Redundancy: how it should be conducted
Date: December 09, 2019 by idu-net
The recent Thomas Cook collapse has had a devastating impact on the staff of the travel firm, bringing the issue of redundancy once again into focus. Some might say no matter what you call it people have still lost their livelihood, but employees are entitled to greater consideration in redundancy.
Employers should try hard to avoid the 10 most common legal pitfalls in handling a redundancy situation. If they fall foul of these common pitfalls, any dismissal could be considered invalid or challenged at Tribunal.
1. Is it an actual redundancy situation?
The starting point is for an employer to consider if the situation they face falls within the statutory definition of a redundancy. A redundancy can occur in several scenarios:
• the closure of a business
• the location in which the employee is working closes
• there is a diminishing need for employees (i.e. the job disappears/fewer people required in the job)
• The business is otherwise restructured or reorganised
Some business reorganisations may not in fact fall within the legal definition of a redundancy. If the situation does not conform with the statutory definition, then the reason for any proposed dismissals is not valid – although there may still be a fair reason if it is “some other substantial reason”.
2. Are there alternatives to redundancy?
Employers should be encouraged to consider alternatives to redundancies. This is in their own interests in order to avoid losing skilled and valued employees or finding themselves short-staffed if there is a subsequent upturn of work. Alternatives to redundancies, such as reducing or stopping overtime or asking staff to volunteer for reduced hours, should be considered first before pressing ahead with a redundancy process.
3. Incorrectly defining the pool for redundancy
There will be a pool of employees from which those to be made redundant will be selected. Often, employers fail to define the redundancy pool correctly, for example making it too narrow or too wide. This can lead to dismissals being held as unfair. When identifying the pool, your employer should pose the question “what exactly is the job?” to identify those employees who are performing the same role within the organisation and who should therefore fall within the pool for selection. Employers should take care where employees perform similar but not identical work, where employees cover the job during periods of absence and where employees have similar skills/perform similar jobs in different departments within the business. The employer must have and communicate have a clear rationale for the approach which they ultimately decide to take.
4. Is the selection procedure fair?
To demonstrate if a role is genuinely redundant, employers must carry out a fair selection procedure. Any selection criteria must be objectively chosen, transparent and fairly applied. The selection should not reflect the personal opinion of the selector and should be based on data such as the employee’s appraisals, qualifications, skills and knowledge. Your employer cannot choose an individual for redundancy because of characteristics such as pregnancy or age and should ensure that such characteristics do not indirectly affect the selection process. Any dismissal based on or influenced by these factors would not only be deemed as being unfair but could also be discriminatory.
5. Failing to inform and consult on an individual basis
If your employer is proposing to make redundancies, they must inform all those affected that their jobs are at risk of redundancy as soon as possible. An employer must act reasonably when treating redundancy as a reason for dismissal. Genuine consultation is an integral part of showing an employer has acted reasonably.
6. Failing to consult properly on collective redundancies
If an employer is proposing to dismiss 20 or more employees at one establishment within a 90-day period, then they are required to collectively consult with appropriate representatives (union reps or elected employee reps) about any proposed dismissals. Any consultation should involve discussion about:
• ways to avoid the proposed dismissals
• reducing the number of employees to be dismissed
• mitigating the consequences of those dismissals on the affected individuals
This consultation process by the employer is not just a formality and must be meaningful. A failure to conduct such meaningful consultation can result in protective award claims by each affected employee which are likely to be successful.
7. Failing to provide information to appropriate representatives
Specific information must be delivered to appropriate representatives, who are either the union representatives (where a union is recognised in respect of the affected employees) or elected employee representatives. If an employer fails to elect employee representatives or if there is any other failure relating to engaging with the appropriate representatives, then a complaint can be made to the Employment Tribunal and the Tribunal may make a protective award in respect of the dismissed employees. This could lead to an order being made that the employer pay remuneration for the protected period of up to 90 days per employee.
8. Not offering suitable alternative work
An employer must look for alternative work before giving notice of redundancy otherwise any dismissal will be unfair. Note that the duty on your employer, however, is only to take ‘reasonable steps’ and not every conceivable and possible step to find alternative employment. It will be a question for the Tribunal as to whether it is reasonable to offer a job in a lower and less well-paid position. Employers are advised that it is best practice to make that offer, even if it is not expected that the employee will accept it, rather than having to argue at a Tribunal that a reasonable employer would not have made the offer.
9. Failing to apply the special rules to employees on family leave
If an employee is on maternity leave, adoption leave or shared parental leave and is selected for redundancy, they have additional legal protection. Such employees have a right to be automatically offered any suitable alternative employment available and thereby jumping ahead of any other at-risk employees in the queue.
10. Failing to hold a dismissal meeting or providing a right of appeal
A redundancy is considered a potential fair reason for dismissal. However, a failure to follow a proper procedure may render such a dismissal unfair. Any notice of dismissal should only be given once all alternatives to redundancy have been considered and the consultation process is completed.
An employer should hold a meeting with employees at risk of redundancy before making a final decision and should allow the employee to be accompanied at that meeting. Any decision to dismiss should also be confirmed in writing and that letter of termination should also include details of your right to appeal to a more senior manager than the one who carried out the consultation process to ensure the fairness of the process followed.