:
- the employer has ceased, or intend to cease, carrying on the business or
- the requirements for employees to carry out work of a particular kind or to carry it out in the place in which they are employed, have ceased or diminished.
A redundancy can therefore occur where the workforce is reorganised and there is less work ; when changes in conditions mean that the old job is quite different from the new one; and when work is put out to contract .
The test for redundancy is whether the employer requires fewer (or no) workers to do work of a particular kind and not just whether the work itself has ceased or diminished.
An employer does not have to show that there is any economic justification for the decision to make redundancies or that there are financial problems that have led to the reduction in work.
The fact that employees’ contracts could require them to work elsewhere (i.e. contain a mobility clause) does not necessarily mean they cannot be made redundant when their own work ceases.
It does not matter whether workers have been selected or volunteered for redundancy – a tribunal will treat either as dismissal for redundancy.

Are you sure that there is a genuine redundancy situation?
Are there alternatives, e.g. recruitment freeze, ban on overtime, short-time working for a period, or redeployment?
Three golden rules – select fairly, consult meaningfully and offer alternative work.
Follow your contractual redundancy procedure, if any, provided it meets the criterion of fairness in these areas.

Employers must make sure that any dismissals on grounds of redundancy comply with fair dismissal conditions. Failure to follow the correct procedures when making staff redundant may result in an unfair dismissal claim, with potential compensation of up to £63,000.
Under the statutory discipline and grievance procedures employers must set out the circumstances surrounding redundancy action, invite the employee to a meeting before any action is taken and advise them of their right to appeal. The standard dismissal and disciplinary procedure will apply when the employer is contemplating any dismisal, including redundancy. Failure to follow the procedure when it applies will make any dismissal automatically unfair.
For businesses with more than 50 employees, the new Information and Consultation of Employees Regulations apply. These regulations do not replace existing laws but they give employees a legal right to information about and consultation on employment developments, such as redundancies.

Multiple redundancies

For 20+ redundancies, consult with either trade union or elected employee reps.
Timescale for start of consultation: at least 90 days when 100 or more redundancies are planned or at least 30 days for 20-99 redundancies.
Discussions must include consultation - with a view to reaching agreement - on ways of avoiding or reducing the redundancies and mitigating the consequences.
Specified details on numbers, jobs, selection methods, timing and procedures must be disclosed to reps in writing.
For 20+ redundancies, notify the BERR on form HR1.

Individual consultation

Consult with individuals on their particular circumstances.
First interview : explain that selection is provisional at this stage
- set out criteria for selection, alternative work, any help on offer such as references or time off, and compensation package
- prepare thoroughly for interview, have all information to hand, allow time for news to sink in, choose appropriate time, don’t allow interruptions.
Second interview : consider points raised by employee. Make final decision.
Confirm all details in writing.

Consider volunteers or voluntary early retirement (volunteers will still count for the purposes of the collective consultation requirements).
Selection criteria must be objective - ideally more than one manager should be involved.
Using last-in, first-out (LIFO) will normally be seen as fair unless used as a way of getting rid of someone unjustifiably.
For fair results, mark against a range of criteria, e.g. skills and qualifications, job performance, attendance and timekeeping, disciplinary record, length of service.
Avoid like the plague certain selection criteria which are automatically unfair : union membership/non-membership or activity; legal industrial action; certain employee representative reasons; actions taken on specified health and safety grounds; reasons associated with pregnancy, maternity, paternity, adoption and parental leave; or because the employee works part time
Adjust criteria for disabled employees if necessary.
Keep written records of marks and comments.
Have an appeal procedure.

Offer any suitable vacancies. Remember that women on maternity leave have priority. Special considerations also apply to disabled staff. Consider ‘bumping’ where appropriate.
Refusal unreasonably to take up an offer of suitable alternative work disentitles an employee to statutory redundancy pay. ‘Suitability’ is suitable for the employee, not for the employer. It will depend on factors such as pay, status, location, hours of work, etc.
Employees taking up alternative work have the right to a four-week trial in the new job.

Employees are entitled to receive their contractual notice (or pay in lieu). This must be no less than the statutory minimum of one week for each year of service up to 12 years.
Those with two years’ service are entitled to reasonable paid time off to look for work following notice of redundancy.
Employees with at least two years’ service are entitled to receive statutory redundancy based on age and length of service (up to a maximum of 20 years). A ceiling of £330 is applied to the amount of weekly pay taken into account.
Provide a written statement showing how redundancy pay has been calculated.

Helplines

Web-based resources

Redundancy Help : calculator and good, practical, employer-focused site with lots of useful info
Redundancy : CIPD factsheet